R12 Financials Upgrade

RELEASE 12

Upgrade Considerations by Product (FINANCIALS)

Applications Release: 12

Author: Financials Product Development

Creation Date: January 22, 2009

Last Updated: March 8, 2010

File URL:

Draft / Version: v6.0

Status: Final

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Table of Contents

Table of Contents ...............................................................................................................2

Introduction ........................................................................................................................3

Oracle Advanced Collections ............................................................................................4

Oracle Advanced Global Intercompany Systems ...........................................................6

Oracle Assets ....................................................................................................................10

Oracle Cash Management ...............................................................................................13

Oracle General Ledger ....................................................................................................16

Oracle Legal Entity Configurator ..................................................................................21

Oracle Payables ................................................................................................................24

Oracle Payments ..............................................................................................................30

Oracle Receivables ...........................................................................................................34

Oracle Subledger Accounting .........................................................................................39

Oracle E-Business Tax .....................................................................................................43

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Introduction

This document is a supplement written by professionals in Oracle’s Product Development

organization that provides product level considerations to help you understand the issues

that your project team should consider when upgrading to E-Business Suite Release 12. It

describes the significant new features available in Release 12 and then gives process

changes, configuration changes and considerations as relevant for each product. It should

be used in conjunction with the published product specific user and implementation

guides for Release 12 when planning your upgrade.

Prior to reviewing this document, the reader is advised to be familiar with the following

Release 12 documentation:

Oracle Financials Concepts Guide

Oracle Financials Implementation Guide

Oracle Financials and Oracle Procurement Functional Upgrade Guide: Release 11i to

Release 12.

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Oracle Advanced Collections

Release 12 of Oracle Advanced Collections extends transactional and customer data in

collection management processes within and across operating units (OUs). New Multi-

Org Access Control security profiles manage each collector’s access to operating units to

which they are assigned. This provides them with the visibility to customer data and

balances within or across OUs on their collector work list and specific screens for a more

complete understanding of each customer’s collections situation.

Other new features in release 12 Oracle Advanced Collections include:

• New Implementation Checklist and Setup Screens

• Improved Payment Processing and Customer Funds Capture through

integration with Oracle Payments

• Use of Oracle Territory Management to Define Collections Territory

Hierarchies

Finally, the collections workbench in Oracle Receivables has been replaced with

functionality from Oracle Advanced Collections. Details on the collections features

available in Oracle Receivables and Oracle Advanced Collections are provided in Oracle

MetaLink Note 389443.1.

Planning Considerations

If you have used the Collections Workbench in Oracle Receivables you must upgrade to

either Oracle Advanced Collections or the new functionality in Oracle Receivables.

Oracle Advanced Collections provides the flexibility and high degree of configurability

required by enterprise collections agents and managers responsible for managing

delinquent customers and collections-related issues. It includes configurable scoring and

strategy management tools, configurable customer metrics, later-stage collections

tracking capability, and is directly integrated to a number of other Oracle EBS products

including Oracle Territory Manager, Oracle Trade Management, Oracle Leasing and

Oracle Loans.

The collections functionality available in Oracle Receivables is intended for AR clerks

who occasionally perform collections activities. Receivables users who have not

purchased a license for Oracle Advanced Collections are not authorized to use the full

feature set of this product. Therefore, your planning team should consider the long-term

operational requirements of your collections group and upgrade to the appropriate

collections management capability that best fits those requirements.

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Process Change

• Pay heed to the order and frequency in which the concurrent programs that

automate the collections processes are run. For instance, some organizations

run their scoring or dunning processes in synch with their billing cycles while

others run them more frequently.

• Based on MOAC security, collections agents will be able to see across

operating units and will need to consider this additional information as they

review and work with customer accounts.

• For collections organizations where collectors or collector groups are

responsible for managing specific customers, collections territories can be

created in Oracle Territory Manager to facilitate and manage customer

assignment and customer-related work assignment.

• Customer call activity created in Oracle Receivables prior to upgrading to

Release 12 can be viewed from the Collections History tab by selecting

“Receivables Calls” from the “Type” List of Values.

Configuration Change

• Start by using the new Collections Implementation Setup tool to create pre-

production collections systems for conference room pilots and testing. Once

you go live, your production collections system settings can be easily

modified with the Setup Tool when changes are needed.

• Review and use the pre-configured elements (correspondence templates,

scoring models, strategies and work items, and metrics) in pre-production

phases of your upgrade. Then add or adjust those elements as needed.

• Aging-based dunning plans in R12 (for either Advanced Collections or

Receivables users) include:

o Configurable dunning letter templates using Oracle BI Publisher

o Output as email, fax or print

o Optional dunning calls assigned to collector for follow up

Considerations

• Collections scoring and collections strategies are not extended to OU level.

Highest level for these are still ‘Customer’

• Dunning plan capability is available for both Advanced Collections and

Receivables users. Configurable collections strategy management (which also

supports dunning activities) is available in Oracle Advanced Collections.

• New collections scoring models and customer metrics in Oracle Advanced

Collections are best configured by qualified DBAs. New scoring and metrics

are usually created during your upgrade project, prior to going live with the

module.

See Oracle Advanced Collections Implementation Guide and Oracle Advanced

Collections User Guide for more information.

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Oracle Advanced Global Intercompany Systems

Oracle Advanced Global Intercompany Systems is a new product in Release 12,

replacing the Global Intercompany System in earlier releases. It allows companies to

streamline intercompany processing and facilitates intercompany reconciliation.

The key components of the Advanced Global Intercompany System are:

• Intercompany Balancing

• Manual Intercompany Transactions

• Intercompany Invoicing

• Intercompany Reconciliation

Intercompany Balancing

Overview:

Intercompany Balancing calculates intercompany accounting when transactions are

entered directly in the Advanced Global Intercompany system, and also when

intercompany transactions occur in Oracle General Ledger and Oracle Subledger

Accounting. Intercompany Balancing uses the same single set of intercompany

accounts and rules for consistent accounting treatment throughout Financials. During

the R12 upgrade, GIS data is upgraded to AGIS, and you can then use R12

functionality to:

• Define all intercompany accounting definitions centrally.

• Support true legal entity for intercompany transactions between legal entities.

• Maintain separate intracompany accounting for transactions between

balancing segments in the same legal entity.

• Track trading partners in a separate optional intercompany segment.

Process Change

• Accounting Setup Manager in Release 12 has a separate setup screen for

Intercompany / Intracompany accounts.

• Release 12 supports legal entity integration with intercompany balancing rules

for intercompany accounts when two legal entities trade. Legal entity

configuration is not needed for intracompany balancing between pairs of

balancing segment values within the same legal entity.

• Intercompany balancing supports separate Intercompany Payables and

Intercompany Receivables accounts rather than a single intercompany due

to/due from account.

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• You can create an optional intercompany segment in your chart of accounts

structure. It will automatically be populated with the balancing segment value

of the trading partner to provide more detail for reporting and reconciliation.


• The R12 upgrade converts intercompany accounts created in GIS into

intracompany balancing accounts and rules. Auto-Accounting rules in GIS are

not upgraded, and need to be set up as Account Derivation Rules and

compiled with the Transaction Account Builder in Subledger Accounting.

• To use intercompany accounting rules, you need to setup legal entities for

transacting subsidiaries, map them either to ledgers or balancing segment

values, and specify them as intercompany organizations. As part of the

upgrade, GIS subsidiaries will be converted to intercompany organizations,

one for one. You need to verify post-upgrade that the correct legal entity has

been assigned to the intercompany organization so that it can be used. In some

cases the automatic upgrade may not have been able to identify one and only

one legal entity to associate to an intercompany organization. In that case the

organization will be inactive and must be updated with the correct legal entity

before it can be used in transactions.

• The R12 Grant Based Security Model maps intercompany organizations to

users instead of responsibilities. Security grants are created for the users based

on the subsidiaries assigned to the responsibilities that each user was assigned.

A user may be given access to many different intercompany trading partners

regardless of the responsibility used to log in.

Considerations

• See Oracle Advanced Global Intercompany System Release 12 Roadmap

Document

• See Advanced Global Intercompany System White Paper

Manual Intercompany Transactions

Overview

The Manual Intercompany Transaction window facilitates intercompany transaction

processing between different legal entities under one or more ledgers. During the R12

upgrade, GIS data is upgraded to AGIS, and you can then use R12 functionality to:

• Create Intercompany Batches for transactions to multiple recipients (no

restriction on COA, currency, calendar), with optional proration of amounts

across recipients.

• Maintain intercompany periods to control timing of transactions (eg during

period close) and close intercompany periods by transaction type.

• Optionally create intercompany invoices between subsidiaries automatically

• Use Oracle Approvals Manager for intercompany transaction approvals.

• Grant user access to multiple subsidiaries from a single responsibility.

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Process Change

• New workbench for entering manual intercompany transaction batches.

• All GIS new and completed transactions are upgraded as AGIS transaction

batches. Generally, for each GIS transaction a batch is created.


• Approvals Manager setup

• Optionally create intercompany calendar / periods to control timing of

intercompany transaction entry.

