In this article we will try to understand Oracle Fusion Payables Enhancements done by Oracle in Fusion Applications Release 9 along with brief overview of new features introduced.

Payment Enhancements Overview

This feature allows Payable department to make a single consolidated payment for multiple invoices processed by different business units (Business Unit in Fusion Application is equivalent to Operating Unit of R12 EBS).

What is centralized payments in Oracle Fusion Applications?

Centralized payments helps organization to process payments for invoices from multiple organizations. Payment application even consolidates multiple payments of a supplier into one as shown in above figure. Traditionally, various processes in a company with multiple organizations have been decentralized wherein all the activities like procurement, invoicing and payment were handled independently by the respective organizations. However with growing importance to improve efficiency, processes have started to centralize and they have come out with centers of excellence. One of the focus area has always been to centralize the finance operations where in the payments are handled centrally to have a better control on supplier payment and thereby reduce the cost for the company. Centralized payments handles such requirements from the payables users’ now.

System creates single payment for invoices from different business units that are services by same payment business unit and also allows offsetting of credit or debit memos across business units.

Payment Enhancements Details

In Create Payment page users creates a single payment only and the business units that are authorized to make payments are listed. One can select invoices from any invoice business unit which has a payment service relationship with the payment business unit that is creating the payment. The Invoices to Pay page has been enhanced to search invoices based on the invoice business unit. This provides added flexibility to selectively make payments for invoice business units.

One of the important feature of centralized payments is the ability to make a consolidated payment to a supplier. As part of this feature now we can even offset the credit/debit memo of one invoice business unit with standard invoices from a different business unit and then make a net payment to the supplier. While making a consolidated payment, the application honors the default setups defined in the payables options for every invoice business unit. In the above picture when headquarters makes a consolidated payment on behalf of the London and New Delhi operations, the setups defined in the Manage Invoice Options page individually for each business unit will be taken into consideration. Let’s say the London business unit is enabled for interest invoices and the New Delhi business unit is not enabled for interest invoices. While making the payment for overdue invoices for these organizations application shall create interest invoices only for payments made for the London business unit and not for the New Delhi business unit.

As the payment service provider details are not stamped on the invoice the relation details are derived during payment runtime. This improves the flexibility for the invoicing organizations to smoothly move from one service provider to the other without any concerns about the unpaid invoices.

Submitting Payment Process Request

While submitting a payment process request, invoices to be paid can be filtered by-

1. Invoice Business Unit
2. Payment Business Unit
3. All Business Units

While submitting a Payment Process Request we can now filter the invoices to be paid either by invoice business unit or payment business unit or both. Only the payment business units accessible by the user are listed in this page. However the invoice business units listed in the page are those which have a payment service relationship with the payment business units accessible by the user.

When we submit a payment process request with one or more payment business units as selection criteria then all the eligible invoices from invoice business units which are serviced by these payment business units are picked up for payments. Alternatively if the All option is selected for the Business Unit parameter then all eligible invoices from invoice business units that are serviced by the payment business units accessible by the user will be picked up for payments.

Similarly the invoices to be paid can even be filtered based on the invoice group. The values listed for this attribute are filtered based on the invoice business unit which have a payment service relationship with the payment business units accessible by the user.

Benefits of Using Centralized Payment

• Improves flexibility and responsiveness through shared services model- Centralized payments helps to streamline payment functions and automate business process through the shared services model
• By centralizing the payments, we will have better control over the supplier. There are less chance to pay a supplier out of one business unit when there is a trade dispute in a different business unit.
• Centralized payments enables a single window channel with a supplier for all payment related transactions and will result in effective communication with the supplier.  Timely payments and effective communication will lead to improved supplier relations.
• In traditional setup where multiple business units are implemented for processing supplier invoices, we would end up sending multiple payments to the same supplier. This increases the transaction and administration costs.  Centralized payments avoids such scenarios by setting up a single business unit to process both supplier payments which will lead to a lesser number of payment transactions thereby reducing their related costs.

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