Create Complex PO and Invoice With Retainage

You need to create
1.Document Style from Purchasing Resp
2.Complex PO using above Document Style from Purchasing Resp
3.Create Invoice and match to PO in Payables Resp

Create Purchasing Document Style
Navigation Path: Purchasing responsibility->Setup->Purchasing->Document Styles
o Click Create button. Enter Name and Description.
o Enable Standard and enter a Display name.
o Check Goods, Services, and Temp Labor.
o Check Advances, Retainage, and Progress Payments.
o Check Milestone, Rate, and Lump Sum.
o Click Apply.

Create Complex PO
Navigation Path: Purchasing responsibility->Buyer Work Center->Orders
o Next to the word "Create" you can see a drop list. Select list and choose more. In the LOV choose the Document Style you just created. Click Go.

o Enter any Supplier and Site name.

o Click on the Lines tab.
o Enter usual line level information. Click on Update(pencil).

o In the Retainage region enter a Retainage rate, say 10 (%).
o In Billing section enter account and any other desired details.
o Click Apply and Submit.

o In the Confirmation section you will get your PO number. Note down the PO number.
o To verify that it has been approved, select "My Open Orders" in the view section and click Go. Check status.

Create Invoice and match PO
Navigation Path: Payables responsibility->Invoices->Entry->Invoices
o Create invoice for supplier and site that you have choosen in PO creation time.
o Enter invoice amount and other mandatory fields.
o Click on Match button and provide PO number you just created. Click Find button.
o In Match to PO window, select Match check box and click Match button to match selected PO.

o Click Save on invoice workbench.
o Now you can see retainage amount on General tab, PO matched Item line(Retained_amount column) and new distribution of type 'Retainage'.

Deferred Tax In AP

In some cases, recoverable taxes can only be accrued and accounted for after the invoice is paid. This is known as deferred recoverability. You can set up taxes with deferred recoverability by enabling the following options at the Tax Regime, Tax, Tax Status, or Tax Rate levels in E-Business Tax. Tax Regime is the most generic level. Tax Rate is the least specific. If you set the options at the Tax Rate level it will override any settings at a more generic level.

Example:
o Assume that you have following tax setup in E-Business Tax.

Tax Rate: 15%
Tax Expense Account: 01-SalesTaxA/C

Recovery Rate: 40%
Default Recovery Settlement: Deferred
Tax Recoverable/Liability Account: 01-TaxRecoverA/C
Interim Tax: 01-DeferredTaxA/C

o Create standard invoice from invoice workbench.
Invoice Amount: 1150$,  Total Tax: 150$ (15%)

Lines:
Item-------1000$
Tax---------150$

Distributions:
Item-------1000$         
RTax---------60$
NRTax--------90$

o Accounting
Invoice Accounting:
CCID-----GL Account----------Dists--------Cr/Dr---Amount($)
17347       01-ItemExpA/C          (Item)          Dr         1000
13850       01-LiabA/C                (Liability)      Cr         1000

Credits recoverable tax amount into Interim account until invoice is paid
12864       01-DeferredTaxA/C    (RTax)          Dr          60
17347       01-SalesTaxA/C        (NRTax)        Dr          90
13850       01-LiabA/C               (Liability)      Cr          150

Payment Accounting:
CCID-----GL Account----------Dists--------Cr/Dr---Amount($)
13850       01-LiabA/C                (Liability)      Dr         1000
89275       01-CashA/C               (Cash)         Cr         1000

13850       01-LiabA/C                (Liability)      Dr         150
89275       01-CashA/C               (Cash)         Cr         150

Moves recoverable tax amount from Interim account to actual Tax Recoverable account.
12864       01-DeferredTaxA/C     (RTax)         Cr         60
13394       01-TaxRecoverA/C      (RTax)         Dr         60

You can summarize these journals/accounting entries.

How to Set R12 Supplier Page in Read Only Mode?

o Open System Administrator resp. Navigate to Security->Responsibility->Define 
o Query responsibility name(Ex: Payables, HG Operations) you want to use that will have the Supplier page as Read Only.
o Under Menu Exclusions select Type as 'Function' and Name as 'Supplier Full Access : Buyer View'
o Save changes.

