Can you give a sample
Process Flow for Procure to Pay Cycle?
Ans) Process flow for Procure to pay will go through two departments
(Commercial & Finance)
Procure - Commercial Department The following steps involve to procure
any item
1. Received Requisition from concern Department
2. Request for Quotation from Suppliers at least three
3. Finalize the best Quotation by keeping in mind about our companies standard
4. Check the Budget for the same
5. Negotiate with supplier for more economic pricing and finalize the payment
terms
6. Process the PO and forward to the supplier to supply the goods and
services
Pay Cycle - Finance Department
The following steps need to be fulfil
1. Invoice should be match with PO
2. Invoice should has all the supporting documents such as PO copy,Delivery
note duly signed by reciever (our staff who authorized to received goods /
store keeper)
3. If the invoice is for services then it should be forwarded to the concern
department head or project manager for his confirmation of work done
and his approval
4. Even if it not the services invoice, it should forwarded to the concern
person's approval who request the PO for the same
5. Finance can reject the invoice if it is not budgeted and ask for
the reasons.
6. After receiving all the confirmation and approvals from the concern
department heads the invoice will be update in to the accounting system first
in order to avoid any duplication of Invoice and PO (it shown on accounting
package if the invoice is duplicate if not, at least it tells you if the PO
already used or cancel)
7. Finance approved the invoice and process the
payment base on payment terms with the supplier.
Explain about Oracle Accounts Payable Application.
Ans)The
Accounts Payable application component
records and manages accounting data for all
vendors. It is also an integral part of the
purchasing system: Deliveries and invoices are
managed according to vendors. The system
automatically triggers postings in response to the
operative transactions. In the same way, the
system supplies the Cash Management application
component with figures from invoices in order to
optimize liquidity planning.
How many types of purchase order
types/agreements are there?
A) Standard Purchase Order: You
generally create standard purchase orders for one-time purchase of various
items. You create standard purchase orders when you know the details of the
goods or services you require, estimated costs, quantities, delivery schedules,
and accounting distributions. If you use encumbrance accounting, the purchase order
may be encumbered since the required information is known
B) Planned
PO : A planned purchase order is a long-term agreement committing
to buy it
items or services from a single source. You must
specify tentative delivery schedules and all details for goods or services that
you want to buy, including charge account, quantities and estimated cost.
EX: Buying goods for Christmas from a specific
dealer.
C) Contract PO : You
create contract purchase agreement with your supplier to agree on specific
terms and conditions without indicating the goods and services that you will be
purchasing i.e. for $ amount you must supply this much quantity. You can later
issue standard PO referencing your contracts and you can encumber these
purchase orders if you use encumbrance accounting.
D) Blanket PO : You create
blanket purchase agreements when you know the detail of goods or services you
plan to buy from a specific supplier in a period , but you do not yet know the
detail of your delivery schedules. You can use blanket purchase agreements to
specify negotiated prices for your items before actually purchasing them.
A Blanket Purchase Agreement is a sort of contract
between the you and ur supplier about the price at which you will purchase the
items from the supplier in future. Here you enter the price of the item not the
quantity of the items. When you create the release you enter the quantity of
the items. The price is not updatable in the release. The quantity * price
makes the Released Amount. Now suppose your contract with your supplier is such
that you can only purchase the items worth a fixed amount against the contract.
What is a Payment Method,
what are different types?
A funds disbursement payment method is a medium
by which the first party payer, or deploying company, makes a payment to a third
party payee, such as a supplier. You can use a payment method to pay one or
more suppliers. Oracle Payments supports several payment methods for funds
disbursement, including the following:
·
Check
·
Electronic
·
wire
·
Clearing
Check:
You can pay with a manual payment, a Quick
payment, or in a payment batch.
Electornic:
Electronic An electronic funds transfer to the
bank of a supplier.You create electronic payments either through the e-
Commerce Gateway, or by delivering a payment batch file to your bank. For both
methods, Payables creates a file during payment batch creation. If you are
using the e-Commerce Gateway to create the file of payments, an EDI translator
is required to create the EDI Formatted file prior to delivering it to your
bank.For electronic funds transfers, the file is formatted and delivered to
your ap.out directory for delivery to your bank.
Wire:
Wire Funds transfer initiated be contacting the
bank and requesting wire payment to the bank of a supplier. A payment method
where you pay invoices outside of Payables by notifying your bank that you want
to debit your account and credit your supplier’s account with appropriate
funds. You provide your bank with your supplier’s bank information, and your
bank sends you confirmation of your transaction. Your supplier’s bank sends
your supplier confirmation of the payment. You then record the transaction
manually.
