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.