R12 -AP /AR Netting an Advance version of Contra

Hi All,

Introduction :

Organisations always Aim for the follwing objects.
1.Reduce the cost to improve the Margin
2.Quick decesion Making.

Therefore To reduce the Reconciliation process time  so that decesion making would be faster and avoid manual errors Oracle has introduced AP/AR Netting  for the Parties who acts as Supplier and Customer for the Organisation.

What is AP/AR Netting:

In the business if a party is a supplier and also customer then the amount need to pay and elgible to receive from that Party would need to be knocked off and only the left amount received or paid need to  be settled in cash.

Oracle AP/AR Netting is  the process  where in the AP , Party who is a supplier  and also in AR where Party is a customer has some balance in their Account.
To do the settlement both AP and AR Balnce need to be knocked off and rest amount need to be paid.

How to do AP/AR Netting:

• Define a netting control account
• Define the exchange rate types if using multi-currency netting.
• Define Netting bank Account
• Define payment method
• Define and assign sequencesBefore multiple customers are netted, you must set up a paying relationship for the customers Enable the Allow Payment of Unrelated Transactions Receivables System Option.
• Define Netting Agreement

Note: If you need Document for the same please reach me@caoraclefin@gmail.com


When to do AP/AR Netting:
This can be used for all parties who has balance either directly in APand AR or also party relationship company has the balance.

Advantages:

• Reconciliation becomes easier as the number of transactions would reduce after applying the Netting.
• No Manual intervention is required.
• As there is manual intervention is required risk of errors is very less.
• Unlike Contra Customer needn't be defined in the same name as supplier for netting

Disadvantage:

•    This is applicable only when the party is available as  a Customer and suplier with in  a single operating Unit.

Backend details:

The following fun tables were involved in the AP/AR netting tables:

•   fun_net_customers_all
•   fun_net_suppliers_all
•  fun_net_batches_all
•  fun_net_agreements_all

Note:The most important columns for joining the FUN tables are Agreement_id and Batch_id.



                                                Please post your feedbacks.

CA.Ganesh kumar