Deidre Figueroa
Oracle Corporation
Abstract
Improve your AP process by understanding the
fundamentals of closing the month in AP and learning
what to do when the unexpected occurs. This paper
provides an overview of the AP month-end process and
discusses proven solutions to frequently encountered
problems. Topics include new 10.7 and cash
management features.
Scope
I. Fundamentals of Closing
II. Solutions to Frequently Encountered Problems
III. Overview of the Cash Management Impact on AP
Please note that this paper does not discuss data entry,
but focuses on insuring that the transactions entered are
posted and balanced. The new 10.7 reporting features
are integrated with the closing process, while a
highlight of the Cash Management will be discussed
separately.
I. FUNDAMENTALS OF CLOSING
Month-end closing within the Oracle Payables system
Pre-Post Work
Before you can post to the GL, you want to review both
your invoice and payment transactions to insure that
they are ready to post.
Insure invoices are ready to post:
An invoice must be approved and/or have no posting
holds in order to be selected for posting. To insure that
Close/Open
Period
Reporting
& Balancing
Pre-Post Work
GL_INTERFACE
AP Data
GL Data
AP Transfer to
GL
Journal Import
AP Data
1. Approve invoices
The approval process attempts to approve invoices and
remove any existing holds. If exceptions are found,
some invoices may be placed on hold and not approved.
If an invoice contains a system hold you need to
manually fix the invoice and then re-run the
autoapproval process to remove the hold. All user
defined holds must be manually removed as they are
not automatically removed by the autoapproval process.
AP is Posted
Posting
Once the pre-work is complete, you are ready to post.
The posting process selects and updates transactions in
the AP subledger and creates accounting transactions
for the general ledger. This process actually occurs in 2
distinct steps:
Step 1 - Transfer from AP to GL
Updates the AP system
ap_invoice_
distributions
AP Transfer to GL
gl_interface
ap_invoice_
payments
AP Journal Reports
Posting Options
While submitting the AP Transfer to GL process, there
are parameters that require input and each is important
to the results received from the posting. Each
parameter will be discussed, along with an example of
its impact on the posting transactions.
1. Post Thru Date
The GL_DATE attached to an invoice distribution or
payment determines in which accounting period the
transaction will be posted. All viable non-posted
transactions having a GL_DATE less than or equal to
Example Invoices
Description
Invoice #ABC
Distribution #1
Invoice #XYZ
Distribution #1
1-500
$100
1-500
GL Journal created
Account
Description
1-200
Liability - #ABC
1-200
Liability - #XYZ
1-500
Expense - #ABC
1-500
Expense - #XYZ
Debit
Credit
$50
$100
$50
$100
Summary
Summary posting groups transactions with similar
accounting flexfield information together, and creates a
single GL journal for each grouping. Debits and
credits made to the same accounting flexfield are
grouped separately, they are not summed together and
net out.
Example Invoices
Description
Invoice #ABC
Distribution #1
Distribution #2
Invoice #XYZ
Distribution #1
Distribution #2
1-500
1-500
$100
$0
1-500
1-500
GL Journal Created
Account
Description
1-200
Liability Summary
1-200
Liability Summary
1-500
Expense Summary
1-500
Expense Summary
Debit
$10
Credit
$160
$160
$10
Example Invoices
Description
Invoice #ABC
Distribution #1
Distribution #2
Invoice #XYZ
Distribution #1
Distribution #2
Example Payments
Description
Check #101
Pays Invoice #ABC
Supplier Payment
Discount Taken
Check #102
Pays Invoice #XYZ
Supplier Payment
Discount Taken
1-200
1-700
$180
$20
1-200
1-700
Debit
$10
$40
$75
$125
Credit
$10
$40
$75
$125
Credit
$9
$36
$67.50
$112.50
$1
$4
7.50
$12.50
Debit
Credit
$250
$10
$40
$75
$125
Credit
$9
$36
$67.50
$112.50
$25
AP is
Posted
gl_interface
gl_batches
gl_headers
Journal Import
gl_lines
gl_import_
references
Journal Import Reports
AP Posted
Note!
Note!
Reporting
Once the posting process is complete, you are ready to
run some key reports to insure that both your Payables
sub-ledger and the General Ledger are in balance.
Oracle provides numerous reports to assist you in
balancing.
1. Unposted Invoice Sweep Report
This report informs you about un-posted invoices and
payments in the current or previous open periods. If
un-posted transactions exist, you must decided if you
want to post them in the current period or sweep them
(move them) to the next open period.
The parameter, "Report Only", determines if the unposted transactions are simply displayed or displayed
AND SWEPT to the next open period. When a
Balancing AP to the GL
To balance the AP and GL systems together, the AP
Trial Balance report should agree with the GL liability
accounts and the posting reports.
AP
GL
gl_import_
references
ap_trial_balance
Balancing
The reports described above will be used in the
balancing process. To determine if your system is in
balance, you need to insure that the amount reported in
AP matches the amount reported in the GL. In
addition, there are times when you want to see that the
AP system is in balance with itself. (i.e. Pilot testing,
checking the validity of converted data, or your AP and
GL systems dont balance together).
Balancing AP
Every transaction that is posted from AP to the GL is
reflected in the Accounts Payable Trial Balance report.
If you want to test the data on this report against the
transactions entered for a supplier, you can spot check
individual suppliers. View the outstanding balance for
the individual supplier via the invoice inquiry form and
compare it to the data on the trial balance report. The
on-line balance inquiry includes all transactions, unlike
the trail balance report that only includes posted
transactions. Therefore, the on-line supplier balance
should match the data reported on the trial balance
report, +/- any non-posted transactions. If a supplier
does not appear on the trial balance report, that
indicates there is no outstanding posted liability for that
supplier.
Character: /Navigate Invoice Inquiry
Search Option: Balance by Supplier
GUI:
Invoices Inquiry Invoices
Calculate Balance Owed
Non-Posted Payments
Invoice
(Posted Items)
(Posted Invoice
Register Report)
(Posted Payment
Register Report)
Supplier Total
(On-line Inquiry)
AP Trial Balance
AP Posted
+
-
(Posted Invoice
Register Report)
(Posted Payment
Register Report
(On-line Inquiry)
Example AP Invoice
Description
Invoice #ABC
Distribution #1
Distribution #2
1-500
2-500
Example:
Description
Invoice #ABC
Distribution #1
Distribution #2
Amount
GL_DATE
$40
$60
15-FEB-97
25-FEB-97
Accounting Impact
When using the standard Payables system, the cash
account is credited when issuing a payment. This holds
true for both accrual and cash based accounting.
Credit
$100
Closing Impact
Utilizing the Cash Management application will not
alter the standard AP closing process, but will change
the some accounting transactions. In the standard
closing process, the invoice and payment transactions
were discussed. If you are using autoreconciliation
accounting, your closing reports will still look the
same, but will contain an additional section that
contains the reconciliation transactions.
For Example:
The AP transfer to GL process will include the
reconciliation transactions, and the data will be
displayed in a separate section on the AP Journal Entry
Audit reports.
Conclusions
It is my desire that this paper has helped you
understand the fundamental process of closing a period
in AP. Breaking the process into the 5 main categories
should help you understand the "state" of your system.
If something appears incorrect in the posting or
balancing process, I hope that you are now better
equipped to troubleshoot the problem and determine
what needs to be done to resolve the issue.
$100
Credit
$100
Credit