Navigation Path: System Administrator->Security->Responsibility->Define

o Now open Suppliers page and check changes.

Navigation Path: Payables Resp(Payables, HG Operations)->Suppliers->Entry
Supplier page looks like this in read only mode

Prepayment Invoices

A prepayment is a type of invoice you enter to make an advance payment to a supplier or employee. You can enter two types of prepayments: Temporary and Permanent.

Temporary prepayments can be applied to invoices or expense reports you receive. For example, you use a Temporary prepayment to pay a hotel a catering deposit. When the hotel's invoice arrives, apply the prepayment to the invoice to reduce the invoice amount you pay.

Permanent prepayments cannot be applied to invoices. For example, you use a Permanent prepayment to pay a lease deposit for which you do not expect to be invoiced.


Include Prepayment in Invoice:
You can enter supplier invoices where the invoice amount includes prepayments. If you receive a supplier invoice, and the invoice amount has been reduced because of prepayments that the supplier has received, you need to indicate that the invoice amount includes one or more prepayments.

Example:
Prepay Invoice:    200$
Standard Invoice: 500$

Case 1: If you apply Prepay on Standard invoice with 'Apply' check box checked in Apply/Unapply window

Result on Standard Invoice after apply Prepay
Header
   Invoice Amount: 500$
   Paid Amount :    200$
Distributions
   Item                 500$
   Prepay             -200$
In this case distribution total is 500 not 300 and amount paid is 200, remaining amount to pay is 300.

Case 2: If you apply Prepay on Standard invoice with both check boxes selected in Apply/Unapply window

Result on Standard Invoice  after apply Prepay
Header
   Invoice Amount:  300$
   Paid Amount :        0$
Distributions
   Item                  500$
   Prepay              -200$    'Prepayment on Invoice'-Checked
In this case distribution total is 300 because prepay is part of Std invoice. Amount to pay is 300.
Note: Because the Distribution Total includes prepayments, you need to ensure that you have applied prepayments before you submit the invoice for Invoice Validation.


Points To Note:

1. Settlement date: The date after which the prepayment can be applied to an invoice.
2. On a prepayment, you can enter any number of distributions, either manually, or automatically by purchase order matching, distribution sets, or allocating. 
3. You can take discounts on prepayments.
4. You can create Foreign Currency Prepayments.
5. You cannot partially pay a prepayment. you must fully pay it.
6. You can apply prepay on the invoice type is Standard, Mixed, or Expense Report.
7. You can apply only Item distributions from the prepayment.
8. You must fully pay a prepayment before you can apply the prepayment to an invoice.
9. If you want to apply Permanent type prepay then you can change the Prepayment Type to Temporary.
10. Supplier, invoice currency and payment currency must be same on prepay and to invoice.
11. If the prepayment has a value in the Prepayment PO Number field, then the invoice must be matched to the same purchase order.
12. GL Date on Apply/Unapply window, which is the accounting date for the new Prepayment distributions that Payables creates when you apply a prepayment. This date must be after the latest accounting date on any distribution for either prepayment or invoice and must be in an open period.

R12 Encumbrance Accrual Accounting for PO and Invoice

What is Budgetary Control?
A method of systematically enforcing spending limits by ensuring availability of budgeted funds before approval of transactions, including pre-expenditures.

What is Encumbrance?
A method of tracking and controlling an organization’s spending from the very early stage of initial documented evidence showing intention to buy to the final stage of actual expenditure. It is a management tool used to reflect commitments in the accounting system and attempt to prevent overspending. Mostly Used by Government and Non-Profit Firms

How it works?
Once an encumbrance document(PO, Invoice..etc) is created, funds are set aside for the sole purpose of enabling the organization to pay for it. If funds are insufficient due to budget or previous commitments and expenditures, no new encumbrances can be entered, ensuring that budget will not be exceeded.