• Setup intercompany invoicing options. When GIS transaction types are upgraded,

the Allow Invoicing option is set to Not Required. In order to take advantage of

the new invoicing feature in AGIS, you should manually select the Allow

Invoicing check box for transaction types where invoicing is required.

Considerations

• See also configuration changes / considerations for Intercompany Balancing –

these apply to all intercompany setup (eg setting up legal entities and mapping

them to intercompany organizations, creating intercompany accounts and rules,

intercompany function security and data access).

Intercompany Invoicing

Overview

Advanced Global Intercompany System interacts with the subledgers to facilitate creation

of a physical invoice for an intercompany transaction in both Receivables and Payables.

Release 12 highlights for Intercompany Invoicing:

• Intercompany uses Oracle Receivables to produce invoices for the initiator.

Once the Receivables transaction is completed, the invoice number is then

automatically used to create a consistent mirror-image invoice in Oracle

Payables.

Process Change

• Create intercompany invoices automatically where statutory or business

practices require them.

• GIS transaction types are upgraded to the new intercompany system

transaction types. When GIS transaction types are upgraded, the Allow

Invoicing option is set to Not Required. In order to take advantage of the new

invoicing feature in AGIS, you should manually select the Allow Invoicing

check box for transaction types where invoicing is required.


• Setup and assign operating units to ledgers (as part of Accounting Setup

Manager) in order to use intercompany invoicing within the subledgers.

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• Create additional AR customers and AP suppliers to represent your

company’s subsidiary legal entities.

• Map the intercompany organizations that are trading partners to AP Suppliers

and AR Customers in TCA.

Considerations

• Intercompany invoices are only created for manual intercompany transactions

(i.e. not for intercompany journal entries entered directly in GL).

• Creation of additional customer / supplier records and mapping to

intercompany organizations is not done automatically as part of the upgrade.

Intercompany Reconciliation

Overview

Intercompany provides reconciliation tools to sort out any discrepancies in accounting

balances between the intercompany organizations.

Release 12 highlights for Intercompany Reconciliation;

• View intercompany out-of-balance accounts and drill down to details of the

subledger accounting and documents.

• BI Publisher technology for reconciliation reporting: the layout is fully

customizable and can be downloaded to desktop tools (eg Excel or Word) for

further analysis.

Process Change

• Need to run data extract program to populate XML data before using the

intercompany reconciliation report.

• Optionally download report output to Excel for additional analysis.


• Optional – customize BI Publisher report layouts.

See Oracle Advanced Global Intercompany User Guide for more information.

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Oracle Assets

In release 12, Oracle Assets has introduced several enhancements to improve the

efficiency of key Assets processes like mass additions and period end close.

• Subledger Accounting(SLA) Architecture and Inquiries

o Oracle Assets is fully integrated with SLA, which is the common

accounting platform for all E-Business Suite sub ledgers.

o It enables you to comply with multiple legislative, industry or

geography requirements concurrently in a single instance through

configurable rules.

• Enhanced Mass Additions for Legacy Conversions:

o Populate depreciation attributes directly in the FA Mass Additions

interface table or via? Web ADI (application desktop integrator),

rather than accepting default values from the asset category. This

means complete automation of legacy conversions.

o Asset life, depreciation method, prorate convention, bonus rule ceiling

name, depreciation limit are some of the attributes that have been

added to the interface table in Release 12.

• Automatic Preparation of Mass Additions

o Default rules and public APIs can be used to populate expense

account, asset category and other required fields to complete the

preparation of mass addition lines automatically.

o Could significantly reduce the overhead associated with manual

preparation of mass addition lines.

• Automatic Depreciation Rollback

o Depreciation is rolled back automatically when any transaction is

performed on an asset if the period has not yet been closed.

o No longer required to run depreciation rollback program manually.

o Executed only on select assets as required and not on the entire asset

book; resulting in a faster period close.

• Flexible Reporting using XML Publisher

• Enhanced Functionality for Energy Industry

Process Change

• Prepare Mass Additions process provided in Release 12 automatically

populates all the required information for mass additions lines. Mass

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additions data may be optionally verified before posting the mass additions

lines.

• New SLA Accounting report and online account inquiry provided. The

Account Drill Down report has been replaced the Account Analysis report.

• The Create Journal Entries and Rollback Journal Entries programs are now

obsolete. Create Journal Entries has been replaced by Create Accounting.

• The Create Deferred Depreciation Journal Entries program is now obsolete.

Users now need to run Calculate Deferred Depreciation followed by Create

Accounting.

• During upgrade, transactions in the current fiscal year in Assets books will

have their accounting lines migrated to the Subledger Accounting model.

Accounting for current period depreciation will be upgraded only if

depreciation has already run for the period, and the period remains open.

After the upgrade, you can run the SLA post-upgrade process to update

accounting for past transaction data as needed.

• Prior to Release12, accounting records were not created until after

depreciation had run. For example, if you added an asset and went to the

Transaction History form, you would not see any addition accounting lines if

depreciation had not been run. Post upgrade, however, these records would

appear in the Transaction History form for additions, backdated additions,

backdated transfers and retirements.


• New configurable rules for automatic preparation of mass additions.

o You can use default rules provided by Oracle where the expense

account is derived from the clearing account by replacing the natural

account segment from the asset category.

o In addition, default rules populate the asset category based on the

clearing account from the asset category setup (if there is a one to one

match).

o If the default rules do not satisfy your requirements, you can create

custom logic coded in a public API to pre-populate these values.

• Generic Subledger Accounting Architecture configuration has been discussed

in a separate section of this document.

In summary, the key setup steps are:

o Compile the Application Accounting Definition in SLA. Please note

that the pre-seeded account derivation definitions have been provided

for Assets. You can use the seeded account derivation definitions or

modify them as required.

o Complete the Accounting Setup flow in Oracle General Ledger.

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Considerations

• You may have to look carefully at the clearing account in your category

setups if you are planning to use default rules for automatic preparation of

mass addition lines. If you have been using the same clearing account across

different categories, the default rules will not work effectively.

• In Release 12, Oracle continues to support Account Generator functionality

for existing asset books. However, the common SLA platform provides many

opportunities to implement complex accounting rules without customizations.

For instance, some of our customers have requirements where the retirement

account is different based upon the type of retirement (missing, sale, theft,

etc). These accounting rules can be configured in SLA without complex

customizations on your part.

See Oracle Assets User Guide for more information.

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Oracle Cash Management

Oracle Cash Management is an enterprise-wide solution for managing liquidity and

controlling cash. In Release 12, Oracle Cash Management starts leveraging several

architectural cross-product features such as Multi-Org Access Control and Subledger

Accounting.

The key new features in Release 12 are:

• Centralized Internal Bank Account Model

• Bank Account Transfers

• Bank Account Balances and Interest

Centralized Internal Bank Account Model

Overview

In Release 12, internal bank accounts for use in Oracle Payables, Oracle Receivables,

Oracle Payroll, Oracle Treasury and Oracle Cash Management are centrally defined and

maintained in Oracle Cash Management.

Process Change

• Internal bank account usage in Oracle Payables, Oracle Receivables, Oracle

Payroll, Oracle Treasury and Oracle Cash Management does not change in

Release 12. Internal bank account maintenance, however, is done differently as

described below.


• There is new user interface in Oracle Cash Management for bank, bank branch

and bank account maintenance. Windows related to internal bank account

maintenance in Oracle Payables and Oracle Treasury have been made obsolete.

• Privileges to maintain bank accounts are granted to a user role by legal entity in

the Oracle User Management security wizard.

• Internal bank accounts are owned by legal entities. Any operating unit under the

same legal entity can be granted access to the same bank account.

• Bank account reconciliation parameters are now defined at the bank account level.

• Before you can enable bank account usage in Oracle Treasury, you will need to

link a bank-counterparty in Treasury to the bank branch in Cash Management,

using Treasury’s Counterparty Profiles window.

• The system supports country specific validations for the bank account and address

format. When creating new bank accounts, the format and content of the Bank

Number, Branch Number, Account Number and Check Digit will vary according

to the country specific rules. The countries that are supported are Austria,

Belgium, Denmark, Finland, France, Netherlands, Norway, Portugal, Spain,

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Brazil, Colombia, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Poland,

Sweden, Switzerland, United Kingdom, and United States.

Considerations

• During the upgrade, existing internal bank accounts defined in Oracle Payables

and Oracle Treasury are migrated one-to-one into the new bank account model in

Oracle Cash Management. If you previously had to create two separate bank

account records to represent the same real life bank account because it was used

by two different operating units, after the upgrade you will have the option to

disable the duplicate bank account and allow both operating units to use the single

bank account. This will simplify bank account maintenance and bank

reconciliation.

Bank Account Transfers

Overview

In Release 12, users can create cash transfers between internal bank accounts, settle them

through Oracle Payments and account for them using Oracle Subledger Accounting.

Process Change

• New user interface is available for capturing and, separately authorizing bank

account transfers.

• Bank account transfers can be created intra-company (between two bank accounts

belonging to the same legal entity) or inter-company (between two bank accounts

belonging to two different legal entities).

• Reusable bank account transfer templates can be created for accelerated data

entry.


• Privileges to create bank account transfers are granted to a user role by legal

entity in the Oracle User Management security wizard.

