BP.080 Future Process Model · Web viewAccounts Receivables is one of the Sub ledger modules, which...

AIMBP.080 FUTURE PROCESS MODELAccounts ReceivablesThe National Company for Glass Industries – ZoujajOracle Applications Implementation Project – Release 12

Author: Sathyanarayana SarmaCreation Date: January 10, 2010Last Updated: February 10, 2010Document Ref: 1.0 Version: 1.0

Approvals:

Mr. Yousef Al Salman General Manager / Project Sponsor , Zoujaj

Mr. Hatem Al Fadli Group Finance Manager , Zoujaj

Zulfiaqar Ali Najeeb Project Manager, Zoujaj

Sathyanarayana Sarma Project Manager, Sierra Atlantic

Document Control

Change Record

Date Author Revision Change Reference

23-Jan-2010

Sathyanarayana Sarma

Draft 1.0 New Document Created

10-Feb-2010

Sathyanarayana Sarma

1.0 Version Change

3

Reviewers

Name Position

Padmiah V Consultant, Sierra AtlanticMr. Balan Asst Group Finance Manager –

Zoujaj Ms Ambujam Narasamangalam Oracle CoE, Sierra Atlantic

Distribution

Copy No.

Name Location

1 Library Master Project Library2 Zoujaj Project Manager Riyadh, Saudi Arabia

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File Ref: document.docZoujaj/ Sierra Confidential

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Contents

Document Control....................................................................................2

Introduction & Scope...............................................................................4

Future Business Model.............................................................................5

Future Processes......................................................................................8

Future Process Descriptions....................................................................9Future Process Diagrams.................................................................15AR.BP.01 – Enter & Maintain Customers.........................................15AR.BP.02 – Define Transaction Types..............................................16AR.BP.03 – Define Document Sequences........................................17AR.BP.04 – Define Invoice Sources..................................................18AR.BP.05 – Define Payment Methods..............................................19AR.BP.06 – Define Receivable Activities..........................................20AR.BP.07 – Imported Invoices..........................................................21AR.BP.08 – Manual Invoices.............................................................22AR.BP.09 – Adjustments...................................................................23AR.BP.10 – Customer Advances......................................................24AR.BP.11 – LC Receipts....................................................................25AR.BP.12 – Credit Receipts and Misc Cash......................................26AR.BP.13 – Customer Refunds.........................................................27AR.BP.14 – Collections & Follow-up.................................................28AR.BP.15 – Generate Reports..........................................................29AR.BP.16 – Period Close Activities...................................................30AR.BP.17 – Transfer to GL................................................................31AR.BP.18 – Open / Close Periods.....................................................32

Accounts Receivable Business Solution Matrix....................................33Critical Requirements......................................................................33Current Benchmark Activities..........................................................34Current Bottlenecks.........................................................................35

Open and Closed Issues for this Deliverable........................................36Open Issues......................................................................................36Closed Issues....................................................................................36


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Introduction & Scope

This document consists of the Future Process designs including high-level design, the various Organizations (Divisions) at National Company for Glass Industries - Zoujaj will operate after the Oracle Accounts Receivable system is implemented in this project.

The Process Designs included in this document are generic and intended to apply across the whole of the organization. Designs for variants, such as business units or departments, will be produced in this deliverable. The generic process model explains in high-level terms how work will flow in the future and who will be responsible for completing the activities. It is composed of the following components:

Future Business Model (Proposed Model) – A detailed Diagram and necessary descriptions for any proposed business set ups that would form the basis of the proposed processes.

Process Flow Diagram—A description of the process level (high-level) design and sub processes in graphical form wherever applicable.

Process Descriptions & Events—A high-level, textual description of the process that is executed in response to each event, together with an identification of the process’ main inputs and outputs.

Sub Process Flow Diagram & Description - A description of the sub process level design and sub processes in graphical form. A textual description and graphical representation of the process that is executed in response to each event, together with an identification of the process’ main inputs and outputs.


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Future Business Model

Accounts Receivable module will carry out the business functions of Invoicing customers, Collecting Receipts from customer, Generating Accounting Entries and Reports. Accounts Receivables is one of the Sub ledger modules, which maintain customer accounts balances, generates accounting entries and passes to the General Ledger for financial reporting. Accounts Receivables is integrated with order management, Inventory and General Ledger. Accounts Receivables module will carries out the following business functions:

1. Customer Creation and Maintenance2. Invoicing Customers3. Entering and Processing Customer Receipts 4. Maintaining Customer Balances5. Generating Accounting Entries6. Generate Customer Statements 7. Generating Accounting and Other Reports.