Calculation of fund available
F.A. = Budget – (Encumbrance + Actual)

F.A. - Amount of money left in the account to spend
Budget – Maximum amount that can be spend for the account
Encumbrance – Reserved amount (Requisition, PO, invoice, and others)
Actual – Amount liable to another party


Encumbrance Accounting for documents PO and Invoice When accounting method Encumbrance Accrual is set
Example:
Budget is $1000
Purchasing an item which costs $200
Assume encumbrance is enabled for Purchase Orders and Invoices

Fund available before transaction
   F.A. = Budget – (Encumbrance + Actual)
   F.A. = 1000   –  (0+0) = 1000

Create a PO for $200.
   Application RESERVES the fund of $200 for PO
   PO  A/C------------------------200-----Dr
   RFE A/C------------------------200-----Cr
  
   F.A. = Budget – (Encumbrance + Actual)
   F.A. = 1000   - (200+0) = 800

Created an Invoice for $200 and matched it to the above said PO and validate Invoice(bc_event and validation event get created).
   Step 1: Application REVERSES PO encumbrance accounting.
   PO  A/C------------------------200-----Cr
   RFE A/C------------------------200-----Dr
  
   Step 2: Application RESERVES the fund of $200 for Invoice(bc_event)
   Inv A/C------------------------200-----Dr
   RFE A/C------------------------200-----Cr

   F.A. = Budget – (Encumbrance + Actual)
   F.A. = 1000   - (200+0) = 800

Run accounting for invoice actuals(Invoice Validation event).
   Step 1: Application REVERSES above Invoice encumbrances accounting(bc_event).
   Inv A/C------------------------200-----Cr
   RFE A/C-----------------------200-----Dr

   Step 2: Application creates original entries for invoice(Invoice Validation event).
   ItemExpenseA/C----------------200-----Dr
   LiabilityA/C---------------------200-----Cr

   F.A. = Budget – (Encumbrance + Actual)
   F.A. = 1000   - (0+200) = 800

Note: Payment accounting may happen in two stages based on option selected in Payables->Setup->Options->PayablesOptions->AccountingOption tab->PaymentAccounting.
Payment Accounting:
   Direct Pay-No Clearance
     Payment Time
     LiabilityA/C-------------------200----Dr
     CashA/C----------------------200----Cr

   Or

   Pay and Clear
     Payment Time
     LiabilityA/C-------------------200----Dr
     CashClearingA/C--------------200----Cr

     Clearing Time
     CashClearingA/C--------------200----Dr
     CashA/C----------------------200----Cr

R12 Standard Accrual and Cash Accounting in Payables

Standard Accrual
In case of Standard Accrual, Invoice and Payment Accounting will be there.
Reason: Transaction happens in two phases.
1)Order goods and receive goods(Create PO, Create Receipt, Create Invoice and account it)
2)Pay the amount for received goods within due time set by the supplier( Pay the invoice and account it)
Since you are not paying the amount immediately, you need to keep track of the amount needs to pay to the supplier after phase one. You maintain this amount in LiabilityA/C(Cr). After second phase, you debit your LiabilityA/C and credit your CachA/C which shows your cash flow from your organization to the supplier.

Here are the details of accounting for an item purchase of cost 100 dollars.

Note: Payment accounting may happen in two stages based on option selected in Payables->Setup->Options->PayablesOptions->AccountingOption tab->PaymentAccounting.

Accounting Method: Standard Accrual
Invoice Accounting:
ItemExpenseA/C----------------------100----Dr
LiabilityA/C---------------------------100----Cr

Payment Accounting:
  Direct Pay-No Clearance
    Payment Time
    LiabilityA/C------------------------100----Dr
    CashA/C--------------------------100----Cr
 
  Or

  Pay and Clear
    Payment Time
    LiabilityA/C------------------------100----Dr
    CashClearingA/C-------------------100----Cr

    Clearing Time
    CashClearingA/C------------------100----Dr
    CashA/C--------------------------100----Cr


Standard Cash
In case of Standard Cash, only payment accounting will be there.
Reason: While purchasing an item you pay amount immediately to the supplier. So you don't have any debt to the supplier to record. so there is nothing to record in LiabiltyA/C.

Here are the details of accounting for an item purchase of cost 100 dollars.

Note: Payment accounting may happen in two stages based on option selected in Payables->Setup->Options->PayablesOptions->AccountingOption tab->PaymentAccounting.

Accounting Method: Standard Cash
No Invoice Accounting..
No LiabiltiyA/C

Payment Accounting:
  Direct Pay - No Clearance
    Payment Time
    ItemExpneseA/C------------------100----Dr
    CashA/C-------------------------100----Cr

  Or

  Pay and Clear
    Payment Time
    ItemExpneseA/C------------------100----Dr
    CashClearingA/C-----------------100----Cr
 
    Clearing Time
    CashClearingA/C-----------------100----Dr
    CashA/C-------------------------100----Cr

Invoice Price Corrections In Payables

Corrections enable you to adjust the invoiced price, quantity, or amount of previously matched purchase order shipments, distributions, or receipts. You can use a correction when a supplier sends an invoice for a change for an invoice you have already matched to a purchase order. Price corrections adjust the invoiced unit price of previously matched purchase order shipments, distributions, or receipts, without adjusting the quantity billed.

The type of correction that you can make depends on the type of purchase order line you are correcting:
• Goods. You can make price or quantity corrections.
• Services. You can make amount corrections on all services, with the exception of Rate Services.
• Rate Services. You can only make Quantity corrections for Rate Services.
If the purchase order line is a Milestone, then you cannot enter corrections. In this case, you must completely reverse the invoice.

To record a correction enter a Standard invoice to record a price increase, or enter a Credit Memo or Debit Memo to record a price decrease.

For example, if the original unit price was $100.00 and quantity is 2 and the supplier is decreasing the price by $10.00, enter -10.00 in Unit Price field. If the invoice Type is Credit or Debit Memo, the value in the Unit Price field must be negative.

Enter PO with quantity 2 and unit price 100

Enter invoice HG-Std, match to PO 5765, validate and pay.

To correct the unit price to 90, enter credit memo for same supplier and click Correction button. Provide standard invoice num HG-Std and click Find.

In Price Corrections window, change Unit Price to -10 and tab out. Click Correct button.

See the results in Invoice Lines and Invoice Distributions.

System Created Invoices/Creating Invoices Automatically in Payables

Recurring Invoices
You can set up your system to automatically create periodic invoices, for example, rent invoices.

RTS Invoices
If you use Return to Supplier feature in Oracle Purchasing, the system creates these debit memos directly in your Payables system.

Retroactive Price Adjustment Invoices
If Oracle Purchasing users use the Retroactive Pricing of Purchase Orders feature, the system automatically creates Adjustment and PO Price Adjustment invoices.

• PO Price Adjustment Invoice: This invoice is for the difference in price between the original invoice and the new purchase order price.   PO price adjustment invoices can be matched to both purchase orders and invoices.
• Adjustment Invoice: This invoice effectively reverses any outstanding regular Payables price corrections and PO Price Adjustment invoices. This is so the PO Price Adjustment document can be for only the price difference between the original invoice and the new PO price.

What is Tolerance in Payables and How to define Tolerances?

In Payables, You can set tolerance for Purchase Order Matching and Tax Override.

Purchase Order Matching/Invoice Tolerances
Use the Invoice Tolerances window to define the matching tolerances you want to allow for variances between invoice, purchase order, and receipt information. You can define both percentage-based and amount-based tolerances.

If you enter a zero for a percentage tolerance and enable the check box for that tolerance, Payables will not allow any variance at all. If you want a low tolerance, you can enter a very small percentage. If you enter no value, then Payables will allow infinite variance. If you enter an amount-based tolerance, enter all amounts in your ledger currency. If an invoice exceeds these tolerances, Invoice Validation will apply a hold to it.

Navigation Path: Payables->Setup->Invoice->Tolerances

Tax Tolerances
Tax tolerances are used to determine whether E-Business Tax places a tax hold on an invoice due to the
override of calculated tax lines.

A tax tolerance is the acceptable variance between the calculated tax amount on an invoice and the override tax amount entered by the user. If the variance between these two amounts exceeds the tolerances you specify, then E-Business Tax places the invoice on hold. To define tax tolerances, you must first set the Allow Override for Calculated Tax Lines option.

Navigation Path: Payables->Setup->Options->Payables Options->Invoice->Tax Tolerances

What is Distribution Set and How to define Distribution Sets?

Specify a distribution set for the invoice. A distribution set is a template for invoice distributions. When you specify a distribution set for an invoice, Payables automatically creates invoice distributions based on the distribution set.