• Accounting configuration for bank account transfers is done in subledger

accounting. Seeded journal line definitions are provided for bank account transfer

clearing and un-clearing. Users can define additional journal line definitions for

bank account transfer creation and cancelation.

• Settlement of bank account transfers is done via Oracle Payments.

• If you plan to create inter-company bank account transfers, you will need to

define inter-company accounts in Oracle Advanced Global Intercompany System

in order to create proper journal entries.

Considerations

• Bank account transfers can be created in the system automatically if you have

zero-balance accounts (ZBAs) with your banks.

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Bank Account Balances and Interest

Overview

In Release 12, Oracle Cash Management provides robust functionality for bank account

balance reporting, both online and via concurrent programs with Oracle BI Publisher. In

addition, bank balance interest can be calculated for bank fee or credit verification.

Process Change

• There is new bank balance maintenance user interface in Oracle Cash

Management. Bank balance maintenance in Oracle Treasury is disabled. The data,

however, is replicated between Cash Management and Treasury for bank accounts

used in Treasury, so that the interest accrual and settlement can still be performed

in Treasury.


• There is a new user interface to manage interest rate schedules. Before bank

balance interest can be calculated, interest rate schedules have to be defined and

assigned to bank accounts.

• Basis, Interest Rounding, Day Count Basis and Interest Includes parameters,

previously defined at the bank account balance level in Oracle Treasury, are now

a part of the interest rate schedules in Oracle Cash Management. Portfolio Code,

Pricing Model and Limits, previously defined at the bank account balance level in

Treasury, are now a part of the internal bank account definition in Cash

Management.

Considerations

• Interest amount can be calculated for both standalone bank accounts and notional

cash pools.

• For each bank account and balance date, you can keep track of multiple balance

types: ledger, available, value dated, 1-day float, 2-day float, projected month-to-

date average, and year-to-date average. It should be noted that the system does not

calculate any of these balance types. They can be populated manually or from the

bank statement.

• Projected closing bank account balance can be saved alongside actual bank

account balances using the new button in the Cash Position window.

See Oracle Cash Management User Guide for more information.

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Oracle General Ledger

In Release 12, Oracle General Ledger is significantly enhanced to support multi-national

companies and shared services centers. You can perform simultaneous accounting for

multiple reporting requirements. You can also gain processing efficiencies by setting up,

accessing, and processing data across multiple ledgers and legal entities from a single

responsibility.

Release 12 highlights for Oracle General Ledger include;

• Centralized Accounting Setup

• Data Access Sets

• Ledger / Ledger Set Architecture

• Replacement for Disabled Accounts

Note: There is also a terminology change between Release 11i and Release 12: Sets of

Books are upgraded and renamed to Ledgers – the upgrade retains all 11i settings.

Centralized Accounting Setup

Overview:

In Release 12, the Accounting Setup Manager centralizes the setup and maintenance of

common accounting-related setup that is shared across Oracle Financials applications, for

example:

• Definition of legal entities and associated accounting setup to meet different

accounting principles and reporting requirements of multiple countries using

different currencies, charts of accounts and/or calendars.

• Secondary ledgers and reporting ledgers to create alternate accounting

representations automatically.

Process Change

• Accounting Setup Manager is used to create and maintain accounting setups.

An accounting setup defines the accounting context for one or more legal

entities or other business entities. The upgrade creates a separate accounting

setup for each primary ledger that is upgraded from a set of books.

o Legal Entities: HR Organizations classified as GRE/LEs in Release

11i will be upgraded legal entities in Release 12. Legal entities can be

assigned to a ledger and balancing segment values can optionally be

mapped to legal entities to help identify transactions by legal entity.

o Operating Units: All HR Organizations classified as operating units

will be preserved in Release 12. If operating units are assigned to a set

of books, then they will be associated to a primary ledger in an

accounting setup.

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o Primary Ledger: Most sets of books in Release 11i will become

primary ledgers in Release 12.

o Secondary Ledgers: Multiple-posting set of books (Global Accounting

Engine) will upgrade to secondary ledgers.

o Reporting Currencies: Multiple Reporting Currency (MRC) reporting

sets of books become reporting currencies in Release 12.

o Intercompany Accounts: The Release 11i Global Intercompany

System (GIS) will be replaced by Advanced Global Intercompany

System (AGIS) and GIS features will be migrated to the corresponding

features in AGIS.

o Subledger Accounting Method: All upgraded ledgers in Release 12

will have a subledger accounting method assigned during the upgrade.

Any reporting currencies assigned to the ledger inherit the subledger

accounting method from the source ledger. The subledger accounting

method enables Oracle General Ledger to integrate with Oracle

subledgers using Subledger Accounting. All upgraded, non-public-

sector ledgers will have a subledger accounting method assigned

called Standard Accrual or Standard Cash. All upgraded public sector

ledgers will have a subledger accounting method assigned called

Encumbrance Accrual or Encumbrance Cash. For US Federal

customers, all upgraded ledgers will have the US Federal Accounting

subledger accounting method assigned to them.


• Create legal entities and assign them to accounting setups – either assigned to

ledgers or mapped to balancing segment values.

• Create primary and secondary ledgers and mappings for alternate accounting

representations from single transaction (replacement for the Global

Accounting Engine Dual Posting solution in Release 11i).

Considerations

• Sequencing is determined by the ledger. Journal entries may have multiple

legal entities (each accounting line may be different), so there is no distinct

legal entity of the journal header.

• In Release 11i, users could change settings for certain options on a primary set

of books independently of its reporting set of books. The upgrade will

preserve the Release 11i settings, but in Release 12 these options cannot be

manually updated for reporting currencies because the reporting currency will

inherit its settings from its source ledger. If you modify any of the ledger

options for the source ledger after the upgrade, the settings on the reporting

currency will automatically be changed to be synchronized with the source

ledger.

• You can run the Accounting Setup Manager Pre-Update Diagnosis Report to

view your Release 11i setup for Multiple Reporting Currencies, General

Ledger, Global Accounting Engine, Assets, Payables, and Receivables. This

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report identifies potential problem areas where you may want to modify your

setup in order to take advantage of new Release 12 functionality.

Data Access Sets

Overview

Data access sets allow users to access multiple ledgers and ledger sets within General

Ledger from a single responsibility. This allows you to:

• Secure user access to data by ledger, balancing segment value or management

segment value.

• Grant read-only user access, or read and write access.

Process Change

• Process changes do not directly impact users, but rather control General

Ledger security behind the scenes.

• Security allows you to secure users’ access to data, or portions of data.

• Privileges allow you to grant users’ read only or read/write access to specific

Balancing segment values within a ledger, or to specific ledgers.

• Data access sets work with cross–validation rules and flexfield value security

rules. If flexfield value security rules are defined that prevent certain

responsibilities from accessing certain segment values, those rules are

combined with data access set security.


• The General Ledger Accounting Setup Program automatically creates a data

access set for each ledger and reporting currency (journal level or subledger

level) assigned to a completed accounting setup. The system-generated data

access sets created for each ledger and reporting currency provide full read

and write access to the ledger and all of its balancing segment values and

management segment values.

• (Optional) Manually create data access sets to further control read and write

access to ledgers, ledger sets, or specific balancing segment values or

management segment values for a ledger or ledger set. For example, if you

have a shared accounting setup where multiple legal entities share the same

primary ledger, you can limit a user's access to a legal entity's data by creating

a data access set that secures read and write access to specific balancing

segment values or legal entities.

• To associate a data access set to a responsibility, you must assign a data

access set to the GL: Data Access Set profile option at the Site, Application,

or Responsibility level.

Considerations

• All ledgers and ledger sets assigned to a data access set must share the same

chart of accounts and accounting calendar/period type combination.

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• Use data access sets instead of flexfield value security rules to secure read and

write access to balancing segment values and management segment values.

Flexfield value security rules are still applicable for the other segments of the

accounting flexfield.

• If you have read-only access to a ledger, or read and write access only to some

of its balancing segment values and management segment values, you will not

be able to open and close its accounting periods.

• FSG report output takes into account data access set security and only shows

the data accessible for your responsibility. You must have at least read access

to the data to view it on a report.

Ledger / Ledger Sets Architecture

Overview

Sets of books are upgraded to ledgers in Release 12. Ledger sets allow grouping of

ledgers with the same chart of accounts and calendar / period type, to allow processing

across multiple ledgers simultaneously. They do not have to share the same currency.

This allows you to group the primary or secondary ledgers with their associated reporting

currencies to reduce maintenance efforts and streamline processing.

Ledger sets facilitate the following accounting operations across ledgers:

• Open / close periods for multiple ledgers simultaneously

• Submit concurrent programs for all ledgers in a ledger set

• Cross ledger allocations, recurring journals and year-end closing journals

• Currency translation for multiple ledgers simultaneously

• Financial reporting (FSGs) across ledgers

• Account inquiry across ledgers

Process Change

• Management of multiple ledgers simultaneously by grouping them into ledger

sets


• Create ledger sets to group ledgers with the same chart of accounts and

calendar / period type.

• Assign ledger sets to data access sets for user access and security. The system

automatically creates a data access set each time you define a new ledger set.