Clearing:
Clearing Payment for invoices transferred from
another entity within the company without creating a payment document.Payment
method you use to account for intercompany expenses when you do not actually
disburse funds through banks. You do not generate a payment document with the
Clearing payment method. When you enter the invoice, you enter Clearing for the
payment method.You can record a Clearing payment using a Manual type payment
only.
What do you mean by
pay through date?
Pay Through
Date. Payables selects all approved and unpaid
invoices that have a due date on or before the Pay Through Date. You cannot
update this field after invoice selection for a payment batch
What are different status in payment batch?
ANS – Status (Payment Batches window only). Payables displays the
status of the payment batch. Payables displays the status in red if there is an
error, for example, if the concurrent manager goes down during a process.
1.
Selecting : Payables in
Identifying the invoices which needs to be selected for payment on the basis of
Criteria defined in Payment template
2.
Building. Payables is determining which invoices will be paid by
each payment document.
3.
Built. Payables has determined which invoices will be paid with
each payment document. You can now review the Preliminary Payment Register,
Modify the Payment Batch, or Format the Payment Batch.
4.
Cancelled. You have cancelled the payment batch.
5.
Cancelling. Payables is cancelling the payment batch.
6.
Confirmed. You have confirmed the payment batch.
7.
Confirming. Payables is either confirming or partially confirming the
payment batch based on the action you selected in the Confirm Payment Batch
window.
8.
Formatted. Payables has completed formatting your payments and has
created the output file that you can use to print checks or, if you are making
electronic payments, you can deliver the output file to the e-Commerce Gateway
or your bank for processing.
9.
Formatting. Payables has created the output file that you can use to print
checks or, if you are making EFT payments, you can deliver the output file to
your bank for processing.
10.
Modified. Payables has modified the payment batch based on the
modifications you made in the Modify Payment Batch window.
11.
Modifying. Payables is modifying the payment batch based on the
modifications you made in the Modify Payment Batch window.
12.
Rebuilding. You have modified a payment batch, and Payables is rebuilding
the modified payment batch.
13.
Restarting. You have confirmed a partial payment batch and have chosen
Restart Payment Batch in the Confirm Payment Batch window. Payables is
rebuilding and reformatting the remaining portion of the payment batch.
14.
Selected. Payables has selected invoices that match the payment
batch criteria you entered.
15.
Unstarted. The payment batch is unstarted.
Explain The concept
of Automatic Offset?
If you enter invoices
for expenses or asset purchases for more than one balancing segment, you might
want to use Automatic Offsets to keep your Payables transaction accounting
entries balanced.
If you do not use Automatic Offsets, Payables creates a single liability
accounting entry for invoice transactions (if you use accrual basis accounting)
and a single cash type accounting entry for payment transactions.
When you use Automatic Offsets, Payables automatically creates balancing
accounting entries for your transactions. The GL account that each of the
offsetting accounting entry is charged to depends on which method you use,
Balancing or Account:
·
Balancing. Payables builds the offsetting GL account by taking the
balancing segment (usually the cost center code) from the invoice distribution
and overlaying it onto the appropriate default GL account, for example the
Liability account from the supplier site.
·
Account. The Account method takes the opposite approach with one
segment (the designated account segment) being retained from the default GL
account and all other segments being retained from the invoice distribution.
What is an ERS (Pay on
Receipt) ? How is it setup?
Payment on Receipt
enables you to automatically create standard, unapproved invoices for payment
of goods based on receipt transactions. Invoices are created using a
combination of receipt and purchase order information, eliminating duplicate
manual data entry and ensuring accurate and timely data processing. Payment on
Receipt is also known as Evaluated Receipt Settlement (ERS) and Self Billing.
You can automatically
create invoices with multiple items and distribution lines, and include tax.
You define which
supplier sites participate in Payment on Receipt and enforce matching rules to
ensure the proper payments are made to the suppliers.
Amount – Payment on Receipt builds invoices with the following
information: Determined by multiplying the Quantity received by the Purchase
Order Item Unit Price.
Payment Terms - Defaulted from the purchase order payment terms or from
the supplier site payment terms, depending on your Oracle Public Sector
Payables setup.
Tax - Based on Tax Codes on each purchase order
shipment, or the default tax hierarchy in Payables.
