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    Letter of Credit in Payables Module

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    Chandan Bhangale
    This case study describes how to track letter of credit payments in Oracle Payables. Key steps include: 1. Creating an independent value set to track letter of credit numbers. 2. Enabling descriptive flexfields to capture letter of credit details at the invoice header level. 3. Entering letter of credit numbers and linking them to suppliers in the flexfield values. 4. Creating a prepayment invoice linked to a letter of credit when the bank pays the supplier. This can then be applied to the actual supplier invoice later.

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    Download as PDF, TXT or read online from Scribd

    Letter of Credit in Payables Module

    Uploaded by

    Chandan Bhangale
    2K views10 pages
    This case study describes how to track letter of credit payments in Oracle Payables. Key steps include: 1. Creating an independent value set to track letter of credit numbers. 2. Enabling descriptive flexfields to capture letter of credit details at the invoice header level. 3. Entering letter of credit numbers and linking them to suppliers in the flexfield values. 4. Creating a prepayment invoice linked to a letter of credit when the bank pays the supplier. This can then be applied to the actual supplier invoice later.

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    This case study describes how to track letter of credit payments in Oracle Payables. Key steps include: 1. Creating an independent value set to track letter of credit numbers. 2. Enabling descriptive flexfields to capture letter of credit details at the invoice header level. 3. Entering letter of credit numbers and linking them to suppliers in the flexfield values. 4. Creating a prepayment invoice linked to a letter of credit when the bank pays the supplier. This can then be applied to the actual supplier invoice later.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2K views10 pages

    Letter of Credit in Payables Module

    Uploaded by

    Chandan Bhangale
    This case study describes how to track letter of credit payments in Oracle Payables. Key steps include: 1. Creating an independent value set to track letter of credit numbers. 2. Enabling descriptive flexfields to capture letter of credit details at the invoice header level. 3. Entering letter of credit numbers and linking them to suppliers in the flexfield values. 4. Creating a prepayment invoice linked to a letter of credit when the bank pays the supplier. This can then be applied to the actual supplier invoice later.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 10

    Customer Submitted Case Studies

    Case Study: How we handle Letter of Credit in Payables Module

    Author: Tarakeswara Rao Janapareddy, Consultant, Satyam Computer Services Ltd

    Skill Level Rating for this Case Study: Intermediate

    About Oracle Customer Submitted Case Studies


    Oracle Customer Submitted Case Studies are intended as learning tools and for sharing
    information or knowledge related to a complex event, process, procedure, or to a series of
    related events. Each case study is written based upon the experience that the writer/s
    encountered.

    Customers should not interpret or use information in these case studies as solutions
    or recommendations without first contacting Oracle Support.

    Each Case Study contains a skill level rating. The rating provides an indication of what
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    • Intermediate: some experience with the subject matter
    • Beginner: little experience with the subject matter

    Case Study Abstract


    This Case study is intended to explain how we handle Letter of Credit in Payables
    Module.

    Case History
    The requirement is in our Client organization after they open LC (Letter of Credit) with
    the bank against a Supplier they want to track it in the System. Once the goods shipped
    by the Supplier they provide documents to its bank and bank transfers the amount to the
    Supplier bank and goods will be released from shipping warehouse. At this instance
    client wants to track this payment and when Finance Department creates an invoice then
    adjust this invoice by the payment made through Letter of Credit.
    Business Scenario:

    • Supplier sends the Proforma Invoice upon receipt of the requisition from Client.

    • Client Finance Department then applies for opening of a Letter of Credit (LC) and
    upon receipt of LC from the bank the copy of the same is sent to the Supplier.

    • Supplier ships the goods and submits the shipping documents as per the condition
    of the LC to their bank.

    • Supplier bank forwards the documents to the client bank and bank sends advice to
    Client Finance Department and they authorize the advice to debit their bank
    account and pay the supplier.

    • Upon receipt of this approval from client’s Finance Department bank releases the
    shipping documents to the client and payment to the Supplier bank.

    Analysis
    This Feature is achieved by using Prepayment Functionality, Value Sets and enabling
    Descriptive Flex fields in Oracle Payables.

    The Following setups were done to achieve the above Functionality

    • Defined an Independent Value set for LC Tracking

    • Enabled Context Sensitive DFF at “LC Tracking Value Set” values definition

    • Defined DFF at Invoice Entry Header Level with one segment “LC Number” with
    the table validated value set attached. This value set is created with the
    validations of Supplier and Invoice Currency Code and user can select the LC
    Numbers available against the Supplier and the currency while entering
    Prepayment invoice

    Page 2
    Step1: Defined an Independent Value Set for LC Tracking
    Navigation> Payables> Setup> Flexfields>Validation>Sets

    Page 3
    Step2: Enabled Context Sensitive DFF at “LC Tracking - Value Set” values
    definition and define segments
    Navigation> Payables> Setup> Flexfields>Descriptive>Segments

    Page 4
    Step3: Entered LC Details in Flexfield Segment Values
    Navigation> Payables> Setup> Flexfields>Descriptive>Values

    Page 5
    Step4: Enabled DFF at Invoice Entry Header Level and define segments

    Navigation> Payables> Setup> Flexfields>Descriptive>Segments

    Page 6
    Step4A: Defined Table Validated Value Set for “LC NUMBER”

    Page 7
    With the above validations put in place for this value set, we could able to select LC
    Numbers available against the specific supplier and currency to whom against we entered
    the invoice.

    Page 8
    Step5: Prepayment Entry with LC Details at DFF enabled:

    Navigation> Payables> Invoices>Entry>Invoices

    The above steps up to 4A are for one time. Step 5 is during the creation of
    Prepayment when Bank Pays amount to the Supplier and at the time of creation of
    Invoice when Client Finance Department creates actual Invoice received from the
    Supplier

    Transaction Flow:

    • When we setup LC (Letter of Credit) with the Bank, we created


    Prepayment Invoice with the selection of LC Number (which is already
    created in LC TRACKING Value set) from the List of Values available in
    the DFF – LC Details at Invoice Header Entry Level and we had kept this
    prepayment in unpaid status.
    • When Bank paid the amount to the Supplier, we paid this prepayment
    invoice so that it has been available for application against the actual
    invoice.
    • When Client Finance Department created actual invoice it has been
    applied against to this prepayment invoice.

    Page 9
    Results, Conclusion and Learning’s

    1. By using the above we can track the Letter of Credit from the initiation to the
    fulfillment by paying the invoice amount to the Supplier.

    References

    Oracle Payables User Guide


    Oracle Sys Admin User Guide

    DISCLAIMER:
    The information in this document is the opinion of the author, not of Oracle Corporation. Any content, materials, information or
    software downloaded or otherwise obtained through the use of the site is done at your own discretion and risk. Oracle shall have
    no responsibility for any damage to your computer system or loss of data that results form the download of any content,
    materials, information or software.

    Page 10

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