AR Overview

An entry type categorizes your pending items and the system uses them to
create or update items. The Receivable Update process (AR_UPDATE) uses
pending items along with associated entry types and reasons to create or update
items and to maintain customer balances.
Item entry types identify pending items created during online item entry or by an
external interface. The system uses item entry types to handle processing when
you directly build a pending item—during online entry or when an interface
process constructs groups of pending items. When you enter or build pending
items that comprise a group, you'll use entry types that you've specifically
enabled for use as item entry types.
• Adjust underpayment
• Adjustment overpayment
• Credit memo
• Debit memo
• Deduction
• Earned discount
• Finance charge
• Invoice
• Maintenance credit
• Maintenance debit
• Match customer's debits and credits
• On-account
• Payment
• Prepayment
• Refund credit
• Refund remaining credit
• Unapplied cash
• Unearned discount
• Write-off
• Write-off a credit
• Write-off overpayment
• Write-off remaining credit
• Write-off remaining debit
• Write-off underpayment
A group is a postable entity, a collection of pending items that you have finished
processing and are ready to post. Groups that you enter—such as Billing groups
—as well as groups that are created during processing—such as transfers,
matches and payments—all need to be assigned a group type. You need to
establish codes to categorize the types of groups that you process. Reports that
list group activity use group types to sort and select information.
Set up payment terms if you plan to have the system handle payment terms—
automatically calculate payment due dates, discount amounts, and discount due
dates. Defining payment terms is a two step process.

Payment Predictor (AR_PREDICT) is the automatic cash application feature in

PeopleSoft Receivables. It's one of three alternatives in the array of cash
application options that also includes express deposit and payment worksheets.
You can think of Payment Predictor as an automated version of the payment
worksheet, which is used to manually match payments to open items and to
create adjustments or write-offs for overpayments and underpayments.

The source of payments does not matter when you use Payment Predictor.
Payments can be online payments—entered in regular or express deposit—or
they can enter the system through electronic data interchange (EDI), bank
statement reconciliation, or a lockbox interface.

Each payment must have a Magnetic Ink Character Recognition (MICR ID),
customer ID, or some other type of reference information. The reference
information is used to match payments to customers.

Payment Predictor first looks for the MICR ID. If it finds a valid MICR ID, it moves
on to the next stage. If it doesn't find a valid MICR ID, it then looks for a customer
ID with a business unit before it moves on. If it doesn't find a valid customer ID
with a business unit, then it looks for a customer ID without a business unit and
uses the deposit business unit to determine which setID should identify the
customer and the remit from customer.

After Payment Predictor finds and validates the reference information, it stores
the results in temporary tables. The temporary tables are used to identify which
payment processing method should be used.

When you set up Payment Predictor, you create a payment processing method
that includes a detailed set of instructions for applying payments. The method
also includes instructions for handling payments that can't be applied, such as
placing the payment on the customer's account, generating a payment worksheet
so the payment can be manually applied, or releasing the payment.

After Payment Predictor has completed every step in the method, it moves the
payment information from the temporary tables to the application tables.

Payment Predictor process flow

Pending items enter the system in one of two ways: you can import them from a billing
interface or add them manually. If you add pending items manually, the next step is to
create accounting entries for the pending items.

During online and background processing, the system verifies that all entries
contain valid information and all control totals balance. After the data entry
process is complete, you decide when to post pending items.

After pending items are in the system, you post them to PeopleSoft Receivables
using the Receivable Update process (AR_UPDATE), which updates the
customer balance. If there are errors during posting, the process does not post
the pending items, and you use the pending item error correction pages to
correct whatever errors were

PeopleSoft Receivables distinguishes between items (posted receivables) and pending

items (information that has been entered into or created by the system but hasn't yet been
posted). During the Receivable Update process, the system uses the pending items to
update customer balances—either by creating new items or by adding item activity lines
to existing items. found.

Using a Billing Interface

When you enter pending items through a billing interface, the system edits
external groups so that errors are discovered during posting instead of during
pending item entry.

Entering Pending Items Online

When you enter pending items online, you enter control information, provide
pending item information; select payment terms and personnel references; enter
VAT information, if necessary; create accounting entries if needed; and select an
action for the group.