The system generated data access set provides full read and write access to the

ledgers in the ledger set. Before you can begin using the ledgers contained in

your ledger set for transaction processing, you must assign the ledger set to

the profile option GL: Data Access Set.

Considerations

• The same ledger can belong to multiple ledger sets, and ledger sets can

contain other ledger sets.

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• Use a ledger set to combine the source ledger with its reporting currencies

(journal and subledger levels) to open and close periods across all ledgers

simultaneously. Both the source ledger and its reporting currency must have

the same open periods to prevent problems during posting in the general

ledger.

Replacement for Disabled Accounts

Overview

Prevent errors & reduce manual intervention in the journal import process by defining a

replacement account for disabled accounts. If specified, the alternate account is used by

the Journal Import process and the Create Accounting program in Subledger Accounting

to replace the original account combination if it is disabled or end-dated.

Process Change

• None


• Define alternate accounts when creating GL account combinations.

See Oracle General Ledger Implementation Guide, Oracle General Ledger Reference

Guide and Oracle General Ledger User Guide for more information.

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Oracle Legal Entity Configurator

In Release 12, Oracle E-Business Suite is moving from an implicit definition of legal

entities to an explicit one. You will be able to define legal entities to meet different

statutory principles and reporting requirements of multiple countries and jurisdictions.

The Legal Entity architecture allows you to represent the legal organization structure

separately from the operational business structure. A highlight of Release 12 is the Legal

Entity Configurator which guides the user through the LE creation process.

Overview

The Legal Entity Configurator allows you to define legal entities to meet statutory

principles and reporting requirements of multiple countries or legal jurisdictions. This

legal entity definition is used in the following business processes:

o Payment runs by legal entity

o Intercompany (legal entity subsidiaries that trade with each other)

o Tax calculations (legal establishments that are registered with a tax

authority)

o Bank account ownership

o Ownership of subledger transactions (eg in Payables or Receivables)

o Reporting at the legal entity level

Process Change

• Subledger transactions are stamped (at header level) with the owning legal

entity in addition to an operating unit.

• The legal entity is determined as follows:

o Each transaction exists within an operating unit and that OU has a

ledger which will account the transactions. If that ledger has more than

one legal entity associated with it, then a hierarchy of LE derivation is

used to default an LE. For example in AR the legal entity derivation

hierarchy for transactions is

1. Transaction Type

2. Batch Source

Assigning a LE to a transaction type or batch source is optional and

only the LE’s mapped to the ledger associated with the OU are

available to assign.

o Legal entity can also be defaulted from the default legal context of an

operating unit if no other default exists. For values to show up in the

LOV associated to a default legal context, an LE must be associated to

the ledger that is assigned to the OU.

o If no default legal entity value is found from any other source, the user

must explicitly provide it during transaction entry.

• Additional information:

22

o How do I define my Legal Entities?

http://davidhaimes.wordpress.com/2007/11/21/how-do-i-define-my-

legal-entities/

o Can I assign an operating unit to 2 legal entities?

http://davidhaimes.wordpress.com/2007/12/11/can-i-assign-an-

operating-unit-to-2-legal-entities/

o Release 12: Legal Entity Uptake

http://www.oracleappshub.com/release12/release-12-legal-entity-

uptake/


• Migration of existing data into legal entities (eg GRE/LEs, AP Reporting

Entities, VAT Reporters, Brazilian Companies and Global Descriptive

Flexfields)

• Create legal entities and assign them to accounting setups. An organization of

type GRE/LE is used as a source for creating an LE during the R12 upgrade.

But after migration there is no link between an HR organization of type

'GRE/LE' and an LE created using the Legal Entity Configurator UIs.

Although it is a source for upgraded legal entities, HR Organization cannot be

used for creating a new LE in Release 12.

• Configure existing organizations to be legal entities or establishments as

appropriate.

• Use Legal Entity Associations to maintain the association between business

constructs (operating units, inventory organizations, inventory locations etc)

and legal constructs (legal entities and establishments).

• Assign legal entities to intercompany organizations (if using AGIS).

Considerations

• There is no Legal Entity uptake in Oracle General Ledger or Oracle Assets –

instead the ledger or balancing segment value is used.

• Sequencing on transactions is still by ledger, not by legal entity.

• If your legal entities share the same ledger attributes (such as chart of

accounts, calendar, accounting method), it is possible for them to use the same

ledger – depending upon your business needs. You can also assign balancing

segment values to legal entities that share the same ledger - recommended for

easier identification of transactions and for reporting purposes. Note that

balancing segments are required for intercompany accounting between legal

entities that share the same ledger.

• If legal entities differ in any of the 4Cs or require different ledger processing

options (like average daily balances, journal approval, or sequencing),

separate primary ledgers are required. It may be possible to group multiple

ledgers into ledger sets for easier processing if need to setup multiple ledgers

for legal reasons.

• In Release 12 there is no direct relationship between an operating unit and a

legal entity. One way of determining the operating units associated with a

23

legal entity is via the ledger associated with both the legal entity and the

operating unit. Note that there may not be a unique relationship between a

legal entity and an operating unit.

See the Oracle Legal Entity Configurator Release 12 Roadmap Document which

describes the published information available for Oracle Legal Entity Configurator,

Release 12. Use this document to ensure that you leverage all existing resources to learn

about, install, implement, and use this product in Release 12.

24

Oracle Payables

In R12, Oracle Payables has made some significant changes in the following areas.

• Supplier Representation in TCA (Trading Community Architecture)

• Invoice Lines

• Payment Process

• AP-AR Netting

Supplier Representation in TCA

Overview

Trading Community Architecture is a data model that allows the deploying

company to maintain information about its parties (customers, suppliers, banks etc) and

their relationships with the deploying company in a centralized place, thereby providing a

single source of truth. It also allows easier cross-product integration.

Process Change

• New user interface presents a clear distinction between the supplier’s

company details and terms and controls for the trading relationship.

• Managing the attributes specific to particular functional areas such as Oracle

Payables, Purchasing and Receiving can be controlled with the use of

Function Security.

• Adding new locations or relationships with additional operating units is

streamlined.

• Each supplier is associated with a party and each supplier site is associated

with a party site.

• Addresses can be entered and formatted based on country specification.

Configuration Change:

• When new suppliers are created the system creates a TCA party behind the

scenes. The information that will be stored in TCA includes supplier name

and legal information, address and contact information. The parties are created

with a party usage of “supplier”

• Procurement and Payables specific attributes like terms and conditions,

accounts etc. are maintained in the supplier sites tables.

• Some payment and tax related information is no longer maintained in the

supplier sites tables - it was moved to the appropriate product tables (Oracle

Payments, Oracle E-business tax).

Considerations

• Existing suppliers, sites or locations and their contact information are

automatically created in TCA.

25

• Existing tables that hold the supplier information are moved to a new set of

tables (AP_SUPPLIERS).

• New views, based on the old supplier table names have been added for

backward compatibility.

• When a supplier or supplier site is merged, the associated party or party site

does not change.

• During the supplier merge process, when a supplier site is “copied” from one

supplier to a different supplier, a new supplier site must be created. Hence, a

new party site will also be created.

• When merging suppliers, supplier merge should be performed before initiating

the party merge.

• Supplier or supplier site merge does not affect contacts. The contacts are

always transferred to the merged supplier site specified in the supplier merge

form.

• Employees that were defined as suppliers in prior releases will not be

migrated, as their information would already exist in TCA.

• Supplier open interface processes are enhanced to support the creation of TCA

entities while importing suppliers. The creation of supplier bank accounts is

also supported from the supplier open interface.

Invoice Lines

Overview

The addition of invoice lines allows Oracle Payables to better model the paper or

electronic business document by representing the goods or services, as well as tax, freight

and other charges. The new invoice structure also more accurately models Oracle

Procurements PO shipment, allowing for improved allocation of charges, as well as

enhancing the matching function.

Process Change

• The new Invoice Workbench now contains a multi-record block to represent

the invoice lines. In a separate window, users can enter one or more

distributions for every invoice line.

• Redesigned matching windows for PO/Receipt matching can be invoked from

the Invoice Workbench. Invoice lines that were generated by matching will

generate distributions at the time of match.

• New windows support price/quantity/invoice corrections.

• Freight/miscellaneous lines created automatically via request to the matching

process from the matching windows do not automatically generate

distributions at line creation time.

• Tax, freight, and miscellaneous type invoice lines can be prorated to all item

lines on an invoice.

• Users can enter freight at the invoice header and then prorate it across all item

lines on the invoice.

26


• Users can also do a quick match by entering just the PO number on the

invoice header. In this case, the invoice lines are automatically created.

• With the new invoice lines model, the R12 multi-period accounting is realized

at the invoice line level. Once Subledger Accounting is configured for multi-

period accounting, users can specify the deferred accounting period as a

parameter for each individual invoice line. To invoke this feature, users check

the “Deferred Option” box and specify the deferred period type, start date and

number of periods. Later on, when the accounting records are created for this

invoice line and distribution, a series of accounting records will be generated

reflecting the fact that the invoice expense is first recorded in an accrual

account then moved into expense account periodically.

Considerations

• No new setup steps are required for using Invoice Lines.