There are two types distribution sets
Full Distribution Set
Skeleton Distribution Set

Creating Full and Skeleton Distribution Sets
Navigation Path: Payables->Setup->Invoice->Distribution Sets

What is Payment Terms and How to define Payment Terms?

Payables uses payment terms to automatically calculate due dates, discount dates, and discount amounts for each invoice you enter. Payment terms will default from the supplier site. If you need to change the payment terms and the terms you want to use are not on the list of values, you can define additional terms in the Payment Terms window.

Defining Payment Terms
Example: Payement Term - 10/30 Net 45
Your supplier has just notified you that they are going to offer 10% discount if you pay their invoices in 30 days. The entire invoice amount will be due in 45 days. In this case, you will set up payment terms as follows.

Navigation Path: Payables->Setup->Invoice->Payment Terms

Accounting and Reconciliation Reports in AP

• Accounts Payable Trial Balance Report
• Accounts Payable Negative Supplier Balance Report
• Period Close Exceptions Report
• Posted Invoice Register
• Posted Payment Register
• Unaccounted Transactions Report

Accounts Payable Trial Balance Report
Use the Accounts Payable Trial Balance Report to verify that total accounts payable liabilities in Payables equal those in the general ledger. To reconcile these balances you can compare the cumulative total liability provided by this report with the total liability provided by your general ledger. The Accounts Payable Trial Balance report is a Payables-specific version of the Open Account Balances Listing report. By running this report from Payables, you can run this report for a specific operating unit.

Accounts Payable Negative Supplier Balance Report
The Accounts Payable Negative Supplier Balance report allows you to run a Payables-specific version of the Open Account Balances Listing report. By running this report from Payables, you can view the negative supplier balances for a specific operating unit.

Period Close Exceptions Report
Submit this report to review a complete list of exceptions that are preventing you from closing a Payables accounting period. This report lists, for each organization within the ledger, the following exceptions:
• Outstanding Payment Batches
• Accounting Entries not Transferred to General Ledger
• Bills Payable Requiring Maturity Event and Accounting
• Unaccounted Invoices
• Unaccounted Payments

Posted Invoice Register
Use the Posted Invoice Register to review accounting lines for invoices that have been transferred to your general ledger. Because it presents amounts that have been charged to liability accounts, this report is valid only for an accrual ledger.

The Posted Invoice Register is primarily a reconciliation tool. Use this report along with the Posted Payment Register and the Accounts Payable Trial Balance Report to reconcile balances between Payables and your general ledger. To make their output easier to read, each of these reports can be generated for a single liability account. For example, if you are using Automatic Offsets and the liability for your invoices is allocated across multiple balancing segments, then you can use the Liability Account parameter to limit your reports to a single balancing organization.

You can generate the report in summary or in detail. When generated in detail, the report displays invoices charged to liability accounts and the accounting information that has been transferred to the general ledger. Also included is the supplier and amount information for each invoice listed. Payables displays the total invoice amount in the invoice currency, and the transferred distribution amount in both the invoice currency and accounted currency for easier reconciliation with your general ledger.

Posted Payment Register
Use the Posted Payment Register to review accounting lines for payments that have been transferred to general ledger. Because it presents amounts that have been charged to liability accounts, this report is valid only for an accrual ledger. You can submit the Posted Payment Register for one payment journal entry batch or all payment journal entry batches.

The Posted Payment Register is primarily a reconciliation tool. Use this report along with the Posted Invoice Register and the Accounts Payable Trial Balance Report to reconcile balances between Payables and your general ledger. To make the output easier to read, each of these reports can be generated for a single liability account. For example, if you are using Automatic Offsets and the liability for your invoices is allocated across multiple balancing segments, then you can use the Liability Account parameter to limit your reports to a single balancing organization.

You can generate the report in summary or in detail. When generated in detail, the report displays payments that relieve liability accounts and that have had their accounting information transferred to the general ledger. Also included is the supplier and amount information for each payment listed. Payables displays the payment amount in the entered currency and the liability amount relieved in the accounted currency. In detail mode, the report also displays the payment document and disbursement type for each batch of payments. It provides a report total and subtotals for each payment document and bank account.

