White Paper: Setup and Usage of New Automatic Cash

Application Functionality

Product: Oracle Receivables

Version: Release 12

Contents
Introduction .................................................................................................................................................. 2
Automatic Matching Rule ............................................................................................................................. 2
Automatic Matching Rule Set ....................................................................................................................... 6
Assign default Automatic Matching Rule Sets in System Options for each Operating Unit ......................... 7
Assign default Automatic Matching Rule Sets in Customer Forms .............................................................. 8
Remittance Lines Form ................................................................................................................................. 9
Changes in Lockbox ..................................................................................................................................... 11
Changes in Quick Cash Process ................................................................................................................... 13
Changes in Receipts Form ........................................................................................................................... 13
Automatic Cash Application Concurrent Program ...................................................................................... 16
Menus and Function Security Options........................................................................................................ 19
Other Seed Data .......................................................................................................................................... 20

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Introduction

The process described in this document provide an automated method to apply any fully or
partially unapplied receipt, regardless of the source of origin, to outstanding receivables
transactions at the header level, partially or in full. The automated process works based on the
user-defined matching rules.

Automatic cash application process affects any fully or partially unapplied receipts (manual,
automatic, lockbox, quick cash, prepayment and deposits) and all outstanding AR transactions
(invoices, debit memos, chargebacks and deposits).

The application process occurs at the transaction header level, partially or in full and the receipt
that is applied can be either manually entered in the system or uploaded automatically by any
supported method.

The receipt can be applied on any invoice created for customer entered on receipt header (across
customer sites within customer account) or any 3rd party payer (across a group of associated
customers).

Automatic Matching Rule

New form Automatic Matching Setup allow users to maintain matching rules and matching rule
sets and can be accessed using the following navigator path: Setup>Receipts>Automatic
Matching Setup.

Automatic Matching Rules page has 2 tabs:

Automatic Matching Rules that allow users to create, update and view matching rules
Automatic Matching Rule Sets that allow users to create, update and view matching
rule sets

Create Matching rule:

Click the Create button on the Automatic Matching Rules page in order to create new matching
rule:

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Using the Automatic Matching Rules, users can instruct Receivables how to find customer debit
items for applying the receipts. The matching rule comprises of following two sections:

1. Matching Criteria
2. Matching Attribute Transformation

Matching Criteria:

User can use the attributes of the rules to build the matching criteria. The key attributes are as
follows:

Match Receipts By

Customers use various business document numbers as references while remitting money to their
suppliers. Receivables provides the following list of business documents which can be used to
match with the reference numbers provided in the receipt remittance lines:

Transaction Number (AR Invoice, Debit Memos, Deposits, etc.)

Sales Order Number
Reference Number
Purchase Order Number
Way Bill Number
Balance Forward Billing Number
Service Contract Number
Interface Header Attribute1 to Interface Header Attribute15

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Match on Transaction Amount

In addition to using the business document numbers for matching, transaction amount can also
be used to refine the search and improve the accuracy of the match. Receivables provides
following two options for matching on corresponding amount:

For Duplicates Only: Users can choose this option to match on corresponding amount
only when the document number provided as reference cannot provide unique receivables
transaction to apply the receipt. For example if the Sales Order number is used as Match
Receipt By reference number and if multiple invoice numbers refer to same sales order
number then system will select the invoice whose amount exactly matches the remittance
line amount.
Always: When the user chooses this option, Receivables will always select the
transaction only when its amount matches the remittance line amount, irrespective of
whether or not match by reference number results in multiple transaction matches.

For any business document reference number selected for Match Receipt By attribute,
Receivables will first select the receivables transactions, which refer the business document
number, and then matches the amount of the receivables transaction with the remittance line
amount.

When attempting to match the remittance line amount with the transaction amount, Receivables
will also take into consideration earned discount, if any applicable. Receivables will deduct the
applicable earned discount from the transaction amount and then attempt to match with the
remittance line amount.

In the case of matching with Balance Forward Bill number, system will match with Balance
Forward Bill amount not with the amount of individual transactions included in the Balance
Forward Bill.