• The standard upgrade process creates one invoice line for every distribution

existing in the 11i Payables distribution table.

• Exchange rate variance (ERV) and invoice price variance (IPV) amounts

become separate distributions in the upgrade process and so, are no longer

part of the item distributions.

• Charge (tax/freight/miscellaneous) distributions are created at the maximum

level of detail to represent detailed allocation information.

• In prior releases, the allocations were managed by a charge allocation table

which is now obsolete,

Payment Process Enhancements

Overview

The payment process has been significantly enhanced in Release 12. The following are

some of the new enhancements that were made in this release:

• More robust and flexible payment processing engine

• Improved visibility into payment processing via the centralized Payments

dashboard

• Improved pay run automation

• Improved pay run management tools:

o Enhanced cash management report

o Comprehensive selected invoice information

o Improved online inquiry of selected invoices

• Process payments for multiple operating units from single responsibility

Process Change

• A new Selected Invoices page displays summary and detail information used

to view and analyze invoices selected in a pay run.

• Powerful search tools improve online inquiry to invoices that you may want to

review, modify, or remove from a pay run.

27

• Users can now view invoices that were not selected due to various reasons

(not validated/approved).

• A Payment Dashboard empowers your payment manager to monitor all

current pay run processing and gives them visibility to payment processes that

require attention.

• If payment batch sets were used as a workaround for doing multi-currency pay

runs in 11i then, consider combining those pay runs into a single pay run. In

addition a single payment run can process multiple banks that includes both

electronic and printed payments

• The Payment Process Request template enables you to predefine invoice

selection criteria, thereby simplifying payment processing.

• Validation errors during the payment build process are automatically handled

based on the options that are specified on the payment process request. For

example, the process may be stopped for review, payments with errors can be

rejected, or all payments may be rejected in the request if errors exist.

• Usage rules and validations can be set up for a payment method.

• Pay runs can be stopped at two points. Users can choose to pause after the

invoices are selected. At this point, users can review selected payments, add

or remove scheduled payments or change payment and discount amounts. The

second point is after the scheduled payments are built into payments. Here, the

user can see the final amounts of each payment and can choose to drop any

payments.

• Scheduled Payment Selection report replaces many portions of the

Preliminary Payment register report. It can be used for reviewing the invoices

selected in a pay run, review invoice selection criteria, determine immediate

cash requirements for a pay run etc.


• All payment related setup has now been moved to the new Oracle Payments

module. Refer to the Oracle Payments User guide.

• In prior releases, Oracle Payables seeded four payment method types (Check,

Electronic, Wire, and Clearing). In Release 12, customers can setup their own

payment methods

Considerations

• Scheduled Payment Selection report cannot be run for historical data.

• Custom document categories for payments will not be upgraded.

• Disbursement type has been made obsolete and hence, it has been removed

from all reports.

• IMPORTANT: All custom payment formats must be migrated to XML in

order to work in R12.

• Check Payments and the Electronic Payments document categories have been

retained in Release 12. However, Payables no longer supports the Wire

Payments and Clearing Payments document categories.

28

AP-AR Netting

Overview

The AP-AR Netting feature allows you to offset balances in both Oracle Payables and

Oracle Receivables to reduce the outstanding debt owed either from an internal company

or from a customer. It also supports foreign currency netting. Accounting for netting is

handled in the same way as if it had been closed in the subledgers. This feature allows

you to optionally give the trading partner the opportunity to review and approve

transactions before they are posted.

Process Change

• A netting batch needs to be created using the Receivables responsibility. It can

include various parameters like operating unit, netting agreement, settlement

date etc.

• Once the batch has been set up, submit the netting batch.

• Query the netting batch and view the proposed AP/AR netting amounts

online. Users can view the Receivables and Payables transactions that were

selected for possible netting. In the header portion of the screen users will be

able to see the total dollar amounts of the AP and AR transactions selected as

well as the proposed netting amount. Users could also run the proposed

AP/AR netting report.

• Optionally, users can review the netting batch. In this process users can

review, remove or add transactions before submitting it.

• Submit the netting batch and view the final netting report.


• Both customers and suppliers must be setup as a trading partner in TCA.

• Here are some of the additional steps that are required:

o Create a netting agreement.

o Create a netting bank account.

o Create a netting control account in General Ledger as well as exchange

rate types if using multi-currency netting.

o Establish a paying relationship for the customers in Accounts

Receivable.

o Associate the bank account used in the netting agreement with the

AP/AR netting receipt class.

Considerations

• An internal dummy bank account will be seeded which will process receipts

generated in Oracle Receivables.

• When creating a netting agreement, if the (supplier?) site information is left

blank, then the system includes all the sites for the trading partner.

• If the option to include trading partner approval is selected, only one approver

can be selected. The approver name list of values is derived from the customer

contact information.

• No netting batch information will be upgraded.

29

• Netting agreements will be created for every existing customer and supplier

relationship that is migrated. Agreement name will be created using customer

id and customer name.

• Users must review the migrated netting agreement setup to add or correct

upgraded information. Netting upgrade uses dummy values for certain

mandatory information not found in 11i setup. Users must change this to valid

values.

• Transaction data residing in interface tables in 11i is not migrated to Release

12. All in-progress netting batches should be closed or completed before

upgrade.

See Oracle Payables Implementation Guide and Oracle Payables User Guide for more

information.

30

Oracle Payments

Oracle Payments is a new product introduced in Release 12 that provides a configurable,

robust and centralized engine for disbursing and receiving payments. Oracle Payments

has changed payment processing within Oracle products:

• From proprietary Oracle reporting technology to standardized formatting using

XML.

• From bank accounts stored in multiple products to centralized bank account setup.

• From credit card information stored in multiple product entities to a centralized

credit card entity within Payments.

• From single operating unit restrictions to cross-operating unit transactions..

• From receipt remittance through Receivables to centralized receipt remittance.

• From payments transmitted by external systems to native transmission

capabilities.

The key components of Oracle Payments are:

• Funds Disbursement

• Funds Capture

Funds Disbursement

Overview:

The funds disbursement features delivered in Oracle Payments simplifies user procedures

for managing complex payment processes that span multiple payment methods, formats,

currencies, organizations and bank accounts.

The major features within funds disbursement are:

• Funds Disbursement Dashboard that enables payment administrators to

manage every aspect of the process across multiple organizations from a

central location in the application.

• End-to-end electronic payment processing that includes validation,

aggregation, formatting, and secure transmission of payments to financial

institutions and payment systems.

• Remittance advice reporting that notifies a payee of the remittance detail

when a payment is made.

• Country-specific payment formats and reporting that meet global payment

requirements.

31

Process Change:

• In Release 12, Oracle Payments segregates the process into two major

functions: Payment Build process and the Payment process.

o Payment Build process first groups documents according to various

rules, such as the payment method and currency.

o Payment process aggregates payments from multiple document

selections and submissions into payment instruction files, formats the

files, and handles additional processing, such as printing and

transmission.


• All payment related setup has been centralized within Oracle Payments.

• Oracle Payments offers flexible setup to configure funds disbursement

processing. Some of the key areas of impact are:

o Payment Methods: each document to be paid requires a payment method

to indicate how it should be handled in the funds disbursement process.

The upgrade seeds payment methods that existed in Oracle Payables and

globalizations. Payment Methods are now user definable.

o Processing Rules: the payment method on a document links it to

processing rules configured in Oracle Payments. These setup rules are

held in a key entity called the Payment Process Profile.

o Payment System: a payment system holds information about the third

party involved in processing payments.

• The upgrade uses various data from Oracle Payables to create the new

Payment Process Profiles. See Oracle Payments Implementation Guide for

more detailed information.

• All masking of credit cards, debit cards and bank accounts is centrally

controlled.

• Future Dated Payments are renamed to Bills Payable in release 12. Setup has

moved from the payment document on an internal bank account to the

payment method in Oracle Payments.

Considerations:

• Both the Automatic Payment Programs and Payment Formats (AP entities)

are obsolete in release 12. Also, setup entities related to payment formats

within Oracle Payables are obsolete as they are effectively replaced by the

new Oracle Payments setup.

• Oracle Payments’ secure electronic payment file and payment message

transmission and transmission result processing replaces previously existing

electronic transmission features in Oracle iPayment, Oracle Payables, and

Oracle Globalizations.

32

Funds Capture

Overview

Funds capture supports the processes to electronically receive funds owed deploying

companies by debtors, such as customers. Oracle Payments works with AR to authorize

and capture funds against credit cards, process refunds to credit cards, perform electronic

funds transfers from bank accounts, and to format bills receivable.

The major features within funds capture are:

• Funds Capture Dashboard provides payment administrators an overview of

the payment process status.

• Supports multiple payment processing systems operating simultaneously for

funds capture transactions.

• Supports authorization and settlement of funds against credit cards and

PINless debit cards, refunds to credit cards, electronic funds transfers from

bank accounts, and formatting of bills receivable.

• Supports out-of-the-box integration with leading third party payment systems

such as Citibank, Paymentech, First Data Merchant Services, and Concord

EFS. Other payment systems, such as VeriSign, offer their own out-of-the-box

integrations with Oracle Payments.

Process Change

• Oracle Payments has consolidated notification letters from Oracle

Globalizations into an Oracle XML Publisher format.

