Adjustments in Fusion Receivables

What is an Adjustment in Fusion Receivables?

An adjustment is a manual or automatic billing update that increases or decreases the balance on a transactions such as an invoice, debit memo, chargeback or a credit memo. We can make either positive or negative adjustments to your invoices.  We can approve adjustments that are within approval limits and give pending statuses to adjustments that are outside approval limits. We can automatically write off debit items that meet specific selection criteria.

Configurations required:

·       Setup Approval limits for User - Approval limits are going to determine whether a user can approve adjustments. These are defined by document type, amount and currency.

§  A document type - can be adjustment, or it can be something like credit memo refund or receipt write off.

§  Amount - Amount can be part of a defined range. the range can go from a negative number to a positive number.

§  Currency - Approval limits are going to be specific by currency. There will be different limits for the US dollar, for the Euro.

·       Receivable activity for Adjustment - this configuration in the Receivables application allows to generate accounting distributions. 

Setup Approval Limits

Task: Manage Approval Limits

Positive Amount Adjustments: If you want to increase the Invoice amount, then enter positive amount in Adjustments screen. For ex: additional charges

Negative Amount Adjustments: if you want to decrease the invoice amount, then enter negative amount in Adjustments screen. For ex: to reduce customer invoice balance.

Setup Receivables Activity for Adjustment

Task: Manage Receivables Activities

 

Which types of Adjustments can be processed in Receivables?

• ·       Invoice - This means that the adjustment amount will be applied to the entire invoice.
• ·       Line - The adjusted amount is prorated across all lines. If the adjustment includes tax, then the amount is prorated across lines and tax.
• ·       Charges - the adjusted amount is applied to the charges amount on the invoice. Again, if the adjustment includes tax, the amount is prorated across charges and tax.
• ·       Tax - the adjusted amount is applied to the tax amount
• ·       Freight - The adjusted amount will be applied to the freight amount

How to make manual adjustments?

Go to Transactions à Actions à Manage Adjustments à

Click + to create an adjustment and provide details as mentioned in the above screenshot

Click Submit

How Adjustment Feature works in Oracle?

There is no approval workflow in Oracle for Adjustments. Any user who has approval limits assigned for Adjustment document type can create adjustment in Receivables. If the adjustment amount is within approval limit, that adjustment gets automatically approved. In case user does not have approval limit for the adjustment amount, when user submits adjustment it is processed with a status as “Pending Approval”. Any user who has that approval limit can approve it, user does not need to be any supervisor or manager.

Centralized Payments in Oracle Cloud

Centralized payment processing enables you to implement a shared payment service model.

In this model, a single payment business unit provides payment services to multiple invoice business units. That is, any business unit with the Payables Payment business function can provide payment services to other business units with the Payables Invoicing business function.

The designated payment business unit processes invoices from multiple invoice business units and generates a consolidated payment for a given supplier. Because payment processing is centralized, you can exercise better control of supplier payments and reduce the cost of payment processing.

What is Shared Service Concept - When a company operates in different locations, and let us say they have different functions as well -  like Requisitioning, Purchasing (Buy), Invoicing, Payment etc. and decides that one of the Business Unit handles the Invoicing, other Business Unit handles Payments on behalf of other business units, this concept is called Shared Service Model i.e. centralizing some of the business unit functions.

The payment business unit groups standard invoices, prepayments, and credit memos for the same supplier name and site, from all of the invoice business units that the payment business unit services.

Points to note:

•Centralized Payments - Shared Services can't be centralized across ledger (Payment) but could be done across the LE (within the same ledger, ex: US1 LE can pay on behalf of US2).

•Invoicing and Payment functions - these 2 can be shared within the same Ledger.

•Inter company balancing is required

Setups Required

·       Assign Business Unit Business Function: Enable required Business Functions for Invoice and Payment BUs

·       Manage Service Provider Relationships: This is a very important setup as this defines the relationship between the client and provider.

·       Setup for Supplier Site Assignments: In the Supplier Site, we can see how a Site (Procurement BU) needs to have Client BU in the Site Assignments tab. The Procurement BU is your provider and the Client BU are the ones for which you define the relationship to the service provider.

Setups required for Invoice Business Units

·     Manage Common Options for Payables and Procurement
·       Manage Invoice Options
·       Manage Tax Reporting and Withholding Tax Options

Setups required for Payment Business Units

·       Manage Payment Options

Payment Service Models

The different models of payment services that you can implement are:

• Dedicated: In a dedicated payment service model, the payment business unit works solely as an outsourced payment processing unit to service other invoice business units.
• Self-Service: In a self-service model, the invoice business unit services itself, acting as its own payment service provider.
• Dedicated and Self-Service: In a dedicated and self-service model, the payment business unit, in addition to servicing itself, also services other invoice business units.