Tag Archives: Purchase Requisition Overview of Procure to Pay Cycle in Oracle Apps Overview of Procure to Pay Cycle in Oracle

Apps Procure to Pay Lifecycle is one of the important Process in Oracle Applications. Procure to Pay meansProcuring Raw Materials required to manufacture the final or finished Goods from a Supplier to Paying the Supplier from whom the material was purchased. But this process is not just two steps. It involves many steps. Lets see the steps and Oracle Application involved in performing those steps.

1.Creation Of Purchase Requisition Requisition is nothing but a formal request to buy something. Requisitions represent the demand for any goods or services that an organization needs. Requisitions for goods and services:

Are generated by applications including Inventory, Work in Process (WIP), Material Requirements Planning (MRP) and Order Management.

May be entered manually through Purchasing windows. May be entered using iProcurement. May be imported from external systems.

There are two types of Requisitions 1] Internal Requisition Basically used when there is a Requirement from One Inventory Organization to the Other Inventory Organization (Inter- Organization Transfer) 2] Purchase Requisition Basically used when there is a Requirement to be fulfilled by External Sources i.e. Suppliers, Requirement from MRP, Requirement from WIP, Requirement from Sales Order etc. With Oracle Purchasing module, you can create, edit, and review requisition information online. Then the Requisitions went for approvals from proper authorities. 2. Creation of Purchase Order Based on the Purchase Requisition and its approval next we have to create a Purchase order to buy the item.

Purchasing supports four types of purchase orders: 1] Standard: Create standard purchase orders for one-time purchases 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. 2] Blanket: Create blanket purchase agreements when you know the detail of the 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. 3] Contract: Create contract purchase agreements with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. 4] Planned: A planned purchase order is a long-term agreement committing to buy 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. Once purchase orders are created, they may be submitted for approval. The approval process checks to see if the submitter has sufficient authority to approve the purchase order. Once the document is approved, it may be sent to your supplier using a variety of methods including: printed document, EDI, fax, e-mail, iSupplier Portal and XML. Once the purchase order or release is sent to your supplier, they are authorized to ship goods at the times and to the locations that have been agreed upon. 3. Receipt of Material After receiving the PO, the supplier will send the items.

Purchasing lets you control the items you order through receiving, inspection, transfer, and internal delivery. You can use these features to control the quantity, quality, and internal delivery of the items you receive. 4. Creation of Payables Invoice Once youve received goods or service from your supplier, youll also receive an

invoice. Using Payables you can record invoices in a number of different ways.

With Payables you can:

Import/Enter invoices manually, either individually or in batches. Use Quick Invoices for rapid, high-volume entry of standard invoices and credit memos that are not complex and do not require extensive online validation.

Automate invoice creation for periodic invoices using the Recurring Invoice functionality. Use iExpenses to enter employee expense reports using a web browser. Import EDI invoices processed with the e-Commerce Gateway. Import XML invoices. Match invoices to purchase orders or receipts to ensure you only pay what youre supposed to be paying for.