• Oracle Receivables retains the functionality of lockbox processing and

electronic upload of remittance messages.


• Centralized, configurable funds capture processing can be setup by Payee,

Routing Rules, or Funds Capture Processing Rules. Please refer to Oracle

Payments Implementation Guide for more details.

• Credit card security setup can be easily completed using the Oracle Payments

Payment Administrator responsibility.

• The required setup entities for bank account transfer processing are upgraded

for you, but it is important for you to understand the new setup and process so

you can successfully test the migrated information

Considerations

• EFT online validation is only offered for United States ACH and not for all

payment systems. EFT online validation checks whether a bank account exists

and that the account is not flagged fraudulent. EFT online validation does not

reserve funds or check if the account has sufficient funds.

• Oracle Payments does not support risk management for PINless debit card or

bank account transfer transactions.

33

• Oracle Payments does not automatically reauthorize settlements that are

rejected due to expired authorizations.

See Oracle Payments Implementation Guide and Oracle Payments User Guide for more

information. Also see Metalink Note733537.1 for more details in the Functional

Upgrade Impacts Document for Oracle Payments (FINANCIALS).

34

Oracle Receivables

Oracle Receivables streamlines the invoice, receipt and customer deduction processes

while simultaneously improving cash flow, increasing efficiency and optimizing

customer relationships. In Release 12, significant changes were made in the following

areas:

• Revenue Management

• Line Level Cash Application

• Redesigned Customer User Interface

• Bill Presentment Architecture

Revenue Management Enhancements

Overview

Enhancements in the Revenue Management area include the ability to distribute revenue

in a more granular fashion which includes full and partial periods. Additionally,

organizations may create their own revenue deferral reasons to ensure revenue is

recognized in accordance with applicable revenue recognition policies.

Process Change

• New configurable accounting rules to determine the treatment of revenue

allocations for partial periods.

• Enhanced event-based revenue management allows users to define revenue

deferral reasons and corresponding revenue recognition events specific to

their business practices.

o Ability to create user defined revenue contingency definitions seeded

examples include: cancellation, customer creditworthiness, etc.

• New Revenue Manager responsibility that provides the revenue analyst a

central location to set up and maintain revenue policies and rule assignments.

• Seeded revenue assignment rules have been replaced by a new window that

enables the user to create process specific revenue assignment rules.

• New Contingency tab offers the ability to review and manually manage

contingencies from the Revenue Adjustment Manager (RAM) wizard.

• New Cost of Goods Sold (COGS) and Revenue Matching feature

synchronizes the recognition of revenue with recognition of associated COGS.


• Creation of new accounting rules allows for revenue recognition that meets

accounting standards and contractual start and end dates.

o Example: Able to create an accounting rule for revenue that will

distribute revenue across identified accounting periods that can include

a partial period (meaning the period does not start or end on the first or

35

last day of the accounting period). During a partial period, the revenue

amount will be prorated based upon the number of days in the period.

� The table below provides an example of how the new

accounting rules would prorate revenue accordingly.

GL Date Period Days in

Period

Daily

Revenue

Rate, All

Periods

Daily

Revenue

Rate,

Partial

Periods

Fixed

Schedule

Variable

Schedule

January 14 January 18 180 180 225 180

February 14 February 28 280 295 225 240

March 14 March 31 310 295 225 240

April 13 April 13 130 130 225 240

• Ability to create user defined Revenue Assignment Rules:

o Example: New Rule for Acceptance:

� Matching Criteria (must choose from a seeded choice list): Bill

to Customer

� Condition: equals ABC Customer

� Revenue Contingency: Explicit Acceptance

� Result: If a transaction line with Bill to Customer of ABC

Customer meets the criteria of this rule -- Receivables will

assign explicit acceptance as the contingency to the transaction

line, and the revenue will be deferred until customer

acceptance is received.

• New Application Programming Interface (API) automates revenue & COGS

matching.

Considerations

• Oracle costing calls the new Receivables API

(AR_match_rev_cogs_grp.populate_cst_tables) that triggers earning and un-

earning of COGS when revenue is recognized or unearned.

• COGS and Revenue Matching report has been retired.

• No longer necessary to create manual journal entries for revenue & COGS

matching.

• Uptake of SLA does not impact timing and amounts for revenue recognition. It

only provides the ability to override the accounts defaulted via auto-accounting.

• Provides the capability to default contingencies from feeder systems.

o In R12, Order Management (OM) provides this capability for invoicing &

customer acceptance contingencies. User will assign a contingency at

order entry time based on the contingency defaulting API from

Receivables.

o Once this order is imported into Receivables from Order Management, the

Contingency Defaulting API runs again and can default additional

36

contingencies but will not over-ride the invoicing and/or customer

acceptance contingency created during initial order entry.

o SLA can only be used to override the accounts created via auto-

accounting.

• The Revenue Policy System Option available in 11i will be obsolete in R12.

o The system will automatically apply the credit worthiness contingency,

refund contingency and extended term contingency for all invoices (that

either violate the policy or match the credit worthiness criteria).

o The revenue policy data (which is populated for certain customers) will

automatically show up in the new revenue policy window. The system will

check to see if this revenue policy is populated during the initial set up.

• Upgrade script will convert the contingency ID from prior releases to the new

contingency removal event code.

o Only impacts those systems interfacing to Receivables through

AutoInvoice or Invoice API.

o No User Interface impacts.

Line Level Cash Application

Overview

With the introduction of line level cash application, receipts can be applied against

specific transaction items such as individual lines, group of lines or tax or freight buckets.

Process Change

• New cash application tree to choose the appropriate application level.

• Receipts can be applied against:

o one or more transaction lines

o all transaction lines

o a specific group of transaction lines

o a specific transaction line type such as tax, freight, late charges or any

combination thereof

• Ability to un-apply and re-apply receipts. Un-apply and re-apply can be done

against an entire transaction or to a specific transaction line.


None

Considerations

• Line level applications apply to manual cash application only.

o However, automated line level application is available via lockbox.

• Receipts cannot be applied at the line level against invoices migrated from

Release 11i, as line level balances were not stored prior to R12.

• Available only for invoices, debit memos and chargebacks with line details.

• Cannot apply against invoices with installments.

37

• Does not use application rule sets.

• If necessary, modify the AR profile option “Always Default Transaction

Balance” for Applications profile option.

• Balances are now stored at the line level regardless of application.

o Ability to set flag on Batch Source window to not store balances at

line level in 12.1.

Customer Standard User Interface (UI) Redesign

Overview

The new HTML based user interface provides a streamlined and intuitive customer data

management flow. Data quality management tools allow users to maintain the integrity

of customer data.

Process Change

• Provides functionality to create a new customer, customer account, customer

account site, and a business purpose for the customer account site.

• Tight integration with TCA allows users to take advantage of the DQM (Data

Quality Management) feature. DQM allows the user to perform advanced

searches for parties and customer accounts with user defined criteria. In

addition to the advanced search feature, it can prevent duplicate entries by

determining if the customer that is being created or updated is a potential

duplicate.

• Ability to classify customers based on industry, location, size, credit

worthiness, business volume and payment cycles.


• The new Customer Standard UI replaces the five functions that used to exist

in prior releases (Customers Standard, Customers Quick, Customers

Summary, Customers Standard View, and Customers Quick View).

o The pages are built using TCA CPUI (Common Party User Interface)

components.

• By using TCA components, the cost of maintenance is lowered.

Considerations

• The Customer Standard menu item will launch the new HTML customer

form.

• No data is affected.

• Display of data has been enhanced to represent the TCA model.

38

Bill Presentment Architecture

Overview

Bill Presentment Architecture (BPA) allows you to retrieve billing data from multiple

sources, including those external to Oracle Receivables. Enhancements were made to the

following features:

• Balance Forward Bill Presentment

o More appealing and easier to modify bill layouts

o Ability to view printed bill exactly as the customer sees it

o Rules engine provides the ability to select from unlimited formats

• Enhanced Template Assignment

o New attributes provide more flexibility in how templates are assigned

to customers

• Attachment Printing

o Ability to print PDF attachments for specified document categories

Process Change

• Balance Forward Bill Presentment:

o Key set up steps include:

� Register views

� Select template items

� Select assignment attributes

� Create hyperlinks

o Utilize balance forward data source for template assignment.

o Two seeded assignment rules:

� Default rule for balance forward detail template

� Default rule for balance forward summary template

o Must run the “Generate Balance Forward Bills” program

• Enhanced Template Assignment

o Templates can now automatically be assigned by:

� Any attribute in the invoice header

� Seeded attributes like Batch Source, Transaction Type or

Context Reference

� Supplementary data sources, like header and footer flexfields

(e.g., Projects interface attributes).

• New profile option must be set to take advantage of printing attachments for

printed bills

o AR:BPA Print Attachment Document Category

o Applies to both internal & external templates

Considerations

• Balance Forward Billing replaces Consolidated Billing.

See Oracle Receivables Reference Guide, Oracle Receivables Implementation Guide and

Oracle Receivables User Guide for more information.