When you enter pending items online, the system validates your data and
displays an error message if the data fails one or more system edits

In PeopleSoft Receivables, a deposit consists of all payments that you or the

bank group for processing..

You can enter payments into PeopleSoft Receivables using the following methods:

Regular deposit The standard method for online payment entry. Use regular deposit when
you have customer information, but lack item IDs.
Express deposit If you have an item ID, use express deposit so that you can enter deposits
 and apply payments at the same time. You don't need customer information
to use express deposit.
Lockbox Electronic payments that are deposited automatically in the background from
a bank file.
Electronic Data A process that receives payments in both the European and U.S. EDI
Interchange (EDI) formats.
Bank Statement Bank statement deposits are a source of payments through the entry of
reconciled deposits to the receivables system.
Bilateral Netting Netting deposits are the result of a net of payables and receivables
transactions.

After you enter payments, you can apply them to items using either a payment worksheet or
the Payment Predictor process (AR_PREDCT), which automatically applies payments. You
then journal your cash to general ledger either directly or using cash control.

If you have an item ID, use express deposit so that you can enter deposits and apply payments
at the same time. You don't need customer information to use express deposit.

If you don't have an item ID, but have a customer ID, a reference number, an amount, or only a
business unit, you must use a payment worksheet to apply the payment.

Cash control accounting ensures that the general ledger reflects cash as soon as you receive it
or reconcile it on a bank statement; you do not have to apply the cash for it to appear in the
general ledger.

Cash control is implemented at the bank level; it does not vary by business unit or customer.
However, you can select different cash control options for each business unit, and you can
designate a bank account as a cash clearing bank account. In that case, the system creates
accounting entries for deposits to that bank account at the time cash is received or when
reconciled on you bank statement. The bank account must have ChartField combinations defined
for AR Cash and AR Control.

When you receive deposits from a cash clearing bank account, the system creates two
accounting entries for each payment:

• A debit to cash.
• A credit to cash control.

After application of the payment, the system creates reversing entries to debit cash control and
credit the relevant ChartFields determined by the application.

The system automatically creates cash control accounting entries when you save a deposit or
receive payments electronically from a bank account designated for cash control. All payments
except those earmarked to be directly journaled are affected. If you change deposit or payment
information, the system updates the accounting entries to reflect your changes.

The Payment Loader Application Engine process (AR_PAYLOAD) processes all payments
that are received through an electronic payment process, as shown in the following diagram.

Entering payments electronically using Payment Loader

The Payment Loader process performs the following tasks:

• Edits data for internal integrity.

• Checks for duplicate deposits.
• Assigns defaults and deposit IDs.
• Assigns document sequence numbers if you enabled document sequencing at the
installation level and the general ledger (GL) business unit level.
• Creates cash control accounting entries based on settings at the bank account and
business unit options.
• Matches split stream remittance advices and their cash, depending on the request
parameters that you specify for split stream processing.

Setup the system to receive electronic payments by creating adjustment reason codes. This will
create adjustment reason codes for electronic payments, such as EDI, lockbox, and bank
statements. The system matches the adjustment reason codes in the electronic files to the entry
type and reason setup to create the appropriate accounting entries and adjustment items. The
system uses this information when it processes the payment in Payment Predictor and when you
build a worksheet. It automatically assigns the correct entry type and reason to the line for the
adjustment in the payment worksheet and uses the system function ID to create the accounting
entries for the adjustment.

Lockbox deposits automatically update deposit and payment information from a bank or payment
collection system. Each lockbox transmission can contain multiple deposits with multiple
payments and each payment can have a different currency. Once the deposits exist in the
system, you can match them with items that have not yet been paid using either payment
worksheets or the Payment Predictor.

Lockbox functionality consists of two processes:

• The Lockbox process (AR25001) reads the bank flat file and loads data into the
staging tables.
• The Payment Loader (AR_PAYLOAD) process moves data from the staging tables
to the Payment application tables.