Match on Corresponding Date

In addition to using the business document numbers and amounts for matching, transaction dates
can also be used to refine the search and improve the accuracy of the match. Receivables
provides following two options for matching on corresponding amount:

For Duplicates Only: Users can choose this option to match on corresponding date only
when the document number provided as reference cannot provide unique receivables
transaction to apply the receipt. For example if the Sales Order number is used as Match
Receipt By reference number and if multiple invoice numbers refer to same sales order
number then system will select the transaction matches after matching the dates as per the
option selected for Match Date By attribute.
Always: When the user chooses this option, Receivables will always select the
transaction only when the relevant date, based on the option selected for Match Date By
attribute matches the date reference on the remittance line, irrespective of whether or not
match by reference number results in multiple transaction matches.

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For any business document reference number selected for Match Receipt By attribute,
Receivables will first select the receivables transactions, which refer the business document
number, and then matches the relevant date of the receivables transaction with the date reference
on the remittance line.

Match Thresholds

Match Thresholds can be used to allow certain amount of tolerance when remittance and
transaction attributes are matched. Receivables provide both automatic match tolerance and
suggested match tolerance. Receivables will automatically match the transactions only when the
match score is greater than the automatic match tolerance. If the match score is less than the
automatic match tolerance but greater than suggested match tolerance then those matches will be
made available to user as suggested matches. User can manually review the suggested matches
and apply them, if appropriate.

Matching String Transformation

This region allows the user to define how a remittance reference number and document numbers
should be transformed for the purpose of matching. The region allows users to define string
functions to be applied to the remittance reference and document number before system attempts
to find a match for the receipt.

String transformation can be performed on both the remittance line reference number and
document numbers in the system. User can add multiple transformation rows for each of the
numbers. Multiple rows will be interpreted as having AND Boolean operator. Each
transformation row will be executed in the order of sequence number. When multiple
transformation rows are defined the result from the prior transformation row is passed to the next
transformation row and so on for performing string transformations.

Defining matching string transformation rules is optional. User can create an automatic matching
rule without creating any rules for transforming remittance reference and document numbers.

String transformation is performed as follows:

If the String Value is Space then all spaces will be removed from either front or end of
the string based on the value given for String Location field.
If the String Value is Zero then all zeros will be removed from either front or end of the
string based on the value given for String Location field.
If the String Value is Any then system will remove specific number characters from
either front or end of the string based on the values given for String Location field and
No. of Characters fields.
If the String Location is Floating the system will remove all occurrences of the
character(s) specified in the String Value field.

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To change a rule: search for the rule and press Update button:

Automatic Matching Rule Set

The page allows users to:

1. Search for existing automatic matching rule sets;

2. Initiate creation of the new rule sets;
3. Initiate update of the rule sets;

This form allows user to group automatic matching rules into a set. User can also assign a
priority to the each rule in the group. Priority determines the order in which system will evaluate
each rule for matching the attributes.

Click the Create button on the Automatic Matching Rule Sets page in order to create new
matching rule set:

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Enter: rule name, description, effective from, assign matching rules and assign a priority for each
rule then save.

In Exception Reason field can be selected a value user defined exception reasons from the
lookup AR Cash Application Exception Reason.

Assign default Automatic Matching Rule Sets in System Options for each
Operating Unit

Setup>System>System Options

Search for Operating Unit, select Miscellaneous tab and enter a Automatic Matching Rule Sets
and save:

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The automatic matching rule set defined in the System Options form acts as default rule set at the
operating unit level.

Assign default Automatic Matching Rule Sets in Customer Forms

The automatic matching rule set defined for the customer profile class will default to customer
account profile.
Customers>Profile Classes

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Customers>Customers

The automatic matching rule set defined for the customer profile class will default to customer
site profile.

Remittance Lines Form

A new Remittance Lines form was introduced to display remittance lines for a receipt. User can
view, modify, delete and enter new remittance lines. The form can be accessed from the
QuickCash form by clicking the Remittance Lines button.

