P2P: Procure to Pay Cycle in 7 Steps with Accounting

P2P: Procure to Pay flow in 7 Steps

P2P: Procure to Pay flow with Accounting Entries


STEP 1: Create Requisition
       No Accounting Entries

STEP 2: Create Purchase Order
          
           No Accounting Entries 

STEP 3: Create Inventory Receipt

• When Receiving Inventory

 

•  When Inventory moved/delivered to Sub-inventory

            The Receiving Inventory account is getting knocked-off at this stage.

 

 
STEP 4: Create AP Invoice

• When Creating AP Invoice

           The Inventory AP Accrual account is getting knocked-off at this stage.

 

STEP 5: Create AP Payments

• When Creating AP Invoice Payments

           The Liability account is getting knocked-off at this stage.

• When Cash is Cleared at the Bank

           The Cash Clearing account is getting knocked-off at this stage. 

  

• The Final Accounting entries 

         

This shows, the "Inventory/material we purchased comes in and the "Cash" has gone out as payment.

STEP 6: Create Accounting

            This Step is applicable for both Invoice and payments

 
STEP 7: Transfer to General Ledger

Important Tables to Know in Procure to Pay (P2P) Cycle

REQUISITION

• PO_REQUISITION_HEADERS_ALL (Requisition header information)
• PO_REQUISITION_LINES_ALL (Requisition line information)

PURCHASE ORDER (PO)

• PO_HEADERS_ALL (Purchase Order (PO) header information)
• PO_LINES_ALL (Purchase Order (PO) lines information)
• PO_LOCATIONS_ALL (Purchase Order (PO) shipment schedule information)
• PO_DISTRIBUTION_ALL (Purchase Order (PO) distribution information)

RECEIVING AGAINST PURCHASE ORDER (PO)

• RCV_SHIPMENT_HEADERS (Receipt header information)
• RCV_SHIPMENT_LINE (Receipt lines information)
• RCV_TRANSACTIONS (Receipt transaction Information)

ACCOUNTS PAYABLE (AP) INVOICE

• AP_INVOICES_ALL (AP invoice header information)
• AP_INVOICE_LINES_ALL (AP invoice lines information)
• AP_INVOICE_DISTRIBUTIONS_ALL (AP invoice distribution information)

ACCOUNTS PAYABLE (AP) PAYMENTS

• AP_PAYMENT_SCHEDULE_ALL (AP payments information)
• AP_CHECKS_ALL (AP payments check information)

ACCOUNTS PLAYABLE (AP) TRANSFERRED TO GENERAL LEDGE (GL)

• GL_JE_BATCHES (GL: Journal batch information)
• GL_JE_HEADERS (GL: Journal header information)
• GL_JE_LINES (GL: Journal line information)

Setup E-Business Tax

Responsibility: Tax Manager
Navigation: Tax Configuration > Tax Regimes

Step 1: Creation of Tax Regime
 
Enter the name of the country and click on go will display the tax regimes existing in the system.
To create a new tax regime click on create.
Enter the following:
1. Unique name for the tax regime code. The name can be same as tax regime code.
2. Enter Country name from LOV
3. Disable tax recovery: If this is enabled, then you would find 2 lines in the distribution level.
4. Specify Rounding rule
5. Specify Tax precision
6. Enable allow tax rounding override
7. Enable Allow multiple jurisdiction
8. Allow tax inclusion: Choose standard non-inclusive handling
Click on Continue
In the following screen assign the OU to which the tax regime is applicable to.
Click Finish to complete the set up of tax regime.

Step2: Creation of Taxes

To use the wizard regime to rate query the tax regime defined. To the right end you will find the link to regime to rate flow.
Click on that link
To create tax click on the link against the tax regime (under create tax).
Enter the following under main information:

1. Configuration Owner (This is the owner of tax): GAP US OU
2. Tax and Tax Name: Enter a unique value
3. Tax Type: Choose Sales or Sales Tax from Lov
4. Enter effective from date
5. Geography type: Country
6. Parent Geography Type: Country
7. Parent Geography Name: United States
8. Choose tax currency
9. Choose rounding rule.
10. Enter tax precision
Enter the following under control and defaults:
1. Allow tax inclusion: Select Standard Non inclusive handling
2. Enable Allow tax rounding override
3. Enable Allow override of calculate tax lines
4. Allow entry of Manual tax lines
5. Allow multiple jurisdictions
6. Allow mass creation of jurisdictions
Note:
Point 3 & 4 above are required for manual allocation of tax lines
Click on Tax accounts
Enter the ledger Name and click on Create Button.
Note:
Tax accounts can be entered in 3 locations.
Taxes
Tax jurisdiction
Tax rate Code.
Enter the tax recoverable / liability account and click on Apply.
Continue to click on apply on every page until we come back to the below screen

Step 3: Creation of Tax status

Click on link against the tax under create tax status.
Enter the following
1. Enter unique tax status code and name.
2. Enable set as default tax status
3. Enable Allow tax rate override. This is required for manual tax allocation.
Click on Apply.

Step 4: Create Tax rate code

Click on the drop down link (+) against the tax. This will display the tax status.
Click on the drop down link (+) against the tax status.  There is a link to create tax rate as shown below
Click on the link to create tax rate.
Enter the following
1. Enter Tax rate code
Rate Periods
1. Enter rate and the effective date from
Click on rate details
Enter the following
1. Enter tax rate name and description
2. Check internet expenses enabled: This check box is visible only during definition of tax rate code
3. Enable set as default rate and enters effective date from.
Note: Only one tax rate should be defined as default.
4. Enable Allow Ad-hoc rate: This is necessary for manually allocation of tax to item lines
5. Set Adjustment for ad-hoc amounts to taxable basis.
Click on Apply
Click on link to tax accounts to specify tax account the specific tax rate code.
The tax account definition is similar to the steps under step 2.