Perform the following steps to receive electronic payments:

1. Load the lockbox files to your desired location. Run the Lockbox process to load
data from the flat file into the staging tables from the Lockbox — Request page.
2. Run the Lockbox process to load data from the flat file into the staging tables from
the Lockbox — Request page.
3. Run the Payment Loader process (AR_PAYLOAD) to move the data from the
staging tables into the Payment application tables from the Payment Interface — Request
page.
4. (Optional) View the Application Engine error messages in the Process Monitor. The
Payment Loader process compares the control totals and counts with the calculated
totals at all levels (deposit, lockbox, and file). If they do not match, the process issues an
error message. Batch level errors are given an Out of Balance status.
5. Review the received control totals on the Lockbox Run Information page.
6. Check for errors at the deposit level on the All Deposits or Viewing Incomplete
Deposits pages.
7. Correct errors on the deposit and payment entry pages and on the Payment
Interface Duplicates page.
8. If you use cash control accounting and there is a duplicate or out of balance deposit,
run the Cash Control (AR_CASHCNTL) process from the Cash Control Request page to
create the cash control accounting entries after correcting the errors.

The Payment Loader Application Engine process processes all payments that are received
through an electronic interface. It moves the payment data from the staging tables to the Payment
application tables.

EDI transactions or the Lockbox SQR process can be run many times throughout the day to load
multiple transmissions into the staging tables. Then at the end of the day, run the Payment
Loader process once to load the data into the application tables and process all the received
payments.

When the Payment Loader process completes, it updates the following tables:
 • PS_DEPOSIT_CONTROL
• PS_PAYMENT
• PS_PAYMENT_ID_ITEM
• PS_PAYMENT_ID_CUST
• PS_PAY_MISC_DST

Processing bank statement payments involves:

1. Load bank statements.

2. Run the Automated Reconciliation process using the AutoRecon Manager (auto
reconciliation manager) page. Run the Bank Stmt Processing (bank statement
processing) process (AR_BNKSTMT), which uses Payment Loader (AR_PAYLOAD), to
load any unreconciled payments that have the status NTF into the Payment tables. The
Bank Stmt Processing processes only the payments that have been processed by the
Automated Reconciliation process. It does not evaluate unprocessed payments in the
Bank Statement tables.
3. Run the Bank Stmt Processing (bank statement processing) process
(AR_BNKSTMT), which uses Payment Load (AR_PAYLOAD) to load any unreconciled
payments that have the status NTF into the payment tables. The process also creates
cash control accounting entries for the payments if you selected the appropriate settings
at the bank account and business unit options.

The Bank STMT Processing processes only the payments that have been processed by
the Automated Reconciliation process. It does not evaluate unprocessed payments in the
Bank Statement tables.

4. If you use cash control accounting and you had errors, run the Cash Control process
(AR_CASHCNTL) from the Cash Control Request page to create the cash control
accounting entries.
5. (Optional) View the Application Engine error messages in the Process Monitor for
the Payment Loader process
WORKSHEETS

Using the Worksheet Selection page to apply payments is the first step to create a new
worksheet or add or change items on an existing worksheet. The next step is to use the
Worksheet Application page to achieve a zero balance with the items on the worksheet. You
cannot post an out-of-balance worksheet. Every dollar of a payment must be accounted for—
either applied to an item, deemed a prepayment, held on account, deducted from the customer's
balance, or considered an adjustment.

The next step is to create accounting entries, which can only be created for completely applied
payments. This is only for interunit accounting entries. The system creates accounting entries
based on templates that are defined during setup. Each type of transaction—payment, write-off,
discount, deduction, and so forth—has its own template.
The accounting template may define all the accounting entries for a transaction or only one side
of the accounting entries.

The Receivable Update process creates accounting entries during background processing when
payments are posted.

INTERUNIT TRANSACTIONS

When the Receivable Update process creates accounting entries using interunit transactions, the
following actions occur:

• The system creates four lines rather than two. The first two lines debit a cash
account and credit an accounts receivable (AR) account. Two offsetting entries are
necessary to transfer the cash and AR to the appropriate PeopleSoft General Ledger
business units.
• The offsetting entry for the debit to cash is a credit referencing the InterUnit
ChartField combination of the cash transferee's General Ledger business unit. The
offsetting entry for the credit to AR is a debit referencing the InterUnit ChartField
combination of the AR transferee's General Ledger business unit.
• When PeopleSoft Receivables generates interunit accounting entry lines, it
populates the Affiliate ChartField with the other General Ledger business unit involved in
the intercompany transaction. This helps to simplify consolidation setup in PeopleSoft
General Ledger.