39

Oracle Subledger Accounting

Oracle Subledger Accounting (SLA) provides a common accounting engine that replaces

the existing accounting processes in the subledger applications. The SLA upgrade

involves migrating existing accounting data between 11i and Release 12 to ensure a

continuous business operation.

NOTE: Please refer to the Oracle Subledger Accounting Implementation Guide for more

detailed information and definitions of the terminology used herein.

Oracle Subledger Accounting has changed accounting within Oracle applications:

• From accounting setups within each Oracle module to a unified accounting

definition in Subledger Accounting, with a common posting process to Oracle

General Ledger.

• From separate Global Accounting Engine functionality to a common standard for

all Oracle subledgers (Receivables, Payables, Assets, Project Accounting) within

SLA.

The key upgrade areas impacted by Oracle Subledger Accounting are:

• Accounting Rules

• Transaction account builder

• Standard reports

Accounting Rules

Overview:

Subledger accounting rules define how journal entries can be created from subledger

transactions for both the primary and secondary ledgers. This centralized accounting

setup provides greater flexibility as well as supports more simplified and standardized

accounting rule creation and maintenance. The intuitive user interface does not require

users to know any programming language or to have developer skills.

Process Change:

• In R11i and prior releases, accounting for subledger applications existed

within the individual applications.

• With Release 12, accounting for all subledger applications is unified under

SLA, with a common posting process to Oracle General Ledger.

• Seeded application accounting definitions are provided for all Oracle

subledgers.

• If specific requirements are not met by startup accounting definitions, users

can copy and modify the seeded definitions and their assignments.

40


• In Release 12, each subledger application will maintain its existing accounting

rules; and Accounting Methods Builder (AMB), delivered within Subledger

Accounting, will work in conjunction with those rules. Implementation

teams now have the option to override, modify or use the accounting defined

within the subledger applications as the accounting to be transferred to GL.

Considerations

• Standardize your accounting policies by defining a common chart of accounts

and accounting method across the enterprise before creating new accounting

rules or replicating your existing rules within the SLA model.

• Accounting Class Codes: In R12, the Accounting Class code is similar to the

accounting journal line types in 11i. In 11i, the accounting journal line types

are fixed and can be only modified by development. In R12, the Accounting

Class code is a lookup type owned by Subledger Accounting. Deploying

companies can seed their own Accounting Class codes and assign them to the

different journal lines.

• Application Accounting Definitions and Journal Entry Setup: The seed

data includes all the Accounting Derivation rules, Journal Descriptions, and

Journal Line Definitions for Actual Accounting, Encumbrance Accounting,

Federal Accounting, and Oracle Project Encumbrance Accounting.

• Test effective-dated changes to accounting rules and verify the impact before

the change is implemented.

• Review existing manual or adjustment journal entries to see if accounting

rules can be configured to generate journals that eliminate the need for manual

or adjustment journals.

• As a best practice, determine whether to enter manual subledger adjusting

journals exclusively in SLA or GL for easier reconciliation.

• Accounts that appear on the distributions (either manually entered or

generated by account generator mechanisms) of subledger transactions such as

Payables or Receivables invoices are not necessarily the final accounts that

appear in the SLA and GL journal entries. In Release 12, the accounts on the

transaction distributions become the default accounts used by SLA accounting

rules. Users may configure SLA accounting rules to further modify the

default account by overriding the values for any of the segments in the

account combination. If users define SLA rules to change the default account,

then the SLA and GL journal entries will not match the account stored on the

subledger transaction distribution.

• Account generator mechanisms that existed in 11i still exist and provide the

same functionality in R12.

41

Transaction Account Builder (TAB)

Overview

Transaction Account Builder (TAB) provides a flexible mechanism to derive default

accounts for subledger transactions that is fully integrated with Subledger Accounting

(SLA). TAB is intended only for applications that allow users to modify the default

accounts for a transaction before it is committed.

Process Change

• Advanced Global Intercompany System (AGIS) has adopted TAB in Release

12

o Additional setup in AGIS is required to use TAB to define default

accounting for transactions.

o Distributed accounts must be defined for each ledger and are generated

as defined in Subledger Accounting Transaction Account Builder

(SLA TAB).


• Sources and account derivation rules are shared with Accounting Methods

Builder (AMB), while transaction account types and transaction account

definitions are introduced by Transaction Account Builder.

• Dynamic insertion can be enabled for the chart of accounts so that if the

combination does not exist, a new code combination can be created.

Considerations

• If the application does not allow modification of the default accounts for a

transaction before it is accounted, the implementation team must use AMB.

• Implementation teams may use the seeded transaction account definitions.

They may also create their own definitions either by copying and modifying

seeded definitions, or by creating new ones from scratch.

• If implementation teams decide to create new transaction account definitions,

they may need to create new account derivation rules. These rules can be

derived by accounting flexfield or by segment and may have a chart of

accounts associated with them.

Standard Reports

Overview

Subledger Accounting owns tables that store all the subledger journal entries and their

associated accounting information. Regardless of which product is used to create

accounting, the results are stored in subledger accounting tables. This information

may then be used by analytical applications for inquiries and/or reporting.

• A common data model is designed for efficient inquiry, reporting, and

extraction.

42

• Oracle BI Publisher reports and templates offer immediate cost savings,

greater efficiency, and improved accuracy and reliability for financial

reporting.

Process Change

• Oracle BI Publisher is a key reporting tool in Release 12 that enables business

users to create financials reports with familiar desktop products like Microsoft

Word and Excel.

• BI Publisher can save reports in many different formats including XML, PDF,

RTF, and Excel. It can also publish reports via printer, e-mail, or posting to

websites or portals.

• With Release 12, we’ve made it easier to locate and use reports by classifying

them into three main categories:

� Journal Reporting

� Trading Partner Reporting

� Account Analysis Reporting

Considerations

• Analyze custom reports to map out a plan/approach to migrate existing reports

to Oracle BI Publisher.

• Custom reports may need to be modified to extract data from SLA tables

rather than subledger distribution tables.

• Open Account Balance Listing Definitions: In R12, to run the Trial

Balance Report for a particular liability account, you must create the Open

Account Balance Listing Definition. Implementers need to create their own

definitions for any new liability accounts they have created. The upgrade

process will create Open Account Balance Listing Definitions for each

existing liability account per ledger.

See Oracle Subledger Accounting Implementation Guide for more detailed information.

43

Oracle E-Business Tax

E-Business Tax is a new product introduced in Release 12 that provides a single point

solution for managing transaction tax requirements across several E-Business Suite

products. E-Business Tax has changed transaction tax handling within Oracle products:

• from fixed rules to user configurable rules

• from single product setup to cross product setup

• from single organization setup to cross organization setup

• from multiple engines to single engine (see caveats in sections below)

• from multiple repositories to unique repository (see caveats in sections below)

The key components of E-Business Tax are:

• Configuration Options and Provider Service Subscriptions

• Tax Configuration Manager

• Tax Determination Services

• Tax Reporting

• Tax Simulator

Configuration Options and Provider Service Subscriptions

Overview

The configuration subscription model delivered by E-Business Tax optimizes tax setup

and ensures tax rules are consistently applied within the enterprise. There are two

subscription options in Release 12:

• Internal (or multi-entity) subscription model to share tax setup across entities,

with overriding capabilities at the Legal Entity and Operating Unit levels. The

internal subscription model is based on several key concepts:

o Configuration Owner: any Legal Entity or Operating Unit that creates and

maintains specific tax setup data;

o Global Configuration Owner (GCO): enterprise level tax configuration

owner. This is the entity that owns tax setup data that any configuration

owner within the enterprise can subscribe to;

o Option to override GCO tax setup data: a subscribing entity can override

the tax setup data to handle specific requirements applicable to that entity

only.

• External subscription model where the Configuration Owner may choose to

subscribe to the services of a Tax Service Provider for a given tax regime.

Process change

• Each entity within an organization can subscribe and use a single common

configuration source for all transactions. Alternatively, that entity can use the

common configuration source with overridden tax set up specifically required to

meet its own tax regulations;

44

• In Release 11i, the option to integrate with tax service providers was restricted to

Vertex and Taxware. In Release 12 that restriction no longer exists: you can

choose to integrate with your preferred tax partner. See considerations below.

See Oracle E-Business Tax Implementation Guide and Oracle E-Business Tax: Vertex

Q-Series and Taxware Sales/Use Tax System Implementation Guide

Configuration change

• If all entities in your enterprise are subject to the same tax regulations you can

setup tax only once, under the Global Configuration Owner, and have all your

entities subscribing that common tax setup;

• If any entity within your enterprise requires special tax handling that differs from

the common tax setup, you can either override the common tax setup that is

owned by the GCO or create and maintain specific tax setup for that entity that

becomes a Configuration Owner itself;

• You can optionally subscribe services of external providers to handle tax

configuration and tax calculation, using standard API’s.

Considerations

• Integration with external tax providers is currently available in the Order-To-Cash

business cycle only and restricted to Taxware and Vertex’s product versions that

were supported in Release 11i;

• Testing of standard API’s to integrate with external tax providers in the Order-To-

Cash and Procure-To-Pay business cycles is not completed at the date of writing

this document:

o Order-To-Cash testing underway, using Vertex O Series as a pilot;

o Procure-To-Pay testing not scheduled.

