Order 2 Cash cycle in oracle R12

 The Order-to-Cash (O2C) cycle in Oracle R12 is the process that begins with receiving a customer order and ends with the collection of payment. The O2C cycle involves several modules, including Order Management, Inventory, Shipping, Accounts Receivable (AR), and General Ledger (GL). Below is a step-by-step guide to setting up the Order-to-Cash cycle in Oracle R12:

1. Set Up System Administration

• Navigation: System Administrator → Security → User → Define
• Steps:
  1. Create and define user accounts.
  2. Assign appropriate responsibilities related to Order Management, Shipping, Receivables, and Inventory.
  3. Set up profile options such as MO: Operating Unit and GL Set of Books.

2. Define Key Flexfields

• Navigation: Setup → Financials → Flexfields → Key → Segments
• Steps:
  1. Set up Accounting Flexfields to define the Chart of Accounts (COA).
  2. Define Sales Order Flexfields, Customer Flexfields, and other relevant flexfields for Order Management.

3. Set Up Order Management

• Define Transaction Types:
  • Navigation: Order Management → Setup → Transactions → Transaction Types
  • Steps: Define transaction types for different types of sales orders (e.g., standard orders, return orders).
• Set Up Order Document Sequence:
  • Navigation: Order Management → Setup → Document Sequence → Define
  • Steps: Define and assign document sequences to sales orders to ensure unique numbering.
• Define Order Management Profile Options:
  • Navigation: Order Management → Setup → System → Profile Options
  • Steps: Set up key profile options for order processing, such as OM: Defaulting Rules, OM: Inventory Interface Method.

4. Set Up Inventory and Items

• Define Inventory Organizations:
  • Navigation: Inventory → Setup → Organizations → Organizations
  • Steps: Define inventory organizations and parameters for stock management.
• Create and Define Items:
  • Navigation: Inventory → Items → Master Items
  • Steps: Create items, define item attributes, and assign items to categories and organizations.
• Define Item Orderability Rules:
  • Navigation: Order Management → Setup → Rules → Orderability
  • Steps: Define rules that determine which items can be ordered based on criteria such as customer, region, and order type.

5. Define Pricing and Discounts

• Define Price Lists:
  • Navigation: Order Management → Pricing → Price Lists
  • Steps: Create and define price lists for different customers, regions, or products.
• Set Up Pricing Agreements:
  • Navigation: Order Management → Pricing → Agreements
  • Steps: Define pricing agreements for specific customers or groups of customers.
• Define Discounts and Promotions:
  • Navigation: Order Management → Pricing → Modifiers
  • Steps: Set up discounts, promotions, and surcharge rules that can be applied during order entry.

6. Set Up Customers and Customer Profiles

• Define Customers and Sites:
  • Navigation: Receivables → Customers → Standard
  • Steps: Create customer records, define customer sites, and set up billing and shipping details.
• Set Up Customer Profiles:
  • Navigation: Receivables → Customers → Profile Classes
  • Steps: Define customer profile classes to set credit limits, payment terms, and other customer-specific rules.

7. Set Up Shipping Execution

• Define Shipping Networks:
  • Navigation: Inventory → Setup → Organizations → Shipping Networks
  • Steps: Set up shipping networks to define inter-organization and intra-organization shipping parameters.
• Set Up Shipping Parameters:
  • Navigation: Shipping → Setup → Shipping Parameters
  • Steps: Define default shipping parameters for each organization, such as shipping methods, freight carriers, and handling options.
• Define Shipping Documents:
  • Navigation: Shipping → Setup → Documents
  • Steps: Set up shipping documents such as pick slips, packing slips, and bills of lading.

8. Set Up Accounts Receivable (AR)

• Define Payment Terms:
  • Navigation: Receivables → Setup → Transactions → Payment Terms
  • Steps: Create and define payment terms that will be assigned to customers and sales orders.
• Set Up Auto-Invoice Program:
  • Navigation: Receivables → Setup → Transactions → AutoInvoice
  • Steps: Configure the Auto-Invoice program to automatically generate invoices from sales orders.
• Define Receivables Activities:
  • Navigation: Receivables → Setup → Receipts → Receivables Activities
  • Steps: Define activities such as discounts, adjustments, and miscellaneous receipts.

9. Configure Credit Management

• Define Credit Policies:
  • Navigation: Credit Management → Setup → Credit Policies
  • Steps: Set up credit policies, including credit limits, review cycles, and approval hierarchies.
• Set Up Credit Checking:
  • Navigation: Order Management → Setup → Credit → Credit Check Rules
  • Steps: Define credit check rules that will be applied during order entry and processing.

10. Set Up Taxation

• Define Tax Codes and Rates:
  • Navigation: E-Business Tax → Tax Configuration
  • Steps: Define tax regimes, tax codes, and tax rates applicable to sales orders and invoices.
• Assign Tax Codes to Customers and Items:
  • Navigation: Receivables → Customers → Standard
  • Steps: Assign tax codes to customers and items to ensure proper tax calculation during order processing.

11. Set Up General Ledger (GL) Integration

• Define Accounting Flexfields:
  • Navigation: Setup → Financials → Flexfields → Key → Segments
  • Steps: Set up accounting flexfields that define the structure of your GL accounts.
• Set Up Revenue Recognition:
  • Navigation: Receivables → Setup → Revenue → Revenue Recognition
  • Steps: Define revenue recognition rules to automate the recognition of revenue based on specific criteria.
• Configure Subledger Accounting (SLA):
  • Navigation: Subledger Accounting → Setup → Accounting Methods
  • Steps: Set up accounting methods for AR transactions, ensuring that they are correctly posted to the GL.

12. Perform a Test Run of the O2C Process

• Steps:
  1. Enter and book a sales order.
  2. Pick, pack, and ship the order.
  3. Generate an invoice, apply any payments, and post the transaction to the GL.
  4. Verify that all steps in the O2C process are functioning as expected.

13. Go-Live and Monitor

• Steps:
  1. Once the test run is successful, go live with the O2C process.
  2. Continuously monitor the process, address any issues that arise, and make necessary adjustments to the setup.

14. Set Up Reporting and Alerts

• Navigation: Reports → Run → Submit a New Request
• Steps:
  1. Set up standard and custom reports for the O2C cycle, such as sales order backlog, shipping performance, and AR aging reports.
  2. Define alerts to notify users of critical events, such as credit limit breaches, delayed shipments, or overdue invoices.

By following these steps, your Oracle R12 environment should be fully configured to support the Order-to-Cash cycle, from order entry through cash collection.