For the Quickcash batch created through lockbox process, the Remittance Lines region will show
the remittance lines imported through lockbox file. In the case of manual Quickcash batch, the
form will not contain any lines. In both cases the form allows users to view and update existing
remittance lines, as well as create new remittance lines.
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Form validates that total amount of all remittance lines does not exceed the receipt amount.

Example for a manual Quickcash batch:

Post Quick Cash program was enhanced to launch the new Automatic Application concurrent
program: Automatic Cash Application Master Program

The Post QuickCash program will first process all the receipts in the quick cash batch. If the user
selects the application type as Automatic Matching Rule then the Post Quick Cash program
will not apply the receipt. When the Post Quick Cash program has completed its processing it

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will launch the Automatic Application program to match and apply the receipts having
application type as Automatic Matching Rule.

Changes in Lockbox

The Lockboxes setup form was enhanced to store processing options for automatic receipt
matching.

Setup>Receipts>Lockboxes>Lockboxes

The lockbox import and validation programs will be enhanced to support the new automatic
receipt matching process.

The receipt matching section of the Lockboxes form has three new setup fields to define the
processing options for automatic receipt matching. The new fields are:

1. A new checkbox Use Automatic Matching Rules to specify that receipts processed
through lockbox will be applied using automatic matching rules.
2. A new field Automatic Matching Rule Set to store the automatic matching rule set,
which would be one of the sources for populating the automatic matching rule set on the
receipts processed through lockbox.

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 3. A new checkbox Use Autocash Rules when no lines found to specify that receipt should
be processed using Autocash rules when no remittance lines are available for automatic
matching.

Two new tables were created to store receipt remittance information. The tables will store the
remittance lines imported through lockbox as well as remittance lines manually entered by the
user from Quick Cash form or Receipts workbench.

AR_CASH_REMIT_REFS_INTERIM - An interim table used to store the reference information

that would be processed in the given run.

AR_CASH_REMIT_REFS_ALL - This table holds the remittance reference information

provided for AutoApply.

If the user has selected to use automatic matching process then the lockbox processing will work
as follows:

1. The Process Lockboxes program will not validate the transaction reference information
like reference numbers (Invoice1 to Invoice8 columns) and reference dates (Matching
Date1 to Matching Date8 columns), etc.
2. The Process Lockboxes will not match receipt remittance lines with customer debit items.
3. The Process Lockboxes will not populate the receipt application information in the
interim receipt tables.
4. The Process Lockboxes will populate the transaction reference information in a new
remittance lines table. The mapping between lockbox transmission format attributes and
remittance lines table is as follows:
a. Invoice1 to Invoice8 attributes will be mapped to Reference Number column.
b. Matching Date1 to Matching Date8 attributes will be mapped to Matching Date
column.
c. Amount Applied1 to Amount Applied8 attributes will be mapped to Amount
column.
d. Amount Applied From1 to Amount Applied From8 attributes will be mapped to
Amount Applied From column.
e. Invoice Currency Code1 to Invoice Currency Code8 attributes will be mapped to
Currency column.
f. Customer Reference1 to Customer Reference8 attributes will be mapped to
Customer Reference column.
g. Trans to Receipt Rate1 to Trans to Receipt Rate8 attributes will be mapped to
exchange rate column.
h. Installment1 to Installment8 attributes will be mapped to Installment Number
column.
5. Process Lockboxes program will populate application type as Automatic Matching Rule
in the interim receipts table. However, if the receipt does not have any remittance lines
and the user has selected the option Use Auto Cash Rules when no lines found then the
lockbox program will populate application type as Auto Cash Rule.

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 6. Process Lockboxes program will derive the automatic matching rule set and populate in
the interim receipt table. Rule set will be derived using the following hierarchy:
a. If the customer is identified for the receipt then:
i. From the customer site profile
ii. If rule set is not attached to site profile then from the customer account
profile

b. If the customer is not identified or no rule set is defined for the customer site or
account then the automatic matching rule set assigned to the lockbox.

