Account Payables

New Oracle R12 Payables Feature | AP AR Netting

By Jag - August 01, 2012
New Oracle R12 Payables Feature | AP AR Netting

 After a R12 upgrade, you will notice a new feature in Payables – AP/AR Netting.  You can use the feature when a vendor is also a customer and you wish to offset their AP invoices with your AR invoices.  This new netting feature replaces contra-charging and Federal Financials netting in 11i.  The 10 steps to setup AP/AR Netting are:
1.       Create a Netting Bank
2.       Create a Netting Bank Branch
3.       Create a Bank Branch Contact (optional)
4.       Create Receipt Class
5.       Associate netting bank with the new receipt class
6.       Add receipt method (define in the receipt class) to the customers you wish to net.

7.       Create a Netting Agreement
8.        Add suppliers and customers to the netting agreement.
9.       Create Document Sequences of type Automatic, one for Payables and one for Receivables
10.   Assign defined sequences
Once you have all the setups in place, all you need is some AP and AR invoices and then you are ready to create your first netting payment batch.  This batch will grab the AR invoices and AP invoices that are due and create a payment and receipt to net the two documents together.  The criteria for selecting AP invoices are:
  • Transaction due date must be less than or equal to AP scheduled payment due date.
  • AP scheduled payment due date must be between the Netting Agreement Start Date and End Date.
  • Only invoices for the Supplier and supplier sites (if specified) in the agreement are selected.
  • Only invoices with the selected invoice types in the agreement are included.
  • Operating unit of the invoices must be the same as the operating unit of the batch.
  • Invoices must be approved
  • Invoices must not be on Hold
  • Invoices that have already been included in a batch that is not yet in status ‘Complete’ are not included.
The criteria for selecting AP invoices are:
  • AR Payment Schedule due date must be less than or equal to transaction date mentioned in Netting.
  • AR payment schedule date should be between the Agreement Start Date and end date.
  • Transactions must be complete
  • Only Transactions for customer and customer sites (if specified) in the agreement are selected.
  • Only transactions with the selected transaction types in the agreement are included.
  • Operating unit of the transactions must be the same as the operating unit of the batch.
  • Transactions that have already been included in a batch that is not yet in status complete will not be included in the new batch.
  • The Receipt method associated with the transaction should not have a Payment_type_code = ‘CREDIT_CARD’
  • Transaction must not be in dispute
  • Payment schedule status must be open
  • Transaction must not be a prepayment
Once the AP and AR invoices are selected, the netting engine will begin to net them by the netting order rules in the agreement.  The different rules are: amount ascending, amount descending, due date (most recent to oldest), due date (oldest to most recent), and transaction date.

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