Unaccounted Transactions Report
Use this report to identify and review all unaccounted invoice and payment transactions and see the reason that Payables cannot account for a transaction. Payables sorts the report by transaction type (invoice or payment), exception, supplier, transaction currency, and transaction number. Run this report after you create accounting entries. The report will then show only transactions that had problems that prevented accounting. You can then correct the problems and resubmit the accounting process. Note that this report does not include invoices that have no distributions.

R12 Trial Balance report in AP and Reconciling AP to GL

Trial Balance report in AP

In R12, there are 4 Concurrent Programs related to the trial balance.

1.Report Name = "Accounts Payable Trial Balance (Old) "  Short Name = APXTRBAL
 This is the R11i Accounts Payable Trial Balance, it should be disabled in R12.

2.Report Name = "Accounts Payable Trial Balance"  Short Name = APTBRPT
This is the R12 Accounts Payable Trial Balance, this is the correct report name to run if Trial Balance Remodel Phase 4 or higher has been applied.  This report is a modified version of the Open Account Balance Listing report.

3.Report Name = "Open Account Balance Listing"  Short Name = XLATBRPT
This is a Subledger Accounting report.  This report should NOT be used for Payables.  Instead, use the applicable Payables modified version of the report.

4.Report Name = "Open Account AP Balance Listing"  Short Name = XLAAPRPT
This is the subledger Open Account Balance Listing report modified for Payables and should be used with Trial Balance Remodel Phases 1 - 3.

Note: Currently, the Trial Balance documentation and notes refer to the Accounts Payable Trial Balance and Open Account AP Balance Listing report interchangeably.  The name change was due to a change in Phase 1 - 3, going forward all Payables Trial Balance patches should retain the name "Accounts Payable Trial Balance".  Please make sure you run the correct report based on your Trial Balance remodel phase and do NOT run the Open Account Balance Listing report for Payables.

Reconciling AP to GL
1.Run Accounts Payables Trial Balance report for current period with following details:

• Start Date = Begin Date for first period you started using Oracle (This parameter is hidden as of Trial Balance Remodel phase 4, with default date 01-Jan-1950)
• As of Date = End Date for Period to be reconciled
• Show Transaction Detail = Yes
• Include Write Offs = No
• Include SLA Manuals/Other Sources = Yes (This parameter is only applicable for the "Group by Account, Summary" template.

     Select report template

• Accounts Payables Trial Balance - Group by Account, Detail
• Accounts Payables Trial Balance - Group by Account, Summary

2.Run Invoice and Payment posting reports.
Payables Posted Invoice Register
Payables Posted Payment Register

3.The correct method for reconciling AP to GL is as follows:

Last Months Accounts Payable Trial Balance 
   + This months Payables Posted Invoice Register
        - This months Payables Posted Payment Register
                     = This months Accounts Payable Trial Balance

Note: The Accounts Payable Trial Balance report output shows a GL total. That GL total includes manual and non Liability class entries from the Payables subledger, and non-Payables source entries in GL. Use the given method to reconcile, and the Trial Balance amount remaining total should equal the GL total excluding the manual and non Liability class entries from the Payables subledger, and non-Payables source entries in GL.

Source=>
Refer Note 553484.1 on R12 Steps In Reconciling AP to GL Balance
Refer Note 823043.1 on R12 Steps In Reconciling GL Balance And AP And PO

Types of Invoices in Payables

3rd Party Payments in Payables

Financial settlement is one of the key components of the business process. This is the final step in completing the business transactions. In procure to pay cycle, the suppliers send the invoices to the customers after delivering the goods or rendering the services. Once the invoices are received, the accounts payables department of the customer validates the invoices and approves the payments. The payments made to the suppliers during the settlement process are generally dependent on the agreement entered into between the customers and suppliers for carrying on the business transactions. Payments are generally made to the original supplier providing the goods or services, however there can be specific arrangements made wherein the suppliers can specify a different party to be paid on their behalf. The payments made to other parties on behalf of the suppliers are termed as 3rd party payments.

3rd party payments help parties involved in business to set off their liabilities without directly paying them. This reduces the direct funds movements and transactions can be settled easily.

