How to handle Bank Charges in Oracle Cloud?

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What is a Bank Charge?

Bank charges are fees levied by banks for processing fund transfers between a disbursement bank account and a supplier's or customer's bank account. Handling Bank Charges in Oracle Fusion is usually done through Cash Management or Payables, depending on when the bank charges are identified and on client requirements.

How to handle Bank charges in Finance Modules?


Cash Management

Method1: Manual This method is used when the bank deducts charges directly in the bank statement. Based on this, clients create an External Transaction and reconcile it with the Bank Statement line.

Method2 Automatic: Based on the configuration in Cash Management (Bank Statement Transaction Creation Rules and Cash Transaction Type Mapping), the system can create Bank Charge as the External Transaction when running the Generate Cash Transactions program.


Accounts Receivables

There are two ways to handle Bank Charges in AR.  There are some charges we need to record as bank charges in customer payments.

 

·       Create Misc Receipt in negative (-20 is created as Misc Receipt against the customer)

·       Create an adjustment at the invoice level (1000 Invoice and 980 Receipt, 20 is bank charges for which create an adjustment)


Accounts Payables

Some companies record bank charges in AP when processing payments. Here the requirement is that when making the payment, the system has to deduct the bank charge and make the payment to the full extent of liability. Basically, it is considered as Discount when making the payment, as we are paying less by deducting the bank charge.

If we set up bank charges, we can't take a discount on a payment or deduct bank charges from payments that you create using either: 

  • Create Payment screen
  • Pay in Full action from Invoice screen

NOTE: Bank Charges functionality works only when the payments are created using the Payment Process Request Screen.

Setups required in AP

• Define Bank Charges
• Set the Bank Deduction Type for Payment Options
• Set the Bank Deduction Type for a Supplier Site
• Assign Discount Taken Account in Common Options

Test
  • Create an Invoice with the supplier(for which it is enabled)
  • Run Payment Process Request

Define Bank Charges

Task: Manage Bank Charge


Set the Bank Deduction Type for Payment Options

Task: Manage Payment Options



Set the Bank Deduction Type for a Supplier Site

N: Procurement -> Suppliers --> Search for Supplier.
Go to Supplier Site --> Payment Tab



Assign Discount Taken Account in Common Options

Task: Manage Common Options for Payables and Procurement




Accounting Entries


Payment Creation

Once the payment is confirmed, we can check how the bank charges are processed.


Invoice Amount is 10000, out of which 9900 is paid and 100 is considered as Bank Charge as per setup.





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