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Accounts Receivables is integrated with other modules as depicted in the above flow chart. Sales Orders that are entered and processed in the Order Management system will be imported into Accounts Receivable as as completed Invoices. Accounts Receivable shares the Customer, Transaction Types and Transaction Source with order management. Using these values, invoices for shipped orders will be imported into Accounts Receivable.

Accounts Receivables shares the Ledger (Chart of Accounts, Calendar, Currency, and Accounting method) from the General Ledger module. The currency exchange rates are also flown to the Accounts Receivables from the General Ledger module.

Accounts Receivable module generates the accounting entries for the invoices, receipts and adjustments and transfers the entries to the General Ledger.

Basis of Accounting:The basis of accounting used for the transactions is accrual basis of accounting.

InvoicingThe business function of invoicing customers is done in the Accounts Receivables module. The invoices can be imported from Order Management / other systems and also can be entered manually. Sales Orders of the customers will be entered in Order Management and processed for shipping. The shipped sales orders are imported into Accounts Receivables as Invoices

Manual invoices can also be directly entered in the Accounts Receivables module for the non-trade transactions or other business requirements.

Accounting for TransactionsAccounts Receivables determine the accounting entries for the transactions. Accounts Receivable uses “Auto Accounting Rules” to build up the different revenue and receivable accounts for the transactions.

ReceiptsReceipts from the customers can be entered in the Accounts Receivables module and applied against outstanding Invoices. These receipts entered in Accounts Receivable are available in Cash Management for Clearing and Bank Reconciliation.

GL PostingThe transactions entered in the Receivables module are transferred to the General Ledger module periodically by way of Journal Entries. The Journal Entries are again imported into the General Ledger module and used for the generation of Financial Statements and other reporting.


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System OptionsSystem Options defines controls and defaults for the functioning and Processing of Receivables module. These controls are in the areas Accounting, Tax, Customer Master and Customer Transactions. A Set of Books and the Accounting method are attached in the system options. These two values cannot be changed once they are attached. In addition to these certain General Ledger Accounts for Finance Charges, Realized Gains/Losses etc are also attached. These accounts will act as default accounts for the transaction processing.

Payment TermsReceivables provides for seeded payment terms like Immediate, 15 NET, 30 NET, 45 NET, 60 NET and 90 NET. A Payment Term is assigned during Transaction entry and processing. Invoice due date is calculated by the system based on the Payment Terms assigned to the transaction. Additional payment terms can also be defined and maintained in the Receivable system

Maintain CustomersReceivables share the Customer master with Order Management module. The Process relating to the customer master is explained under AR.BP.01.

Define Grouping RulesGrouping rules are used to group the different sales order and sales order lines in to an invoice. Grouping rules are defined and attached to the Invoice Sources. Auto Invoice program, which imports the Invoice lines use the grouping rules to group different lines under one invoice.


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Future Processes


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Future Process Descriptions

Sl No.

Event/ Process id

Description of the Response to the Event

Inputs Outputs Frequency/month

Responsibility

Corresponding Event id in RD20 (Current Business Process Document)

Changes from the existing process

1. AR.BP.01 Enter and Maintain CustomersCustomers are entered and maintained in the Receivables system. Multiple Customer Accounts can be maintained for a Single Customer. During Customer creation, Customers can be categorized based on business requirement, for Example Region wise like Export/ Domestic, Customer type, etc. Receivables shares the customer master with Order Management.

Initiation of Customer Creation

Customer created in Customer Master

One time conversion or when new customer is created, or existing customer is updated

Finance, Sales Department

AR.RD.2.0AR.RD.2.1AR.RD.2.2

New Setup Process

2. AR.BP.02 Setting up Transaction TypesTransaction Types defines type, invoice processing options and accounting for the Receivables Transactions - Invoices, Credit Memos and Debit Memos

A Transaction Type is selected while entering an Invoice or a credit memo. A Transaction Types determines whether the transaction updates the customer balances and posts the transactions to the General Ledger.