Changes in Quick Cash Process

The Post Quick Cash program was enhanced to launch the new Automatic Application
concurrent program.

The Post Quick Cash program will first process all the receipts in the quick cash batch. If the
user selects the application type as Automatic Matching Rule then the Post Quick Cash
program will not apply the receipt.

When the Post Quick Cash program has completed its processing it will launch the Automatic
Application program to match and apply the receipts having application type as Automatic
Matching Rule.

Changes in Receipts Form

The Receipts form was enhanced to provide new attributes for automatic matching.

Two new attributes were added in tab More on Receipts form:

1. Use Automatic Matching Rules checkbox to indicate whether receipt is eligible to

automatic application using auto match rules.
2. Automatic Matching Rule Set field to store the automatic matching rule set to be used for
automatic application.

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In Tools menu of the receipt workbench was added a new menu item Remittance Lines.

Selecting this action will open the Remittance Lines and Suggested Matches form.

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The form Remittance Lines and Suggested Matches displays the remittance lines imported
through lockbox process as well as manually entered by the user.

The form will also display the suggested matches generated by the Automatic Application
program.

Each remittance line has a status of either:

Auto applied when the Auto Applied checkbox is selected

Manually applied when the Manually Applied checkbox is selected
Not applied when neither Auto Applied or Manually Applied checkboxes are selected

The form allows user to update the remittance lines when they are not yet applied. Once either
auto applied or manually applied, users cannot update the remittance lines.

If the remittance line is not applied then user can select one of the suggested matches for the line
and apply the same by clicking the Apply button. The Apply button will navigate the user to
Application form and populate the application information.

For current record in Remittance Lines region, the Suggestion Matches region will show one or
more suggested matches for the remittance line.

For an unapplied remittance line, user can select one or more suggested matches to apply, by
click on the Select checkbox in the Suggested Matches region. If the user selects more than
one suggested match the system will prorate the remittance line amount in the ratio of remaining
balance for the selected suggested matches. For applied remittance lines, user cannot select any
suggestion match for application.

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Rules for selecting the suggested matches for application are as follows:

If the customer is already identified for the receipt then user can select suggested matches
belonging to the customer on the receipt as well as the customers with whom that
customer has paying relationship. If the Allow Payment of Unrelated Transactions
option is selected in the System Options then transactions belonging to any customer can
be selected for application.
If the customer is not already identified for the receipt then all suggested matches
selected should belong to same Bill To Customer.

Note: In this case, system will associate the receipt with the customer whose transactions are
selected from suggested matches.

In Actions menu was added a new menu item Auto Apply which will launch the Automatic
Cash Application concurrent to automatically apply the receipt.

Automatic Cash Application Concurrent Program

The purpose of the Automatic Cash Application Master Program concurrent program is to
match an unapplied receipt in the system with an outstanding AR transaction using the user-
defined matching rules.

In cases when the matching score equals to or exceeds the threshold for automatic match, the
credit will be automatically applied.

In cases when the matching score equals to or exceeds the threshold for suggested match but
does not reach the threshold for automatic match, the remittance line will not be automatically
applied. Instead, it will be tagged with suggested matches and the presented to the user and the
user can choose which transactions this receipt should apply to.

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Parameter Required
Operating Unit Yes
Receipt Number Low No
Receipt Number High No
Receipt Batch Name Low No
Receipt Batch Name High No
Minimum Unapplied Amount No
Receipt Date From No
Receipt Date To No
Receipt Method Low No
Receipt Method High No
Customer Name Low No
Customer Name High No
Customer Number Low No
Customer Number High No
No. of Instances (value from 1 to 100) Yes

The Automatic Cash Application Master Program will select a batch of receipts based on the
criteria provided by the user in the program parameters. The program will then apply the
automatic matching rule sets assigned to the receipt to either find a match to apply the receipt or
generate a list of suggested matches. In addition to the selection criteria specified in the program
parameters, the program will select a receipt for auto application only if the receipt:

Has the Use Automatic Matching Rules check box selected;

Has unidentified or unapplied amount available for application;

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 Has unapplied remittance lines available for application.

Once the program selects a receipt for automatic application the program will loop through all
unapplied remittance lines and attempt to automatically apply the remittance line using automatic
matching rules.

The program will use the automatic matching rule set assigned to the receipt to perform
matching.

If a rule is successful in providing automatic match then rest of the rules will not be evaluated.
However, if the rule is successful in only providing a suggested match or does not provide any
match then the program will use the rule with next highest priority.

Once the program finds matches and calculates match scores, it will use the match score
thresholds defined for the automatic matching rules to determine whether the match is eligible
for automatic match or suggested match.

If the program finds multiple matches which exceed the automatic matching threshold then
program will use the match with highest score to apply the remittance line.

Following conditions must be satisfied for the system to automatically apply the remittance line:

If the customer is already identified for the receipt then the select matches must belong to
the customer on the receipt or the customers with whom that customer has paying
relationship. If the Allow Payment of Unrelated Transactions option is selected in the
System Options then transactions can belong to any customer.
If the customer is not already identified for the receipt then all selected matches should
belong to same Bill To Customer.

Note: In this case, system will associate the receipt with the customer and Bill To location,
whose transactions are selected for automatic application.

Apart from the threshold for automatic match, the selected match should also satisfy the
Match on Corresponding Date and Match on Corresponding Amount conditions of the
Automatic Matching rule.

If the program is successful in finding a match then the program will apply the receipt. This will
ensure that all the existing validations will be applied for receipt application.

After a match is successfully applied, system will:

1. Update the Auto Applied flag of the remittance line to selected state.
2. If the receipt has customer location assigned then updated the customer site profile to
store the auto match rule, the one that was successful in the finding the match. If the

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 customer location is not assigned to the receipt then update the customer account profile
to store the auto match rule.

Application to Balance Forward Bills:

In the case of applying a remittance line to a Balance Forward Bill, system will:

First select all open transactions of the bill;

Sort them by transaction date;
And then apply the remittance line amount in the sort order till the application amount is
exhausted.

Suggested Matches:

If the program fails to find automatic match but finds match with a score, which exceeds the
suggested match threshold then the program will populate the new table introduced to store the
suggested matches. For generating suggested match, the program will not apply the Match on
Corresponding Date and Match on Corresponding Amount conditions of the Automatic
Matching rule.

The program also assign the exception reason from the automatic matching rule set to the receipt,
if the receipt has at least one unapplied remittance line which the program could not
automatically apply.

The program provides an execution report as output, which will list the matching outcome for the
each remittance line processed by the report.

The program is capable for parallel processing to improve the performance. Based on the value
specified for the No. of Instances parameter, the program will launch the child requests which
will process the data in parallel.

Menus and Function Security Options

A new menu entry Automatic Matching Setup was introduced to provide access to automatic
matching setup UI pages. This menu entry will navigate user to the Maintain Automatic
Matching Rule Sets page. This menu entry was added to the existing seeded menu
AR_SETUP_RECEIPTS_GUI.

New security functions were introduced to control creation and updating of automatic matching
rules. The new functions are as follows:

Create Automatic Matching Rule To control access to Create Automatic Matching

Rules page.
Update Automatic Matching Rule - To control access to Update Automatic Matching
Rules page.

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 Create Automatic Matching Rule Set To control access to Create Automatic Matching
Rules Set page.
Update Automatic Matching Rule Set - To control access to Update Automatic Matching
Rules Set page.

The above new functions are added to the seeded menu AR_SETUP_RECEIPTS_GUI.

Other Seed Data

Automatic Cash Application Exception Reasons will be maintained through lookup codes.
The following lookup will be seeded:
Automatic Cash Application Exception Reason
Table: FND_LOOKUPS
Lookup Type: AR_AUTO_CASH_APP_EXCEPTION_REASONS
Meaning: Automatic Cash Application Exception Reasons
Application: Receivables
Description: Automatic Cash Application Exception Reasons
Access Level: Extensible

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