Payables & Cash Management

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    Sigrid Buitelaar
    Requirement to 'pay' invoices directly to suspense...
    Topic posted November 6, 2019 by Sigrid BuitelaarGold Medal: 3,500+ Points, tagged Payables 
    43 Views, 11 Comments
    Title:
    Requirement to 'pay' invoices directly to suspense accounts
    Summary:
    Requirement to 'pay' invoices directly to suspense accounts
    Content:

    Hi there

    The customer has a requirement to 'pay' invoices directly to suspense accounts. This means, instead of reconciling the payment with a bank statement, the customer has certain invoices which are not paid (no cash out) and these settled against a suspense account.

    The payment option for the BU in payables options has been set up with the option account for payment when the payment is issued. The cash account on the clearing bank account has been defined using the suspense account. With these settings the accounting is correct, however the payments remain negotiable. Is there any other way to properly settle payables invoices against a clearing account?

    Thanks!

    Sigrid

     

    Comment

     

    • Patruni Suresh

      The requirement is not clear. The invoices created in the system must be paid through a bank account to ensure that liability is cleared via payment accounting. The payment when created in the system must be reconciled to change the status to cleared. The usage of suspense account as clearing account merely parks the liability to a suspense account during the payment accounting.

      Is the ask to settle the invoices in the system without making payment?

      Thanks,

      Suresh

       

       

       

       

       

       

      • Sigrid Buitelaar

        Hi Patruni


        That's exactly what I mean! The aim is to clear the liability without creating a payment which is negotiable and needs to be settled with a bank statement.


        Sigrid

        • David Zachar

          Hi Sigrid..

          So will be able to create a dedicated "Zero Payment" payment process profile that will generate a payment run that clears Open balances that are Zero (on the basis you have a way to ring fence these types of transactions), then schedule the PPP so it runs nightly (or as frequently as required - ie before you run your AP TBs)..

          The PPP should be associated with a dedicated clearing bank account, that isnt used for Cash Management purposes so wont be considered for reconciliation purposes and uses the dedicated clearing accountstring for the "Cash" setup in the bank account screens (that should be checked as part of period end to ensure it remains zero and nothing was inadvertently picked up in a payment run) ...

          Hope that helps


          David

    • Patruni Suresh

      The open invoice need to paid to settle the liability. If the liability is not cleared, the unpaid invoices will show up in the trial balance report.

      The invoice liability can be cleared if a credit memo for the same amount is created and a zero amount payment is created. However the zero amount payment will still be showing up as unreconciled payment.

      If the invoice is not needed to be settled, they can cancel the invoice.

      Thanks,

      Suresh

    • Sigrid Buitelaar

      Hi there

      Sorry I was not clear, the Requirement is not to settle invoices in 0 payment. The Requirement is for certain invoices to be cleared against as suspense account as the offseting accounting entries are interfaced through a third party system.

      Sigrid

    • David Zachar

      No worries Sigrid... Its still kinda the same - on the basis that you want to "clear the liability without creating a payment which is negotiable" (ie so you don't actually want to send payment details to the bank to process the physical payment)..

      You will still need to setup a "Clearing" bank account that will use your "suspense" natural account in the Cash field in the bank setup screens. That clearing account wont be considered for Cash Management Reconciliation purposes (so it can be ignored)

      Link a PPP to that bank account (and insert whatever selection criteria you can to ensure that only the "Suspense" invoices are selected).. and when it runs it will Dr AP Control, and Cr "Suspense"

      Hope thats closer to what you need :)

      David

    • Sigrid Buitelaar

      Hi David

      Thanks for your reply. So I have set up a clearing account where instead of cash I filled out the suspense, my issue is that the payments remain negotiable. So the accounting is accurate but the status 'negotiable' indicates these need to be cleared against a bank statement. Any thoughts on this?

      Sigrid

       

    • David Zachar

      Hey Sigrid.. So youve pretty done everything you can.. The next step is much trickier. Those settings are at a BU level so you dont have much room to manoeuvre unfortunately.

      The question would be why is it a concern that payments made from a "clearing" bank account are tagged negotiable - since that account doesnt use the Cash Management functionality, and should be ignored for all Cash Management reporting purposes.

      David 

    • Sigrid Buitelaar

      Hi David

      Thanks again! What do you mean, the next step is much trickier? It seems like this particular BU is only performing clearing payment as it does not have any bank accounts in Oracle. I agree, the 'negotiable' status should be ignored however this is merely confusing as for other BUs this status is valid and means action is required. Do you see any business case to raise this as an idea or do you think the workaround is the best available option?

      Sigrid

    • David Zachar

      Hey Sigrid..

      I was just being diplomatic.. I believe your hands are tied.. Negotiable is the default status for payments.

      There is one thing you could test though - In the "Manage Payment options", there is the "Account for Payment" field. I suspect you have that set as "At payment time"? So in EBS, even with this setting 'Negotiable" is still the default value used for payments.. I havent tried it in Cloud but that be an avenue if you do have some time to test (though to be honest I would be surprised if that proves fruitful).   

      In terms of the enhancement, doesnt hurt to put forward the idea.. I personally havent come across many scenarios like yours - but there could be others. You are essentially asking Oracle to use the Payment Status of "cleared" as a default where a bank account isn't used by CM (which would probably require them to extend the "Account Use" List in the Bank Account to include Cash Management).

      David 

    • Sigrid Buitelaar

      Hi there

      Yes I did, in the initial thread I mention "The payment option for the BU in payables options has been set up with the option account for payment when the payment is issued. The cash account on the clearing bank account has been defined using the suspense account. With these settings the accounting is correct, however the payments remain negotiable."

      Thanks again for your advice! I will log the idea and hope for your vote :)

      Sigrid