Some situations where payments are to be made to a 3rd Party
1)When supplier is having cash flow problems. They sell all their receivables to a 3rd Party to whom all dues are to be paid.
2)When supplier files for bankruptcy. All dues are paid to the Court or a 3rd Party collection agency.

For supporting 3rd party payments, Payables providing functionality to create Invoices with the provided remit to supplier details using Invoice Workbench, Recurring Invoices, Quick Invoices and Payables Open Interface Import. Also while making payment through Payment Workbench remit to account should be populated for selected remit to supplier and supplier site.

Check List for Closing Accounting Period

You close a Payables period after you have completed accounting for transactions for the period and you have transferred the accounting entries to general ledger.

You cannot close a period in Payables if any of the following conditions exist:
1. Outstanding payment batches Confirm or cancel all incomplete payment batches.
2. Future dated payments for which the Maturity Date is within the period but that still have a status of Issued. Submit the Update Matured Future Payment Status Program.
3. Unaccounted transactions Submit the Payables Accounting Process to account for transactions, or submit the Unaccounted Transaction Sweep to move any remaining unaccounted transactions from one period to another.
4. Accounted transactions that have not been transferred to general ledger. Submit the Payables Transfer to General Ledger process to transfer accounting entries.

To complete the close process in Payables:
1. Validate all invoices.
2. Confirm or cancel all incomplete payment batches.
3. If you use future dated payments, submit the Update Matured Future Dated Payment Status Program. This will update the status of matured future dated payments to Negotiable so you can account for them.
4. Resolve all unaccounted transactions. Submit the Payables Accounting Process to account for all unaccounted transactions. Review the Unaccounted Transactions Report. Review any unaccounted transactions and correct data as necessary. Then resubmit the Payables Accounting Process to account for transactions you corrected. Or move any unresolved accounting transaction exceptions to another period(optional). Submit the Unaccounted Transactions Sweep Program.
5. Transfer invoices and payments to the General Ledger and resolve any problems you see on the output report: Payables Transfer to General Ledger Program.
6. In the Control Payables Periods window, close the period in Payables.
7. Reconcile Payables activity for the period. You will need the following reports:
    • Accounts Payable Trial Balance Report
    • Posted Invoice Register
    • Posted Payment Register
8. If you use Oracle Purchasing, accrue uninvoiced receipts.
9. If you use Oracle Assets, run the Mass Additions Create Program transfer capital invoice line distributions from Oracle Payables to Oracle Assets.
10. Post journal entries to the general ledger and reconcile the trial balance to the General Ledger.

Withhold Tax and Withholding Tax Invoices

Withhold Taxes in Payables

You may be required to withhold taxes from your employee expense reports and supplier invoices. Once you set up Payables to automatically withhold tax, you can withhold tax either during Invoice Validation or during payment processing. You can control all withholding tax options in the Withholding Tax region of the Payables Options window.

Companies that use withholding taxes calculate these taxes and deposit them to the corresponding fiscal authority. There can be various regimes applicable to a single transaction. These regimes have different rates that are predefined when the withholding tax is deducted. The time when the withholding taxes are deducted could be at invoice time, payment time, or both. Companies must apply the withholding taxes at the specified time and deposit the amount to the corresponding fiscal authority.

Oracle Payables allows you to calculate withholding taxes at invoice validation time, at payment time, or both invoice validation and payment time. In addition, you can create a withholding tax invoice at the following times:

• At invoice validation time if withholding taxes are calculated at invoice time.

• At payment time if withholding taxes are calculated at payment time.

• At withholding application time if withholding taxes are calculated at both invoice validation and payment time. This means that withholding invoices will be created at both invoice validation and payment time since the withholding taxes would be calculated at both these times.

For example, assume that withholding tax is calculated at Invoice Validation and the withholding tax rate is 20%. If you have a Prepayment Invoice for $250 with no withholding tax, an Invoice for $1555, and a Payment Amount of $1305. Then the calculated withholding tax is $311 (1555 * 20%). However, if the withholding tax is calculated at Payment Time, then the calculated withholding tax is $261 ($1305 * 20%).