Step 5: Define tax jurisdiction.
 
A jurisdiction is the geographical area to which the tax regime is applicable to
Click on Create and enter values as shown below.
Not required to enter tax accounts.
Click on apply.

Step 6: Define Tax rules

Against each rule name and under the column set default there is an icon to update. Click on that icon and set the value as shown in the screen. The values are available as LOV.
The last step is to query the taxes defined and enable a check box to activate the same to be available for transactions
Click on Update icon for the specific tax
Enable Make Tax Available for Transaction.
Click on Apply
This completes the process to define a tax regime to Rate
The next step is to change the event class setting based on the document provided.

Oracle AIM – Processes

Oracle AIM – Processes

A process in AIM represents a related set of objectives, resource skill requirements, inputs, and deliverable outputs. A task can belong to only one process.
Project team members are usually assigned to a process according to their specialization and background.

12 Processes as referred in AIM –

1. Project Management
2. Business Process Architecture
3. Business Requirement Definition
4. Business Requirement Definition
5. Application & Technical Architecture
6. Module Design & Build
7. Data Conversion
8. Documentation
9. Business System Testing
10. Performance Testing
11. Adoption & Learning
12. Production migration.

Project Management ( PJM)

• Project & Phase Planning, Execution, Control, Reporting & Completion
• Work Management & Resource Management
• Quality Management & Configuration Management
• Project Management itself is a comprehensive process and has separate way to handle it, i.e. PMBOK , Oracle PJM etc
• Task ID
• CR: Control & Reporting , WM: Work Management, RM: Resource Management
• QM: Quality Management, CM: Configuration Management

Business Process Architecture

• Task Code/ID : BP
• Provide the framework for combining change in business processes with implementation of software applications
• It focuses on high-level business processes and operations generally applicable to the organization
• Make business focused decisions either to change the current processes to suit the application or to customize the application.
• Commonly used templates

Business Requirements Definition

• Task Code/ ID: RD
• Defines the business needs that must be met by the implementation project.
• Develop a complete set of business requirements scenarios that can be used to map business requirements to application functionality.
• Analyze and identify the reporting requirements for the business
• Carefully document audit and control requirements to satisfy financial and quality policies.
• Commonly used templates

Business Requirements Mapping

• Task Code/ ID: BR
• Ascertain the fitness for use of application features in satisfying detailed business requirements expressed at a business process step level.

Business Requirements mapping encompasses the following areas: 

• Mapping
• Business system testing
• Application setups
• Mapping is an iterative approach with the following objectives:
• Prove business process designs through demonstration
• Identify gaps in the application
• Propose feasible bridges to gaps
• Commonly used templates

Application & Technical Architecture

• Task Code/ ID: TA
• Design an information systems architecture to realize the business vision.
• This process divide into two areas:- 1. Application Architecture, 2. Technical Architecture
• The process takes the business and information systems requirements and develops a blueprint for deploying and configuring:
• Oracle, third-party, and custom applications
• Supporting application server environments
• Critical interfaces and data distribution mechanisms between applications, servers, and sites
• Computing hardware, including servers and client desktop platforms
• Networks and communications infrastructure

Module Design & Build

• Task Code/ ID: MD
• Focus on the design and development of customization to satisfy functionality gaps identified during Business Requirements Mapping (BR).
• Modification — changes to the base Oracle Applications code
• Extension — new forms, reports, programs, tables, interfaces and triggers that add functionality without changing the base application code
• Configurable Extension — addition of functionality through flex fields, alerts, and other configuration options provided by the Applications
• Continue to Next Slide
• Commonly used templates

Module Design & Build
Data Conversion

• Task Code/ ID: CV
• Convert and test all necessary legacy data for the operation of the new system
• Conversion Approaches
• Manual Conversions
• Programmatic Conversion with or w/o tools
• Automated Data Entry

Documentation

• Task Code/ ID: DO
• Reference that shows the users how to use application functionality
• Set of procedures for using the application in response to day-to-day business events
• Documents that describe the technical details of the application for the maintenance staff
• Produce a set of procedures for managing the system

Business System Testing

• Task Code/ ID: TE
• Three main aspects of Business Testing – Planning, Early Introduction of Testing & CRP
• Business System Testing does not address performance testing or the testing of data conversion programs

Performance Testing

• Task Code/ ID: PT
• Enables you to define, build, and execute a performance test.
• To make decisions on whether the performance is acceptable for the business
• Propose tactical or strategic changes to address the performance quality shortfall.
• Automated V/s Manual
• Types of Performance Testing
• System Performance
• Module/ Code Performance
• Hardware and Networks

Adoption & Learning

• Task Code/ ID: AP
• Training prepares both users and administrators to assume on the tasks of running the new application system
• Adoption and Learning impacts the following five major audiences:
• Executives
• Implementation project teams
• Functional managers
• Users
• Information technology groups

Production Migration

• Task Code/ ID: PM
• To migrate the organization, systems, & people to the new enterprise system
• Assessing readiness for transition to production
• Executing cut-over to the new system
• conducting post-production support

Oracle AIM – DEMO

• Oracle AIM Advantage 3.1 Demo
• Templates
• Q&A
• Discussion