To offset the Customers and Supplier balances and update the accounts with netting balances.
This functionality is enabled to check the AP and AR open invoices for related suppliers and customers and net the open balances by running the netting settlement batches that are used Netting Agreements.
Role required to perform Netting:
- Netting Manager Job role and
- Customer and Supplier Balance Netting duty role
Setup: 1 Manage Payment Methods
Navigation: Navigator –> Setup and Maintenance -> Manage Payment Methods
A netting payment method can be setup to identify the payables invoices that are netted.
Ensure the ‘Code’ = ‘NETTING’
Select the checkbox – Enable for use in Payables
Setup 2 : Manage Bank Accounts
A netting bank account is a technical account and must be assigned to netting agreements. To enable it, select the ‘Netting account’ field on the Bank Account setup for your legal entity.
Check the ‘Netting account’ in the ‘General’ tab on the ‘Create Bank Account’ user interface.
For Netting settlements that are for multiple currencies (i.e. if you create a settlement that ‘Nets within each currency’), check the ‘Multi Currency Account’ checkbox in the ‘General Tab’.
Bank Name: XXX Bank Account – US
Assign the ‘Business Units’ to the ‘Bank Account’ in the ‘Business Units Access’ tab. The Bank Account must also have access to the Business Units that you want to include as part of your netting process.
Edit the ‘Business Unit’ and assign the ‘NETTING’ Payment Method :
Setup 3 – Manage Receipt Classes and Methods
Navigation: Navigator –> Setup and Maintenance -> Manage Receipt Classes and Methods
Oracle have seeded a receipt method for netting: ‘ORA_AP/AR Netting’. This is required in order to process receipts that are created in a settlement.
Navigate to ‘Manage Receipt Classes and Methods’ in ‘Setup and Maintenance’
Search for the ‘Receipt Method’= ‘ORA_AP/AR Netting’
Assign your ‘Business Unit’ and ‘Account’ that is setup in the ‘Netting Bank Account Setup’ section in the ‘Feature Specific Setup’
Setup 4 – Manage Receivables System Options
Setup Type: Mandatory if netting for multiple business units
Task name: Manage Receivables System Options
Navigation: Navigator –> Setup and Maintenance -> Manage Receivables System Options
In the ‘Cash Processing’ tab, check the ‘Allow payment of unrelated transactions’ checkbox for your ‘Business Units’ that you want to include in the netting process.
Setup 5 – Manage Standard Lookups
Task name: Manage Standard Lookups
Navigation: Navigator –> Setup and Maintenance -> Manage Standard Lookups
Netting groups allow the Netting Manager to optionally create settlements for multiple agreements at the same time. Implement ‘Netting Groups’ to group together similar business related agreements for settlements.
Oracle have seeded a lookup type for this purpose : ORA_JE_NET_GROUP.
Set up 6 – Netting Agreement Setup
There are two ways how you can create Netting Agreements :
- Create manually through the ‘Manage Netting Agreements’ task
- Import agreements that have been defined in a spreadsheet
Manual Creation of Netting Agreements
Task name: Manage Netting Agreements
Navigation: Navigator –> Payments -> Task List -> Manage Netting Agreements
Navigation: Navigator –> Accounts Receivable -> Task List -> Manage Netting Agreements
Importing Netting Agreements
Netting Agreements can also be imported using the Import Netting Agreements FBDI spreadsheet. It is recommended you review the demonstration that is available in the training material.
Summary guidance for importing netting agreements :
- Download the Import Netting Agreements FBDI spreadsheet
- Enter the agreements in the spreadsheet, following the guidance in the notes
- Create the zip file
- Use ‘File Import’ to import the zip file (choose fin/payables/import account)
- Run ‘Load Interface File for Import’ process (choose ‘Import Netting Agreements’ for the ‘Import Process’). When the process completed, the netting agreements from the spreadsheet will be uploaded into the netting interface tables
- Run ‘Import Netting Agreements’ process. You can optionally select a range of Legal Entities, and/or a range for the ‘Netting Agreement’ name. To import all agreements in the interface tables, you can leave the parameters.
Set up 7 – Managing Netting Settlements
Task name : Manage Netting Settlements
Navigation : Navigator –> Payments -> Task List -> Manage Netting Settlements
Navigation : Navigator –> Receipts -> Task List -> Manage Netting Settlements
Navigation : Navigator -> Tools -> Schedule Processes -> Generate Netting Settlements
Schedule this process based on business requirements.
Step 8 – Reviewing a Settlement
Assuming you have opted to review the settlement prior to the creation of payments and receipts, you can review the proposed settlement in a spreadsheet. It is necessary to review the content, so that you have confirmed that the correct set of invoices and transactions are being selected for netting. This is the last chance to alter the settlement before the netting process creates the payments and receipts.
Click on ‘Actions’->’Download Settlement to Spreadsheet’, or you can download to excel from the download link for the settlement search results table for your settlement number.
An ADFDi excel file with then be downloaded which you can open to review the details of the settlement. Ensure you have the ‘Oracle ADF Desktop Integration Add-In for Excel’ installed.
o Double click the ‘Exclude’ cell for the invoice or transaction number.
o A ‘blue dot’ indicates that the record is selected for exclusion.
o Save changes – Click the ‘Upload Settlement’ menu item.
o The Payables or Receivables Amount will be decreased in the spreadsheet.
Add other invoices or transactions into the settlement that were not originally selected as part of the process since they did not adhere to the settlement criteria. For example, adding a transaction that was initially had the ‘Exclude from Netting’ set to ‘Yes’, but subsequently you do wish to include after updating the transaction to remove the exclusion
o Add a new row in excel
o Double click the ‘Invoice Number’ (if you want to add a payables invoice) or the ‘Transaction Number’ (if you want to add a receivables transaction)
Search for the ‘Invoice Number’ (Payables) or ‘Transaction Number’ (Receivables). Once you have selected your invoice or transaction, it will be added into the spreadsheet.
o The Row Status will change, indicating that you have new data.
o Save changes – Click the ‘Upload Settlement’ menu item. The row status will indicate that the row has been inserted successfully.
o The Payables or Receivables Amount will be increased in the spreadsheet.
Confirmation that the row is being updated is reflected by the blue triangle in the ‘Changed’ column for the invoice or transaction that you have modified.
o Save changes – Click the ‘Upload Settlement’ menu item.
At this stage, the proposed settlement has been created, reviewed and modified. The settlement is now ready to be submitted for the netting to take place.
Step: 9 Submit a Settlement
To submit a settlement :
Search for the settlement in the ‘Manage Netting Settlements’ user interface.
Select the row.
Click on ‘Actions’ -> ‘Submit Settlement’.
A confirmation will show, indicating that the process has been submitted.
When the settlement is complete, the settlement will change to ‘Settled’. Click on to check for completion.
During the settlement process, the following reports are also run:
Netting Report : Lists all of the invoices and transactions with details on the amounts netted.
Netting Letter : If you have enabled the ‘Generate Netting Letter’ a netting letter is produced for your third party. If you enabled the ‘Send Letters by E-Mail’ option the letter will automatically be sent to the third party contact. See the ‘Letters’ section in ‘Netting Agreement Setup’.