Transaction Types are assigned

Accounting Requirements,Values for GL accounts

Define Transaction Types

At the time of Setup

Finance NA New Set up Process


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Sl No.

Event/ Process id



Responsibility



to the Invoice Source in case of imported invoices

3. AR.BP.03 Define Document SequencesDocument Sequences help in assigning a unique sequence number automatically to each transaction that is entered in the Receivables system.

List of numbering / Sequence requirements

Defined Document Sequences

One Time, Periodic

IT Administrator

AR.RD.5.0 New Setup process

4. AR.BP.04 Define Invoice SourcesAn Invoice source is to be selected at the time of entering and creating Invoices. Invoice sources basically determines the invoice numbering options and the default transaction types in case of manual/imported invoices and in the case of imported invoices it also contains the grouping rules.

Invoice numbering requirements and other Invoicing requirements and defaults

Defined Invoice Sources

At the time of Set up

Finance NA New Setup Process

5. AR.BP.05 Define Payment Methods, Receipt Classes and SourcesPayment methods determine the accounting entries for the receipt and the receipt applications.

Bank definition, Accounting requirements for the Receipts

Defined Payment methods

Setup Step


6. AR.BP.06 Define Receivable ActivitiesReceivable Activities are used for defaulting accounting information for certain activities, such as miscellaneous receipts, (interest income, non trade receivables etc), unearned discounts, adjustments, and receipt write-off during receipt applications.

List of Receivable Activities and corresponding Accounting.

Defined Receivable Activities

Setup Step



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Sl No.

Event/ Process id



Responsibility



Receivable Activities also help in closing the corresponding Transaction Balances during Receipt Processing.

7. AR.BP.07 Imported InvoicesCustomer Orders are entered in the Order Management module and the goods are shipped against the order. These processed Orders/Order Lines are imported into Accounts Receivable module by way of Invoices.A program called Auto Invoice will be run to import the invoices. The order lines are grouped into Invoice as per the definition of the grouping rules attached.

Customer Master,Shipped Orders

Completed Invoice

Daily Finance AR.RD.6.0AR.RD.6.1AR RD 7.0AR.RD.8.0

Invoices are automatically created for the deliveries.

8. AR.BP.08

Manual InvoicesInvoices can be manually entered for the non-trade related transactions. Invoice will be raised by Finance on the basis of communication received from the respective user departments.A transaction type and Invoice source are assigned to an Invoice for deriving the accounting. Consolidated Invoices can also be generated for a Customer for the Period Activity.

Defined Invoice types and Invoice sources, Communication from user departments.

Completed Invoice

As and when required

Finance AR.RD.11.0AR RD 11.1 AR RD 11.2

NA

9. AR.BP.09

AdjustmentsAdjustments to the customer accounts are entered by way of debit memos and credit memos.

Intimation from Shipping ,Approval

Debit Memo/Credit Memo


Finance AR RD 9.1AR.RD.11.1AR.RD.11.2

New Process


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Sl No.

Event/ Process id



Responsibility



Limits10. AR.BP.1

0AdvancesAdvances received from customers are entered as receipts and kept as unapplied receipt under customer. Once the Invoice is entered based up on the communication from sales department, the advances are applied against the respective Invoice.

Bank Advice,Defined Payment Method and Bank

Receipt As and When required

Finance AR.RD.14.0 New Process

11. AR.BP.11

L/C Receipts L/C Receipts are entered in Receivables as a Receipt after receiving the advice from the Bank. The receipts are applied against the respective invoices manually.

Bank Advice,Defined Payment Method and Customer invoices.

Applied Receipt


Finance AR.RD.13.0 NA

10 AR.BP.12

Credit Receipts and Misc CashReceipts against customer credit sales can be entered and processed in Receivables. After entering the receipts, they are applied against the respective customer invoices.Also Misc Transactions for Bank Charges, Interest Income, Misc Income, etc can be entered and processed as Misc Receipts.

Defined Payment methods, Receivable Activities and Customer Invoices

Applied Receipt


Finance AR.RD.13.0AR.RD.13.1AR.RD.16.0AR.RD.17.0AR.RD.17.1AR.RD.17.2AR.RD.17.3AR.RD.17.4AR.RD.17.5

New Process

11 AR.BP.13

Customer Refunds Request for refunds from customers can be processed and accounted in the Receivable System. During the refund

Request for Refunds from customers

Refund generated, processed and


Finance AR.RD.15.0 New process


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Sl No.

