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Oracle AP/AR Netting allows you to net your Payable invoice balances against your
Receivables invoice balances for those Customers who are also your Suppliers.
For example, If you have a customer who is also your supplier, then rather than him paying
you and then you paying him, AP/AR netting allows you to pay the net difference between
how much you owe the supplier and how much he owes you.
After establishing a netting agreement with such trading partners, you set up the agreement
and the rules associated with it in eBusiness Suite and you can then start to net AP and AR
transactions.
In Brief
In Detail
Navigation: Payable Manager --> Setup --> Payments --> Bank Accounts
Create a Bank Account, which can be used by the netting process. Set the Netting Account
flag to yes.
Enable Default Settlement Account
Assign this bank account to the seeded Receivables receipt class “AP/AR Netting”
Navigation: Receivable Manager --> Setup --> Receipts --> Receipts Class.
Query AP/AR Netting and then click on Bank Accounts and assign the Netting bank
account.
• Receivables System Options
Check the “Allow payment of unrelated transactions”check box under the Receivables
system options, if you
want to create netting agreements across multiple unrelated customers.
Navigation: Receivable Manager --> Setup --> System --> System Options.
• Netting batch approver
If approval is required for a netting agreement, the approver must be set up as a contact for
the trading
partner (Customer / Supplier). The contact must be setup with an email address.
• Chargeable Subcontracting
Yes – This will select invoices that were matched to purchase orders with outsourced
assemblies by the
netting process.
No – This will select invoices that were matched to purchase orders without outsourced
assemblies by the
netting process.
D (disregard) – This means all eligible invoices will be selected for netting irrespective of
whether or not they
are matched to purchase orders.
• Netting Agreement
Create netting agreement to setup the rules that will decide which transactions are selected
for netting and
how they are ordered and processed once selected.
Navigation: Receivable Manager --> Receipts --> Netting --> Netting Agreement.
click on Next.
Navigation: System Administrator --> Application --> Sequential Numbering --> Define.
Document Tab:
Assignment Tab:
• 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.
• Locking AP invoices:
o Selected AP invoices are locked by populating
AP_PAYMENT_SCHEDULES.Checkrun_id Column
for the selected invoices
o The same Checkrun_id value is populated in FUN_NET_BATCHES.Checkrun_Id for the
given batch
• 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.
• 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 (RA_CUSTOMER_TRX.PREPAYMENT_FLAG =
‘N’)
The following validations are performed when a netting batch is submitted, as there might
be a time lag between when the batch is created and when the batch is submitted. It is also
possible that the batch may have been modified.
• If the current date has passed the batch settlement date, then the batch is set to status
‘SUSPENDED’ and the AP invoices are unlocked.
• AP and AR balances for transactions are validated again. If the validation fails then the
batch is set to
status ‘ERROR’ and the AP invoices are unlocked.
• If the batch has passed all validations, it is sent for approval, if approval is required, else
the settle Netting
batch process is initiated.
• Validation
o The process starts off with the validation of AR transactions. This is necessary as the AR
transactions are not locked when the netting batch is created and therefore there is a
possibility that the AR transaction may have been modified since it was included in the
netting batch
o If any validations fail, the batch is set to Cancelled Status.
o Validations are also performed to check whether the GL, AR, and AP periods are open for
the batch
settlement date. If not, then the batch is set to status ‘ERROR’ and an error message is
displayed in the
Report log.
o Netting bank details like bank account name, bank account owner and number are
derived based on the
FUN_AGREEMENTS.bank_account_id for the given batch.
Settle AP invoices
o Invoices in each batch are grouped by vendor, vendor site and invoice currency code.
o AP payment APIs are called to process the payments. These APIs return the check id
which is
updated in FUN_NET_AP_INVS_ALL.Check_ID
• Settle AR transactions
o AR receipt APIs are called to create and apply the receipts. These APIs return the receipt
id which is
updated in FUN_NET_AR_TXNS.RECEIPT_ID
o If all processing goes through successfully then the batch is set to COMPLETE and the
AP invoices and
netting agreements are unlocked.
AP/AR Netting engine is owned by ‘Oracle Financials Common Modules’ (FUN) Product. All
tables behind the scene will be stored under the FUN schema. Information related to
Netting is stored in the following
tables: