EAM Billing

Enterprise Asset Management (eAM) –

Work Order billing

An Oracle White Paper October 2004 Version 1.0

ii

eAM – Work Order Billing

EXECUTIVE SUMMARY.................................................................................................. 1 INTRODUCTION............................................................................................................... 1 CONCEPTS IN EAM BILLING...................................................................................... 2 DESCRIPTION OF THE INITIAL SETUP................................................................. 2

eAM Parameter - “Invoice Billable Items Only”......................................................... 3 Setting up billable item...................................................................................................... 4

“Cost Plus” setup for items......................................................................................... 4 “Price List” setup for items......................................................................................... 5

Setting up billable resource .............................................................................................. 6 Maintenance Bill Of Material (BOM) & Routing........................................................ 8 Setting up billable activity................................................................................................. 9 Setting up customers.......................................................................................................10 Setups in Oracle Receivable...........................................................................................11

WORK ORDER..................................................................................................................13 BILLING...............................................................................................................................15

Bill by requirements.........................................................................................................15 “Cost Plus”- billing basis ...........................................................................................16 “Price List” - billing basis ..........................................................................................18

Bill by activity...................................................................................................................19 CREATING AR INVOICE..............................................................................................20

Checking invoice details .................................................................................................20 CONCLUSION...................................................................................................................22

1 –eAM – Work Order Billing

eAM – Work Order Billing

EXECUTIVE SUMMARY

Oracle Enterprise Asset Management (eAM) provides features to create work orders. For these work orders , it is possible to estimate and track costs involved to complete the work . In certain scenarios the cost involved in a work order is to be charged across to a customer . This functionality of charging customers by means of an invoice is currently available through eAM Work Order Billing.

INTRODUCTION

Certain costs like material, labor and equipment will be involved in completing a work order. If the maintenance department maintains the enterprise asset then the costs are generally tracked by the general ledger accounts. But the costs involved are not always limited to the particular department /organization . In some scenarios, the costs of a work order need to be charged to a customer, be it Internal customers (departments within an organization) or external customers. eAM billing is used for the above mentioned purpose. Work order Billing enables invoice to be created based on the material or resources used for the work order or based on the asset activity.

eAM billing provides features to bill both internal and external customers. The price involved in the work order could be over- ridden by a certain percentage. The cost for the material, resource or the activity could be defined as a particular cost or could be picked up from a price list.

This paper covers the basic setup and functionality of eAM Billing.

EAM Billing could be done either based on requirements or based on activity. This paper covers both the type of billing with an example.

Readers with an understanding of basic concepts of enterprise Asset management and costing steps would be in a position to appreciate the entire gamut of this paper.

Note: The paper has been written with Oracle Application Release 11i in mind (11.5.9 to be specific). The screen shots indicated pertain to the 11i.


CONCEPTS IN EAM BILLING

EAM Billing could be done either

based on the material and resources involved in the work order. This is known as “Bill By Requirements”

or based on Asset activity costs associated with the work order. This type of billing is known as “Bill By Activity”

In EAM Billing, an “item” represents an activity, material, or a resource, which is charged to the customer. The billing basis for the item could be either Cost Plus or Price List.

Cost Plus - The cost plus method uses the costs associated with the item. Therefore, the item should have a cost defined for it. Ensure that within the costing tabbed region for the item, the following two check boxes are selected: “Costing Enabled” and “Inventory Asset Value”.

Price List - The price list method uses a specified price list. Therefore, the specified item should have an entry in the price list.

The billing basis affects the item setup. If you want the ability to use both types of billing basis for the item, you need to follow both setups. It is possible to have the flexibility of using both billing basis types for an item and to gain that flexibility, it would be necessary to set up both costs and prices for that item.

DESCRIPTION OF THE INITIAL SETUP

Two organizations are used in this paper. The manufacturing organization is FORD MANUFACTURING UNIT, FM. The eAM organization attached to FM is FORD MAINTENANCE UNIT, FMU. FMU treats FM as an external organization. The definition for the FM organization is shown below :


The FMU organization takes up the maintenance of Pickup trucks that are used in the Ford Manufacturing unit (FM). The Asset Group defined for the pickup trucks in FMU is “ Pick Up Trucks”. The Asset numbers under this Asset Group are PUT001, PUT002 and PUT003. There are three major activities that FMU carries out on the Pick Up trucks:

Tire Retreading

Brake maintenance

Engine Overhauling

In this paper, Invoices for the “Tire Retreading” & “Brake maintenance “ activities would be billed by Requirement and the invoices for “Engine Overhauling” Activity would be based on asset activity cost .

The billing basis for the “Tire Retreading” activity would be “Cost Plus” and that for the “brake Maintenance” and the “Engine Overhauling” activities would be “Price List”.

eAM Parameter - “Invoice Billable Items Only” In the Enterprise Asset Management responsibility, access the eAM Parameters window to decide whether Invoice could be raised only for items/ activities that are billable. This is decided by the “Invoice billable Items Only” parameter. Billable items are those that have a populated value within the Billing Type field, within the Service Tab, of the Master Item window. Billing Type is relevant only if this check box selected. Also, selecting this check box means that a different item to be billed can be chosen.


Setting up billable item

“Cost Plus” setup for items

The Work orders for the “Tire Retreading” activity are based on requirements and the billing basis is Cost plus. To have the items billed based on Cost plus,

Ensure that within the costing tabbed region for the item, the following two check boxes are selected: Costing Enabled and Inventory Asset Value.

Within the Service tabbed region, within the Master Item window, select “Material” as the Billing Type. This is only relevant if you selected the “Invoice Billable Items Only” check box, within the “Enterprise Asset Management Parameters” window. Do NOT select the “Serviceable Product” check box.

Setup the item costs in the cost setup window (Navigation: Cost Definition / Item Costs / Item Costs).


The cost setup for the material “Precured Rubber Thread” is shown below:

The cost type used here is Maint. Similar setup is done for “Black vulcanizing cement” and “Maintenance oil”. The cost for each item involved in the “Tire Retreading” activity is shown below :

Material Cost Precured Rubber tread $ 2.00 Black Vulcanizing Cement $ 1.00 Maintenance Oil $ 0.50

“Price List” setup for items

The Billing for the “Brake maintenance” Activity is done based on requirements and the billing basis is “Price List”. To have the items billed based on the Price list

The item should have the “Customer Ordered” check box selected within the Order Management tabbed region, within the Master Item window.

Within the “Service” tabbed region, within the “Master Item” window, select “Material” as the billing type. This is only relevant if the “Invoice Billable Items Only” check box is selected in the “Enterprise Asset Management Parameters” window. The “Serviceable Product” check box SHOULD NOT be selected.


The list Price for the material required for the “Brake Maintenance” activity is added to the “Corporate” Price List as shown below (Navigation: Pricing / Price Lists / Price List Setup) :

The cost for each material item involved in the “Brake maintenance” Activity is shown below :

Material Cost Brake Lining $ 4.00 Brake Oil $ 1.00 Maintenance Oil $ 0.75

After setting up the items, receive the material into the organization.

Setting up billable resource

Define an item that represents a resource. Enable the “Costing Enabled” and “Inventory Asset Value” in the “Costing” tabbed region (OR) the “Customer Ordered” check box in the “Order Management” tabbed region depending on whether the costing basis is “Cost Plus” (OR) “Price list”.

Within the “Service” tabbed region, within the “Master Item” window, select “Labor” as the billing type. . The “Serviceable Product” check box SHOULD


NOT be selected.

Define a resource within the Resources window. In the “Billing” block (in the “Resources” window), attach the item (resource item defined in the first step).

Rates for the resource defined in the resource window will not be used in billing. The billing rates defined for the associated item will be used either from the item cost or from the item price in the price list.

Assign the Resource to the Department.

The Resource details for the “Tire Retreading” Activity are

Resource Billing Basis

Resource Item Department Cost

TRW Cost plus TRW Resource item

Haden $ 1.00

Helper Cost plus Helper resource item

Haden $0.75

The Resource details for the “Brake Maintenance” Activity are

Resource Billing Basis

Resource Item Department Cost

BMW Price List BMW Resource item

Haden $ 1.00

Helper Price List Helper resource item

Haden $0.75


Maintenance Bill Of Material (BOM) & Routing The “Tire Retreading” and the “Brake Maintenance” activ ities are set up using the “Activities” window. The maintenance BOM for “Tire Retreading” activity is shown below :

Maintenance Routing for the “Tire Retreading” activity is shown below :

The BOM and Routing for the “Brake Maintenance” activity is defined using the same steps as mentioned for the “Tire Retreading” activity. For convenience, the quantity of the items in the BOM and the usage in the routing is defined as 1 for both the activities.


Setting up billable activity

Invoices raised for the “Engine Overhauling” activity will be billed based on activity costs. To set up a billing activity, follow the steps mentioned below.

Within the “Invoicing” tabbed region, within the “Master Item” window, select the “Invoiceable Item” and “Invoice Enabled” check boxes.

The billing basis for this activity is “Price List”. In order to set up the activity to be billed based on the price list, the “Customer Ordered” check box must be selected within the “Order Management” tabbed region, in the “Master Item” window .


The unit price for the activity is set up in the “Corporate” Price List (Navigation: Pricing / Price Lists / Price List Setup). The unit price for the “Engine Overhaul” activity is $10.

Setting up customers

The invoice has to be created against a customer .

The setup of customers could be done under Accounts receivable. Navigate to the customers definition form (Navigation: Customers / Standard).

In the “Addresses” tab, click on “New”/”Open” button to add/edit an existing address. In the “Customer Addresses” form, navigate to the “Business Purpose” tab and ensure to add “Bill to” usage.


In the “Customer- Standard” form, navigate to the “Classification” tab. Choose the “Customer Type”. The options available here are “External” and “Internal”. Ford Manufacturing Unit is treated as an external organization to FMU.

Setups in Oracle Receivable

Check whether “Work Order Billing” is set up as a source for transactions. Navigate to the Transaction sources window (Navigation: Accounts Receivable: Setup / Transactions / Sources) .

Another setup to be verified is whether the flexfield definition for work order billing is defined. Navigate to the descriptive flexfield definition (Navigation: Setup / Financials / Flexfield / Descriptive / Segments). Query for “Line Transaction Flexfield” in the “Title” field. Check whether the “Work Order Billing” code exists within the “Context Field Values” region. The “Work Order Billing” structure must have the following segments:


Work order

Work Order Id

Invoice Number

Line Number.

The definition of the flexfield is shown below:


WORK ORDER Create a work order for the asset number – activity combination. The work order, BILL1, created for the “PUT001 – Tire Retreading” is shown below ( The material and resource requirements are also shown) :

Similarly Work orders BILL2 and BILL3 are created for “PUT001 – Brake maintenance” and “PUT001 – Engine Overhaul” respectively. If the Billing is based on requirements , ensure that the material and the resources are applied to the resources. Only if the material and resource are applied to the work order they will be seen in the billing.

Issue material to the work order using the WIP component issue (Navigation: Work Order Transactions / Material Transactions) or via a material issue verification. The material transaction for the Work order Bill1 is shown below


Charge resources to the work order using the resource transaction screen (Navigation: Work Order Transactions / Resource Transactions).

The material and resource transaction for BILL2 is also done as shown for BILL1 Complete the work order (Navigation: Work Order Completion / Work Order Completion). Change the status of the work order to COMPLETE – NO CHARGES.


BILLING

Work orders created for the asset number – activity combination can be billed. An important point to be noted here is that only work orders with status as either CLOSED or COMPLETE – NO CHARGES are eligible for Billing.

Bill by requirements

In this type of Billing , the bill is created based on the material and resources involved in the work order. The Bill by requirement is discussed below for the work orders BILL1 and BILL2.

Steps

The “Find Work Orders “ screen is used to search for work orders for which billing is to be done.

The work order search could be done based on either one or combination of some of the following criteria:

Work Order or Work request number

Asset Group or Asset number

Asset Activity

Work Order status

Start or completion dates of the work order

Owning Department

Click on “Find” button. This would populate the work orders block with all the work orders which satisfy the condition defined in the first step.


Choose the “Bill By Requirements” button.

If the bill is to be raised for an internal customer, then mark the “Internal Customer” check box. If this is marked then the list of values for the “Customer” field is limited to internal customers alone. If the profile is left unchecked, then the customers LOV would display both the internal & external customers.

Choose the customer from the list of values provided. The work order BILL1 is to be billed to the FU organization . The customer details entered for the billing is shown below :

The Billing Basis for the work order could be either “Cost Plus” or “Price List”.

“Cost Plus”- billing basis

All billable items should be costing enabled (In the “Costing” tabbed region for the item, “Costing Enabled” check box must be checked) and the cost must be defined for the item under the cost type which would be used for the billing purpose. The work order BILL1 would be billed based upon the costs defined for the items.

Enter the cost type to be used for the billing purpose.

Enter the markup percentage. The markup percentage would increase the defined item cost by the percentage mentioned.. In this example, for BILL1, the markup % is 20%.

Enter the billing currency. There are times when the billing currency would be different from the organization currency. In such scenarios, the currency conversion block must be populated with the appropriate values. For BILL1, the organization currency and the billing currency are the same (USD).


Click on “Calculate Amounts” button. This calculates the unit rates to be used for each billable item and not the total amount.

In the “Billing by Requirements” block, it is possible to change the quantity for the items. This quantity to be billed should not be greater than the difference between the applied quantity and the previously billed quantity. The applied quantity is what has been applied/used by the work order. For material, it implies the material issued to the work order. For resources, it implies the resources charged to the work order.

Choose the items to be billed. For BILL1, the maintenance oil used would not be billed to the customer. All the other items are to be billed. The two screen shots provided below show the billing details :


The calculated/ billed amount for the work order BILL1 is $5.70

Click the “Initiate Billing” button. This would populate the RA_INTERFACE_LINES_ALL interface table. A success message will be displayed as shown below:

In the “Find Work Orders” window, click on “View Past Details” to get information about the invoices created.

“Price List” - billing basis

All the steps mentioned above for the work order BILL1 hold good for the “Price List” method. The only exception to the steps mentioned above would be choosing of the billing basis. In the “Work Order Billing” form, choose the “Billing Basis” as “Price List” and choose the price list. All billable items should be present on the price list selected. It is not possible to mark up the price in this case. The Work Order BILL2 will be billed based on the “Corporate” price list. The billing definition is shown below:


The Billing amount for BILL2 is $7.50

Bill by activity

Finding the work order is similar to the steps mentioned under “Bill by Requirements” section.

Choose “ Bill by Activity”.

Enter the customer details and the billing basis as mentioned under “Bill by Requirements”. Click “Calculate Amounts”.

Initiate billing.

For BILL3, the billing basis is “Price List” and the price list is “Corporate”.


CREATING AR INVOICE

The next step in billing process is to create the invoices for the work orders that were billed.

The “AutoInvoice Master Program” is run to create invoices from the lines that were populated in the RA_INTERFACE_LINES_ALL table. (Navigation : Accounts receivable : Interfaces / Auto invoice).

Choose a suitable value for “Number of Instances” parameter. An instance refers to how AutoInvoice groups and processes transactions. Submitting a greater number of instances enables import of transactions into Receivables faster.

For the transaction source, choose “Work Order Billing” as the value.

Enter a value for the parameter “Default Date” The date entered must be in an open/future period.

Submit the request.

Checking invoice details

To view the details of the invoice created, navigate to the “Transactions” form (Navigation : Accounts Receivable : Transactions / Transactions).

Query based on the Transaction number and the source (Work Order Billing). The invoice created for the work orders BILL1, BILL2 & BILL3 is shown below :


In the “Transactions” form, click on “Line Items” to view the invoice lines. In the following invoice, lines 1 – 4 are the details imported for BILL1, lines 5-9 are for BILL2 and line 10 is for BILL3. The billed amounts are as follows:

$5.70 for BILL1

$7.50 for BILL2

$10.00 for BILL3.

The invoice total amounts to $23.20.

Please note that the item description seen in the imported invoice transaction line is not the description of the item but displays the work order name and wip_entity_id (against which the item/activity is billed).


CONCLUSION

eAM Billing functionality was introduced in EAM.I. This paper aimed at covering the basic setups and the process of eAM Billing taking a hypothetical business scenario and test data. The paper covers the complete cycle starting from setups in eAM & Receivables to creation of invoices.

Enterprise Asset Management (eAM) – Work Order billing

October 2004 Author: Karthikeyan Balasubramaniam, Vikrant Vartak

Contributing Authors: N/A

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EAM Billing