A payment worksheet is a cash application tool, an alternative to applying payments through

express deposit or with the Payment Predictor process. Payment worksheets use information
about customers and items to apply payments. The system creates one worksheet for each
payment, not one for each deposit.

Working with a payment worksheet consists of the following basic steps:

1. Build a worksheet using the Worksheet Selection page or add items to an existing
worksheet.
2. (Optional) View, add, change, or delete items.
3. Handle payments (balance and apply payments) using the Worksheet Application
page.
4. View item details.
5. Post the payment using the Worksheet Action page.
Note. You must run the Receivable Update process to post the payments and create accounting
entries.

Payment Predictor automatically matches credit and debit items of equal amounts for a
customer without using a payment worksheet. It also matches on-account payments (WS-05
items) with items that have a matching customer ID and value in the Document field—even if the
amounts do not match. When Payment Predictor completely applies payments, it automatically
sets them to Post Later. The Pending Group Generator process creates accounting entries for
those payments during background processing.
Select the Payment Predictor check box to apply the payment automatically the next time you
run payment predictor. If you select Payment Predictor and then attempt to build a worksheet, the
system clears the Payment Predictor check box.

AR UPDATE

The posting process in PeopleSoft Receivables is known as Receivable Update. Receivable

Update occurs throughout the system as you post pending items. These pending items can be
entered online, created by your billing interface, or created during payment processing, draft
processing, direct-debit processing, or during item maintenance activities.

When you post items within PeopleSoft Receivables, the system processes groups of pending
items in order to update a customer's balance and system-defined history elements. During
processing, the system creates balanced, valid accounting entries as needed. The Journal
Generator process then summarizes the accounting entry information into PeopleSoft General
Ledger journal format. Then the General Ledger Posting process updates your ledger balances.

STEP 1

The AR_POSTING process takes groups from all worksheets set to post
and creates the GROUP_CONTROL and PENDING_ITEM components.
(For pending item groups entered online or interfaced from a billing system,
the GROUP_CONTROL and PENDING_ITEM components already exist.)

STEP 2

The Pending Group Generator (AR_PGG_SERV) process creates accounting entries and VAT
lines for any groups set to post. This includes the output from Step 1, as well as any billing groups
for which accounting entries are not already created. VAT lines are created only for certain types
of system-generated groups.

STEP 3

The AR_POSTING process runs again.

STEP 4
The Entry Events Generator processes (FS_EVENTGEN) entry events. Entry events allow
PeopleSoft Receivables to automatically create standard accounting entries based on accounting
lines generated by Receivables document posting. This process runs only if you have the options
for processing entry events selected at the installation level and on the posting request page.

POSTING

Posting creates balanced accounting entries for online items, pending items, external items,
overdue charge items, transfers, drafts, and payments. The system combines information entered
with other control information, such as accounting entry templates, to create the balanced entries.
The Receivable Update process (AR_UPDATE) is the only method that PeopleSoft Receivables
uses to update posted information.

In PeopleSoft Receivables, the posting process in PeopleSoft Receivables is known as

Receivable Update (AR_UPDATE). Receivable Update occurs throughout the system as you post
pending items that have been entered online or that have been created by your billing interface,
in payment processing, draft processing, direct-debit processing, or during item maintenance
activities.

Receivable Update determines whether the accounting date is in an open period for the business
unit in PeopleSoft Receivables. It also determines if the accounting date is in the same period for
both PeopleSoft Receivables and PeopleSoft General Ledger. If the accounting date is not within
an open period for the receivable business unit, Receivable Update issues a posting error.

If the accounting date falls in a different period in PeopleSoft General Ledger, it updates the
GL_ACCTG_DT field on the PS_ITEM_DST table with a date in the General Ledger period
AR Process Flow

PeopleSoft Accounts Receivables Process Flow

Shakirs AR Flow

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