Event/ Process id



Responsibility



process, the system generates the refund and the corresponding accounting entries. Refunds are processed for payment in the Oracle Payables module.

accounted.

12 AR.BP.14

Collections and Follow upReceivables allows reviewing customer account balances, and initiating follow up activities for collection. Customer Accounts can be reviewed for analysis. Aging and different reports can be generated in the Receivables system as part of the Collections process.

Completed Transactions

Aging Analysis and Reports


Finance AR.RD.12.0 New Process

13 AR.BP.15

Generate ReportsGenerate the accounting reports, listings, customer balance reports and other reports

Completed Transactions and Receipts

Generated Reports


Finance

14 AR.BP.16

Period Close ActivitiesPerform the Period Close Activities. Reconcile Customer BalancesReconcile the outstanding balances of customers to ensure the proper opening and closing balances of customers for a given Period. The reports like Aging Report, Transaction Register, Adjustment Register, Applied Receipts Register and Unapplied Receipts Register.Reconcile Transactions and ReceiptsCheck the Receivables

Completed Transactions and Receipts

Monthly Finance AR.RD.18.0AR.RD.18.1AR.RD.18.2AR.RD.18.3AR.RD.18.4AR.RD.18.5AR,RD.20.0

New Process


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Sl No.

Event/ Process id



Responsibility



Transactions to ensure that they are properly balanced by running reports like Sales Journal by GL Account, Transaction register, Receipt Register and Receipt Journal.Reconcile Accounts with GLRun the Receipt Journal and Sales Journal report to identify what will be posted to the General Ledger and subsequently for reconciling with GL Balances.

13 AP.BP.17

Create AccountingThe Create Accounting program will create the accounting and depending on the parameters selected will Run the Journal Import and Post the Entries in the General Ledger.

Completed Invoices, Receipts and other transactions

Generated Journal Entry Lines

Monthly Finance AR.RD.19.0 New Process

14 AR.BP.18

Close /Open AR PeriodsAt the end of each accounting period once it has been confirmed that all the transactions for the period have been accounted then the accounting period has to be closed and the subsequent period needs to be opened for transaction entry.

Monthly IT/Finance NA New Process


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Future Process Diagrams

AR.BP.01 – Enter & Maintain Customers

document.doc Zoujaj/ Sierra Confidential

15 of 36Future Process Descriptions

AR.BP.02 – Define Transaction Types



AR.BP.03 – Define Document Sequences



AR.BP.04 – Define Invoice Sources



AR.BP.05 – Define Payment Methods



AR.BP.06 – Define Receivable Activities



AR.BP.07 – Imported Invoices



AR.BP.08 – Manual Invoices



AR.BP.09 – Adjustments



AR.BP.10 – Customer Advances



AR.BP.11 – LC Receipts



AR.BP.12 – Credit Receipts and Misc Cash



AR.BP.13 – Customer Refunds



AR.BP.14 – Collections & Follow-up



AR.BP.15 – Generate Reports



AR.BP.16 – Period Close Activities



AR.BP.17 – Transfer to GL



AR.BP.18 – Open / Close Periods



Accounts Receivable Business Solution Matrix

Critical Requirements

SI #

Critical Requirements as documented in RD.020

Future Business Solution Corresponding Process Id in BP.080

Remarks

1 Creation of Customers by Sales Department

Customer can be created by Sales Department in Oracle Applications. During Order Booking, if the customer is new and not available in the system, the same can be created through Customer creation form.

AR.BP.01 Complete Solution

2 Region-Wise Customer Classification

During customer creation, customer can be classified based on business requirement.


3 Automatic Customer Numbering

Customers will be sequentially numbered automatically by the system during the customer creation process.

4 Automatic Document Sequencing for AR Transactions

Document sequences can be defined Numbering will be generated automatically by the system based on the sequence setup during transaction entry.

5 Tracking of Revenue by Salesperson for Reporting and Collection Activity

Sales persons can be assigned to customers and revenue tracked accordingly


6 Flexibility to create Debit Memos / Credit Memo manually or Auto created by the Oracle system.

Depending on business requirement/ process, debit memos, credit memos can be manually entered or automatically generated by the system.