If the purchase order
currency and the supplier site Payment Currency (in the Supplier Sites window)
are not fixed–rate currencies (for example, not euro–related currencies),
Payment on Receipt builds the invoices this way, regardless of the supplier
site Invoice Currency:
Invoice Currency
– Defaulted from the purchase order Currency.
Payment Currency
– Defaulted from the purchase order Currency.
What is the relevance
of Withholding tax group?
Use this window to
define withholding tax groups that include multiple Withholding Tax type tax
codes. You can assign the same tax code to more than one group. When you assign
a withholding tax group to an invoice or distribution, Payables calculates
invoice withholding tax based on every tax code in the withholding tax group. For
example, you assign a withholding tax group to an invoice or distribution if
you need to withhold taxes at both the local and country level, each withheld
at different rates and remitted to different tax authorities. You define and
assign to the invoice or distribution a Withholding Tax Group that includes
both taxes.
You rank all of the
tax codes in a withholding tax group when you define the group. When you enter
an invoice and enter a withholding tax group, Payables calculates the taxes in
order of rank. Lower ranked taxes are applied to the amount of the invoice or
distribution amount less the previous withholding tax amounts.
What are different
rate structure for Withholding Tax ?
Period Limit. After you pay a certain amount for a withholding tax in a
period, Payables does withhold further taxes. For example, for each special
calendar period, Payables withholds no more than $10,000.
If you select this
value you must enter values for the Period Limit, and Calendar fields. You
cannot enter values for the Amount Basis and Period Basis fields.
Flat Rate. The withholding tax has no amount or period limits. If you
select this value you cannot enter a value in the Amount Basis, Period Basis,
and Period Limit fields.
Amount Ranges. The tax rate depends on how much you have already paid during a
time period. Base the paid amount on either the gross amount of total paid
invoice amounts, or on the total amount of tax withheld. The time period can be
per withholding tax calendar period or per invoice. For example, define a tax
that for each invoice that withholds at a rate of 10% until you have paid $1000
in tax, after which it withholds at 15%. If you select this value you must
enter values for the Amount Basis and Period Basis fields. If you select Period
as your Period Basis, you must also select a Calendar. You cannot enter a value
for Period Limit.
What is Prepayment and what are different type
of Prepayments?
Pre-payment invoice are used when
there is advance payment made to Suppliers against purchases or Employees for
Travel expenses (Impress amount).
Pre payments are two types:
1.Temporary pre-payment
2.Permanent pre-payment.
Temporary pre payments are adjusted
against the future purchase invoice. Whereas we cannot adjust Permanent pre
payments against future purchases. This payment we can receive when the
contract cancelled with the supplier. We can convert Permanent pre-payment into
Temporary pre-payment. After conversion we can use that to adjust against
future invoices.
Permanent - which is used for long
term deposit. Ex:-Fixed deposit, Term deposit
Temporary-which is used for short term
advance. Ex:-Advance to supplier
Can we automatically ‘Close’ the Purchase order without
receiving the full quantity?
The Receipt Close Tolerance lets you
specify a quantity percentage within which Purchasing closes a partially
received shipment. For example, if your Receipt Close Tolerance is 5% and you
receive 96% of an expected shipment, Purchasing automatically closes this
shipment for receiving.
What is 2-way, 3-way, 4-way matching?
Oracle Payables shares purchase order information from your
purchasing system to enable online matching with invoices. Invoiced or billed
items are matched to the original purchase orders to ensure that you pay only
for the goods or services you ordered and/or received.
Two–Way: Purchase
order and invoice quantities must match within tolerance before the
corresponding invoice can be paid.
Three–Way: Purchase
order, receipt, and invoice quantities must match within tolerance before the
corresponding invoice can be paid.
Four–Way: Purchase
order, receipt, accepted, and invoice quantities must match within tolerance
before the corresponding invoice can be paid.
What is the difference between 'Accrue On
Receipt' and 'Accrue at Period End'?
A: Accrue On Receipt means that when a
receipt is saved, accrual transactions are immediately recorded and sent to the
general ledger interface. This is also known as "online" accruals.
Accrue at Period End means that when a receipt is saved, the accrual
transactions are not immediately recorded and sent to the general ledger;
instead, the accounting entries are generated and sent at the end of the month
by running the Receipt Accruals - Period-End Process.
All items with a destination type of either Inventory and Outside Processing
are accrued on receipt. For items with a destination type of Expense, you have
the option of accruing on receipt or at period end.
