By Wendy Lamar
Pay when paid functionality has been added to Oracle E-Business Suite as part of integration with procurement. The pay when paid functionality improves cash flow management by preventing payment to subcontractors until the customer invoice has been collected. Further, the supplier workbench provides the Project Manager improved visibility to the vendor invoice information, as well as enabling the management of invoice holds directly from the workbench.
When the purchase order is created, it should be setup with pay when paid enabled. Once the goods have been received or the work has been confirmed, the vendor invoice can be created either by interface using pay on receipt functionality, interfaced from a third party system, or manual entry, and it must be matched to the purchase order. The invoice is automatically placed on pay when paid hold. Once this hold is released, assuming no other holds, the vendor invoice is eligible to pay on terms.
In Projects, the resulting expenditure item has the expenditure type class of Supplier Invoice. To enable automatic linking between Payables and Receivables, the project customer invoice should be based on the expenditure items (work based billing), and the expenditure item is billable. In this case, when project invoices are generated the expenditure item is included and the customer invoice is interfaced to Receivables. This automatically creates a link between the customer invoice and the vendor invoice, based on the expenditure item. Linked Invoices are viewable from the supplier workbench.
For project invoices that are not expenditure based, the customer invoice will not be linked to the source expenditure item. In this case, there would be no automatic link created between the vendor invoice and the customer invoice. However, a manual link can be placed between a vendor invoice and a customer invoice, as long as the vendor invoice is on pay when paid hold.
Project Types can be configured in the Billing Information region to enable automatic release of pay when paid holds. When enabled, the concurrent program PRC: Release Pay When Paid Holds runs and automatically releases any vendor invoice holds when the related customer invoice has been fully collected. If the customer invoice has only partial cash application, the hold is not released. There is a client extension available for this process to be extended to accommodate your release rule requirements. Additionally, holds can be released manually from the supplier workbench.
A new workflow has been added which notifies the project manager when cash has been applied to a project related customer invoice. This workflow is optional, and can be modified to suite your business requirements.
The supplier workbench is a very useful tool for your project management team. Here they can review all invoices – customer and vendor – related to the project. They can also manage vendor invoice holds, view collection details on customer invoices, view linked invoices between AR and AP, and even create manual links between AP and AR invoices, if an AP invoice is on pay when paid hold.
From the supplier workbench, there is a subtab named Deductions. This page allows the project team member to process a deduction to recoup costs from a subcontractor. For example, you may have provided your subcontractor with fuel during the course of their work, and a deduction allows you to recover costs from the sub. The deduction is entered and submitted, including the amount and expenditure type. The concurrent program PRC: Import Deductions to Payables runs and interfaces a debit memo to payables. This debit memo can be processed in a payment batch to reduce the amount paid to the vendor. Once the invoice has been validated and approved, the concurrent program PRC: Interface Supplier Costs interfaces the related expenditure item for the offset back to Project Costing.
Register to view a new on-demand webinar that explains this functionality, and its benefits, in more detail: The Business Benefits of New Costing Functionality in Release 12.2