AR.BP.07AR.BP.08AR.BP.09

Complete Solution

7 Printing of Invoices, Credit Memos and Debit Memos

Invoices, Credit Memos, Debit Memos can be printed from the system.

NA Complete Solution

8 Generation of Consolidated Customer Invoice for Period Activity.

Consolidated Invoices can be generated from the system for all Customer Activity for a period.


9 Generation of Customer Statements Monthly or on Periodic basis.

Customer Statements can be generated on a periodic basis from the system.


10 Generation of Dunning Letters at Division Level and Corporate level

Customer Open Items Listing and Aging Report can be generated in the system to review the past due items, and initiate follow-up action


11 Customer Ledger Open Items at Zoujaj Corporate Level

The Custom Reports Listing as provided by Zoujaj is under review. Customer Ledger Open Items at Zoujaj Corporate Level will be addressed as part of the Custom Report Requirement

NA NA

12 Customer Aging Analysis at Zoujaj Corporate Level

The Custom Reports Listing as provided by Zoujaj is under review. Customer Aging Analysis at Zoujaj Corporate Level will be addressed as part of the Custom Report

NA NA



SI #

Critical Requirements as documented in RD.020


Remarks

Requirement13 Generation of Customer

Aging Reports for Analysis

Generation of Customer Aging Analysis at Individual Division Level is a standard report in Receivables that can be generated any time for review and analysis.


14 Enter and process Invoices in Multi Currency

Invoices can be entered and processed in multiple currencies

AR.BP.07AR.BP.08

Complete Solution

15 Enter and Process Partial Receipts, Application of Customer Receipts partially, to multiple invoices, etc

Receipts can be entered accounted in the system. Receipts can be applied to multiple invoices, partially applied to invoices as per business requirement


16 Allow Receipt reversal for wrongly entered / applied receipts

Receipts can be unapplied or reapplied to transactions. Before cancellation, receipts should be unapplied from the respective transaction before they can be cancelled. Fully applied / partly applied receipts cannot be cancelled in the system.

AR.BP.10AR.BP.11AR.BP.12

Complete Solution

17 Process Customer Deposits

Deposits received from the customer can be entered and processed in the system.

AR.BP.08AR.BP.10

Complete Solution

18 Customer Aging Report, Dunning Letters, Customer Statements, Transaction Register, Sales Register and Overdue Statement

Same as mentioned for 9,10,11,12 and 13 as mentioned above. Transaction Register, Sales Register and Overdue Statement are standard reports that can be generated from the system.

AR.BP.15

Current Benchmark Activities

SI #

Current Benchmark activates as documented in RD.020


Remarks

1. Processing of AR Receipts payments

Invoices can be online generated in AR for all the shipped deliveries and Receipts available / entered in the system can be applied to the respective AR Transactions

AR BP.10AR.BP.11AR.BP.12

Complete Solution

2 Customer Statements and Collections

Customer Statements can be generated from the system.


3. Reconciliation of Receipts upon receipt of bank debit advice

Receipts can be cleared in the system after the receipt of the bank advice

AR BP.05 Complete Solution

4. Monthly updation to IFS General ledger

Receivable Activities can be transferred to General Ledger Online in the system to update GL Balances




Current Bottlenecks

SI #

Current Bottlenecks as documented in RD.020


Remarks

1. Manual processes and tracking are still in practice

AR is integrated with Order Management and General Ledger module. Orders entered and shipped in Order Management flow as Invoices into AR. Transactions and Receipts are entered and processed in AR.Posting can be done through system from AR to GL.

AR.BP.07AR.BP.17

Complete Solution

2. MS Excel is being used for Reconciliation, Aging Reporting , Customer Statements

Customer related reports relating to Aging, Statements, and Reconciliation Reports can be generated from the AR system.

AR BP.015 Complete Solution

3. MS Word for Customer Dunning Letters

Customer account can be inquired online and also standard reports can be used for analysis and to provide the clarifications to the customers. Customer Statements can be generated and sent to the customers.

AR.BP.15 Complete Solution.



Open and Closed Issues for this Deliverable

Open Issues

ID Issue Resolution Responsibility Target Date

Impact Date

Closed Issues

ID Issue Resolution Responsibility Target Date

Impact Date



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