5. Payment to Supplier Once invoices are validated, they can be paid. Payables integrates with Oracle Payments, the EBusiness Suite payment engine, to handle every form of payment, including checks, manual payments, wire transfers, EDI payments, bank drafts, and electronic funds transfers. Payables also integrates with Oracle Cash Management to support automatic or manual reconciliation of your payments with bank statements sent by the bank. RECEIVING OPTIONS
Receipt Date 1. Enter the maximum acceptable number of Days Early and Days Late for receipts. 2. Enter the Action for Receipt Date Control. This field determines how Purchasing handles receipts that are earlier or later than the allowed number of days selected above. Choose one of the following options: None Receipts may exceed the allowed days early or late. Reject Purchasing does not permit receipts outside the selected number of days early or late. Warning Purchasing displays a warning message but permits receipts outside the selected number of days early or late. Overreceipt 1. Enter the maximum acceptable overreceipt Tolerance percentage. 2. Enter the Action for Overreceipt Quantity Control. This field determines how Purchasing handles receipts that exceed the quantity received tolerance. Choose one of the following options: None Receipts may exceed the selected tolerance. Reject Purchasing does not permit receipts that exceed the selected tolerance. Warning Purchasing displays a warning message but permits receipts that exceed the selected tolerance. Miscellaneous 1. Check Allow Substitute Receipts if you want to receive substitute items in place of ordered items. You must define substitute items in the Item Relationships window before you can receive them. You can override this option for specific suppliers, items, and orders. 2. Check Allow Unordered Receipts if you want to receive unordered items. You can later match the unordered receipts to a purchase order. If you enable this option, you can override it for specific suppliers and items. 3. Select Allow Blind Receiving if you want blind receiving at your site. Blind receiving helps you ensure that receivers record the exact amount they receive. With blind receiving, you cannot see the quantity due or the quantity

ordered for shipments when you receive items. Purchasing ignores all quantity receipt tolerances to help ensure that you can receive the exact amount the supplier shipped. 4. Check Allow Express Transactions to enable express deliveries and receipts. 5. Check Allow Cascade Transactions to enable cascading for receipts and receiving transactions. 6. Select Validate Serial Numbers on RMA Receipts if you want serial numbers validated. Restricts serial numbers displayed in the list of serial numbers for an RMA line. 7. Enter the Default Receipt Routing that you assign goods: Direct Delivery, Standard Receipt, or Inspection Required. You can override this option at receipt time by changing the destination type for specific suppliers, items, and orders if the RCV: Allow Routing Override user profile is set to Yes. 8. Enter the default RMA Receipt Routing that you assign goods: Direct Delivery, Standard Receipt, or Inspection Required. 9. Enter the Enforce Ship To location option to determine whether the receiving location must be the same as the shipto location. Choose one of the following options: None The receiving location may differ from the shipto location. Reject Purchasing does not permit receipts when the receiving location differs from the shipto location. Warning Purchasing displays a warning message but permits receipts when the receiving location differs from the shipto location. 10. Choose an action for ASN Control. This field determines how Purchasing handles receiving against purchase order shipments for which an Advance Shipment Notice (ASN) exists. Choose one of the following options. None Purchasing does not prevent or warn you when you try to receive against a purchase order shipment for which an ASN exists. Reject Purchasing gives you a message and prevents you from receiving against a purchase order shipment for which an ASN exists. Warning Purchasing gives you a message informing you that an ASN exists for the purchase order shipment and lets you decide whether to receive against the purchase order shipment or its ASN. Receipt numbers 1. Choose the Entry method for receipt numbers. Automatic: Purchasing automatically assigns a unique sequential number to each receipt when you create the receipt. Manual: You provide a receipt number manually when you enter the receipt. Purchasing numbers receipts within inventory organizations rather than across inventory organizations. So, for example, the same receipt number could be used by different inventory organizations. Attention: You can change the method of entering receipt numbers at any time. If you originally allow manual entry and switch to automatic entry, make sure to enter a Next Number that is higher than the highest number you assigned manually. 2. Choose the receipt number Type you want Purchasing to use for receipt numbers: Numeric or Alphanumeric. 3. Enter the Next Receipt Number. This is the starting value you want Purchasing to use for generating unique sequential receipt numbers if you choose Automatic receipt number entry. Purchasing displays the next receipt number that will be used for a new receipt when you create the new receipt. You cannot enter this field if you choose Manual receipt number entry. Accounting 1. Enter the accounting flexfield for the default Receiving Accrual Account.

2. Enter the account number for the Retroactive Price Adjustment Account. This is the account that receiving will use to post an adjusting entry for changes in pricing after a shipment has been received and accrued. 3. Enter the account number for the Clearing Account. This is the account that is used for intercompany receivables in the procuring organization when the receiving organization is not the same as the procuring organization.