To enable the requirement of applying withholding taxes at the time of invoice and payment, an option, At Invoice Validation and Payment Time, is included in the Apply Withholding Tax region of the Withholding Tax Tab of Payables window which when selected lets you apply the tax both at the time of Invoice and Payment. Another option, At Withholding Application, is added in the Create Withholding Invoice region. This option can be selected only when the Apply Withholding Tax option is selected At Invoice and Payment time.

Withholding tax invoice

Payables can automatically create withholding tax invoices, or you can perform this task manually. If you choose to automatically create withholding tax invoices, you must choose whether to do this during Invoice Validation or during payment processing. Indicate this choice in the Withholding Tax region of the Payables Options window.

Important: Payables does not give invoice detail on the Tax Authority Remittance Advice for manually created withholding amounts.

If you choose to create withholding tax invoices manually, create an invoice for each Withholding Tax type invoice distribution on an invoice. Create the invoice for the taxauthority supplier and site assigned to the Withholding Tax type tax code and for the amount of the Withholding Tax type invoice distribution.

If you specify that you want to create withholding tax invoices during Invoice Validation, Payables creates unvalidated withholding tax invoices for tax authority suppliers assigned to tax codes.

If you specify that you want to create withholding tax invoices during payment processing, Payables creates unvalidated withholding tax invoices (for those invoices where you have applied withholding tax) during the Confirm program of payment batch processing, or during processing of a Quick payment.

Important: Payables does not automatically withhold taxes if you pay with a manual payment or a refund.

Open/Close AP Period

Payables does not allow transaction processing in a period that is closed.
You can enter and account for transaction open accounting periods.

The periods statuses available in Payables are:
-Never Opened
-Future
-Open
-Closed
-Permanently Closed

After you change the status to Future or Open you can not change it back to Never Opened.

Budgetary Control in Payables

If you use Oracle Public Sector General Ledger's Budgetary Control feature, you can check funds before you save a transaction and you can have Payables Approval automatically create encumbrances to reserve funds for your transactions. For example, when you enter an invoice, you can use the Funds Check program to check if you have available budgeted funds to pay for an invoice or invoice distribution.

If you select absolute budgetary control in General Ledger, Payables Approval places an Insufficient Funds hold on any invoice that fails funds checking. If you use advisory budgetary control, Payables will allow the invoice to pass Approval, even if it fails funds checking. During Approval, Payables creates encumbrances to reserve funds against the budgets you define in Oracle Public Sector General Ledger. When you create the accounting entries for the transactions, it relieves the encumbrances.

As the final step of budgetary control in Payables, if you enable Use PO Encumbrance in the Financials Options window, Oracle Public Sector Purchasing automatically creates encumbrance entries to reserve funds for invoice expenditures against the budgets you define in Oracle Public Sector General Ledger.
Funds checking and budgetary control include nonrecoverable tax as part of the item cost to fully recognize the commitment because nonrecoverable tax becomes part of the acquisition cost of the item.

Setup=>http://sbllc3.solutionbeacon.net/pls/a159vis2/fndgfm/fnd_help.get/US@PSA_US/gl/@p_bc_setup@PSA_US#p_bc_setup

Tax Variances in Payables

A tax variance occurs when there is a difference between the tax on the invoice and the tax on the PO matched to the invoice. When you match a PO to an invoice, there are three tax-related variances that can occur:

Tax Exchange Rate Variance (TERV) – when there is a difference between the invoice and PO distributions due to exchange rate variance.

Tax Invoice Price Tax Rate Variance (TIPV) – when there is a difference between the invoice and PO distributions due to price variance.

Tax Rate Variance (TRV) – when there is a difference between invoice and PO distributions due to difference in tax applicability.
In addition, Tax Quantity Variance (TQV) is calculated, but is shown as a non-variance distribution.

Variances are calculated for all taxes that are enabled in E-Business Tax.

The following example illustrates how variances are determined.

Note that the exchange rate and tax amounts differ between the PO and the Invoice. The distributions for the invoice show a Tax Exchange Rate Variance of 0.3 and a Tax Rate Variance of $20.00.

To illustrate an Invoice Price Tax Rate Variance, assume that the invoice is the same as above, but the Unit Price changes from $100.00, as shown on the Purchase Order, to $200.00. The Tax Amount also changes as a result of the change in Unit Price.