Account Receivables Setup in Oracle R12

 Setting up Oracle Accounts Receivable (AR) involves configuring various elements, from defining your AR system options to setting up customers, invoices, receipts, and related configurations. Below is a step-by-step guide to setting up Oracle AR:

1. Define System Options

This setup involves configuring options that apply across the entire Accounts Receivable module.

  • Navigation: Receivables Manager > Setup > System > System Options
  • Steps:
    • Select your Operating Unit and Ledger.
    • Define Accounting Options such as revenue, receivables, and accounting rules.
    • Set Invoice and Receipt Defaults (e.g., payment terms, transaction types).
    • Define Tax Settings if applicable.

2. Define Transaction Types

Transaction types help in categorizing invoices, credit memos, debit memos, etc.

  • Navigation: Receivables Manager > Setup > Transactions > Transaction Types
  • Steps:
    • Create transaction types for Standard Invoices, Credit Memos, Debit Memos, etc.
    • Specify Accounting Rules and AutoAccounting setups for each type.

3. Define AutoAccounting Rules

AutoAccounting rules determine how Oracle generates accounting entries for transactions automatically.

  • Navigation: Receivables Manager > Setup > Transactions > AutoAccounting
  • Steps:
    • Define AutoAccounting rules for different accounts like Receivable, Revenue, Freight, etc.
    • Specify segment values based on various sources like Salespersons, Standard Lines, or Transaction Types.

4. Define Payment Terms

Payment terms determine when your customers are expected to pay their invoices.

  • Navigation: Receivables Manager > Setup > Transactions > Payment Terms
  • Steps:
    • Define various payment terms like Net 30, Net 45, or Due on Receipt.
    • Configure discount terms for early payment if applicable.

5. Set Up Customers

Customers need to be defined to generate invoices and record receipts.

  • Navigation: Receivables Manager > Customers > Customers
  • Steps:
    • Enter Customer Name, Address, and other details.
    • Define Customer Sites for billing and shipping.
    • Set credit limits, payment terms, and other financial details.

6. Define Remittance Banks

Remittance banks are where your company receives payments from customers.

  • Navigation: Receivables Manager > Setup > Receipts > Banks
  • Steps:
    • Create the Bank and Branch.
    • Define Bank Accounts and associate them with your Operating Unit.
    • Specify the Currency and Account Type (e.g., collection account).

7. Define Receipt Classes and Methods

Receipt classes and methods dictate how receipts are processed.

  • Navigation: Receivables Manager > Setup > Receipts > Receipt Classes
  • Steps:
    • Define receipt classes like Manual, Automatic, or Direct Debit.
    • Associate Receipt Methods with each class, specifying the remittance bank and clearing methods.

8. Set Up Aging Buckets

Aging buckets categorize receivables based on the number of days overdue.

  • Navigation: Receivables Manager > Setup > Collections > Aging Buckets
  • Steps:
    • Define aging buckets such as Current, 1-30 days, 31-60 days, etc.
    • Associate these aging buckets with your Customer Profiles for aging reports.

9. Define Customer Profiles

Customer profiles contain default settings for transactions, credit limits, and payment terms for different customer segments.

  • Navigation: Receivables Manager > Setup > Customers > Profile Classes
  • Steps:
    • Create customer profile classes for different customer types (e.g., Retail, Wholesale).
    • Set default payment terms, discount terms, and credit limits.

10. Create Invoices

Invoices can be manually created or generated from other Oracle modules like Order Management.

  • Navigation: Receivables Manager > Transactions > Transactions
  • Steps:
    • Create a new Invoice by entering Customer Name, Invoice Date, Invoice Amount, etc.
    • Assign the correct Transaction Type and Payment Terms.
    • Save and complete the invoice.

11. Apply Receipts

Receipts are payments received from customers. These need to be applied to outstanding invoices.

  • Navigation: Receivables Manager > Receipts > Receipts
  • Steps:
    • Enter the Receipt Amount and Customer Name.
    • Select the invoices to which the receipt should be applied.
    • Save and post the receipt.

12. Run Auto-Invoice (Optional)

If using Oracle Order Management or another module, the Auto-Invoice process generates invoices automatically.

  • Navigation: Receivables Manager > Interfaces > Auto-Invoice
  • Steps:
    • Run the Auto-Invoice Import Program to create invoices from sales orders.
    • Review and correct any errors in the Auto-Invoice Execution Report.

13. Reconcile Receipts (Optional)

Reconciliation ensures that the receipts recorded in Oracle match your bank statement.

  • Navigation: Cash Management > Bank Statements > Bank Statement Reconciliation
  • Steps:
    • Upload or enter your Bank Statement.
    • Match the bank statement transactions with Oracle receipt records.
    • Reconcile and post the reconciliation.

14. Generate Reports and Analyze

Run various reports to analyze your accounts receivable activities.

  • Navigation: Receivables Manager > View > Requests
  • Steps:
    • Run reports like Aging Reports, Customer Balance Reports, Receipt Register, etc.

15. Close AR Period

Closing the AR period ensures that all transactions are accounted for in the correct accounting period.

  • Navigation: Receivables Manager > Control > Accounting > Control AR Periods
  • Steps:
    • Review all transactions for the period.
    • Resolve any unposted transactions.
    • Close the period by selecting Close Period.

This setup guide provides a comprehensive overview of the steps needed to configure Oracle Accounts Receivable for efficient operation. Each step can be tailored to meet the specific needs of your organization.

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