Tax Configuration Manager

Overview

The Tax Configuration Manager component is responsible for creating and maintaining

the structural foundation of Tax such as taxes, tax jurisdictions, fiscal classifications, tax

rates, tax rules.

In Release 12 there is an explicit association between tax setup and Legal Entities or

Operating Units. The enforcement of adequate tax rules across Legal Entities or

Operating Units within your company ensures that tax is correctly applied to all

transactions. This is particularly important when you operate in multiple countries with

disparate tax regulations, often times in a shared service model. Legal entities in each

country will be subject to local tax regulations which will impact the entire company.

Tax setup is uniformly created in a common User Interface for all Oracle products. Tax

regulations are defined only once and applied consistently across products.

45

Legal and business tax regulations are mapped to flexible tax rules and other components

of E-Business Tax. If your company expands business to new countries with different tax

requirements, you can easily scale the existing tax setup to meet those new requirements.

Tax configuration is central to the tax role. That premise has determined the creation of

tax configuration flows totally dedicated to the tax manager. There is a clear segregation

of User Interface flows for tax managers and for general business users.

Process Change

• There is a unique tax setup flow and common user interfaces across products. You

no longer need to enter tax setup in multiple product;

• Tax setup creation and maintenance is done in new User Interfaces. See Oracle E-

Business Tax Implementation Guide.

• You have multiple options for defining tax setup in Release 12:

o Migrate tax setup from Release 11i, and gradually adopt the E-Business

Tax setup and tax determination processes according to your needs. Once

you complete the transition to E-Business Tax processes, you can disable

the Release 11i migrated solution with no loss of service. See Oracle

Financials and Oracle Procurement Functional Upgrade Guide: Release

11i to Release 12.

o Manually enter your tax setup;

o Use the Tax Configuration Library with modifications: you can take

advantage of this predefined set of tax configuration data that may be used

as sample data to guide and expedite the E-Business Tax implementation

process. See Metalink note 463001.1;

o Integrate with tax content providers. See Configuration Options and

Provider Service Subscription above.


• Prior to Release 12, you could define Legal Entities in multiple, sometimes

ambiguous, ways. With the new Legal Entity model you now have to explicitly

define your legal entities as well as the association with the appropriate tax setup;

• Instead of creating tax setup in various products, like Oracle Payable or Oracle

Receivables, you create a single tax setup that is applied consistently across

products;

• Central setup and maintenance is now performed in new User Interfaces dedicated

to your tax personnel;

• The Tax Rules flow makes it easy for you to change existing tax rules and tax

rates and/or create new rules and rates, without modifying the product;

• You have the option to run taxes in Release 12 similarly to how you did it in

Release 11i and gradually migrate to the new E-Business Tax model, when you

have the time or the need to adopt the new capabilities of E-Business Tax.

Considerations

• Cannot update tax exclusiveness at invoice header or invoice line levels. See bug

6772098;

46

• There is no support for tax point date in E-Business Tax;

• Tax reporting configuration is associated with a Legal Entity and Tax Registration

Number. It is not integrated with the E-Business Tax internal subscription model;

• Tax reporting configuration not shareable across Legal Entities or Operating

Units;

Tax Determination Services

Overview

The Tax Determination Services component calculates transaction taxes based on

transaction details and tax setup information. This component carries the following

benefits:

• Automation of tax processing through a central tax engine. It improves the

operation efficiency of your company and reduces errors;

• The central tax engine uses a common set of tax rules applicable to all your

business entities. Ensures the accuracy of tax calculation for all tax regimes your

company is subject to;

• Covers standard Procure-To-Pay and Order-To-Cash transaction taxes, with the

exception of withholding taxes and those taxes handled by the Latin Tax Engine

solution.

Process Change

• Instead of disparate tax services provided by multiple products, the central tax

engine uniformly delivers automated tax services through a single application

interface to:

o Procure to Pay - Oracle Purchasing, Oracle Internet Procurement, Oracle

Consigned Inventory, Oracle Internet Expenses and Oracle Payables

o Order to Cash - Oracle Order Capture/iStore/Quoting, Oracle Order

Management, Oracle Trade Management, Oracle Services Contracts,

Oracle Project Accounting and Oracle Receivables

o Inter-company invoicing - Oracle Inter-company invoicing

o General Ledger - Oracle General Ledger

Each product only needs to pass the required information to E-Business Tax to get

the right tax determination and calculation.

• E-Business Tax replaces the following Release 11i tax solutions:

o Procure to Pay – Automatic Tax Calculation and Brazilian Payables and

Purchasing

o Order to Cash – Global Tax Engine

o General Ledger – General Ledger Automatic Tax Calculation

• Your users no longer have to enter the correct tax code at transaction entry point:

E-Business Tax determines the applicable tax or taxes for each transaction and

automatically calculates the tax amount(s). Only your authorized users can

override calculated tax amounts.

47


• There are distinct flows for tax setup and for operational activities such as

entering transactions;

• Tax determination and tax calculation are fully automated, based on tax setup

previously defined by the tax manager;

• Clerks whose main responsibility is to correctly enter transactions in the system

can rely on the product to get the correct taxes applied to transactions. They no

longer have to enter the relevant tax codes for each transaction because E-

Business Tax does that for them, reducing the risk of human errors.

Considerations

• Tax functionality not migrated to the E-Business Tax model, retained in Release

12: Payables withholding taxes, Payables Extended Withholdings (Latin

America), Latin Tax Engine (Receivables), Brazilian Withholding Tax Calendar,

Indian transaction taxes and EMEA VAT Reporting.

Tax Reporting

Overview

Tax Reporting and auditing rely on a single tax repository that stores both reference data

(taxes, tax jurisdictions, fiscal classifications, tax rates, tax rules, etc,) and transactional

data.

In addition to the single tax repository, tax reporting and auditing take advantage of the

XML Publisher reporting tool that facilitates output manipulation. It’s extremely easy to

customize existing templates or to create new ones using XML Publisher.

Prior to Release 12, tax reporting was a lot compromised by how you implemented your

legal entities. In Release 12 you can run all your tax reports by legal entity.

Tax reporting was largely enhanced with features initially requested by EMEA countries,

which can be used by countries in other regions with the same type of requirements.

Process Change

• Reference data and transactional data are now available from a central Tax

Repository. You no longer need to search for tax information in multiple

products;

• Enhanced tax reporting configuration with dedicated User Interfaces where you

define all reporting rules for your Reporting Entities;

• New reports delivered for Austria, Croatia and Israel;

• Business users can easily update templates delivered in the core product or create

new templates without changing code. The majority of tax reports are converted

to XML Publisher.

48

See Oracle E-Business Tax Reporting Guide and Oracle Financials for Europe

User Guide.


• Ability to run tax reports by Legal Entity and Tax Registration Number. In

Release 12 you can still run tax reports by Balancing Segment Value, however,

Oracle expects you to gradually move to tax reporting by legal entity and tax

registration number;

• Definition of reporting categories to report transactions by different business

angles: sales, purchases, goods, services, stocks, assets, domestic, import, export,

etc.;

• Tax reporting based on tax calendar that can different from the accounting

calendar;

• Reporting based on a user definable tax reporting date;

• Preliminary versions of tax reports to be run in order to support corrections and

reallocations prior to finalizing the reports (declarations) to tax authorities

• Final reporting

• Close tax periods after final reporting to prevent updating or reporting twice

transactions already finally reported;

Considerations

• Core tax reports run by Invoice Date only;

• Tax calendars, alternative tax dates, preliminary and final reporting, tax reporting

categories (or tax boxes) only used by EMEA VAT Reports;

• In order to meet reporting requirements, some of the EMEA countries have to

define multiple tax rate codes with the same tax rate;

• Multiple Reporting Currencies support not available in all tax reports;

• Tax Repository does not store General Ledger tax journals;

• A few tax reports were not converted to XML Publisher (still available in rdf).

Tax Simulator

Overview

Tax Simulator allows you to enter transactions, such as a Purchase or Sales Invoice, and

view the results of the corresponding tax calculation.

It allows you to verify if the tax configuration provides the expected results on your

entered transactions. It also gives you the capability to drill down to the rules that were

used in the simulation and to the rules that were not used. You can evaluate results,

update the rules if required, and re run the simulation with same set of transactions.

This is a valuable tool for tax managers who can use this interface to verify the tax

configuration and to simulate the effect of the introduction of a new rule or incremental

setup data, such as a new tax rate.

49

Process Change

• There is no predecessor for Tax Simulator before Release 12. The Tax Simulator

has dedicated User Interfaces where you can test all the tax setup before going

live.


• You can test tax setup in Purchase or Sales invoices using the new User Interfaces

of the Tax Simulator. See Oracle E-Business Tax User Guide.

Considerations

• Requires manual entry of transactions for simulation – no option for uploading;

• Simulation is restricted to the behavior of tax rules. It does not allow simulation

of tax amounts to be paid or collected.

See Oracle E-Business Tax Implementation Guide, Oracle E-Business Tax User Guide,

and Oracle E-Business Tax: Vertex Q-Series and Taxware Sales/Use Tax System

Implementation Guide for more detailed information.

Documents

R12 Financials Upgrade