ORACLE CORPORATION Oracle Receivables Receipts Write-off White Paper

Author: Cyndi Campbell

Creation Date: April 2002

Last Updated: April 2002

Version: 1.1

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Contents

Overview..................................................................................................................................1

Receipt Write-off Setup..........................................................................................................2

How to Manually Write off Receipt Amounts....................................................................3

How to Write off Receipt Amounts in Mass .......................................................................4

Reversing Receipt Write-offs.................................................................................................6

Viewing Receipt Write-offs ...................................................................................................7

Accounting for Receipt Write-offs........................................................................................8

Receipt Write-off Table Information ....................................................................................9

Receipt Write-off Troubleshooting.....................................................................................13

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Overview In Oracle Receivables version 11i, you can write off unapplied cash receipt balances. Receipt write-off functionality is provided to account for small overpayments that you do not intend to refund or maintain as unapplied amounts or on account balances. With this function, you can choose to write off an unapplied cash receipt amount, within certain limits, to a specific general ledger account. The write-off amount is credited to this account, such as a miscellaneous revenue account, and no longer reflects as an unapplied amount on the receipt or on the customer’s account. Receipt write-offs do not change receipt amounts nor do they affect customer balances or general ledger Cash account entries. Receipt write-offs can be processed for cash receipts only. You cannot write off amounts from miscellaneous receipts. You can write off individual unapplied receipt amounts during receipt application or later, at any time using the Applications window. You can also write off balances of multiple receipts in mass using the Create Receipt Write-off option. This White Paper will cover the following receipt write-off information: Receipt Write-off Setup How to Manually Write off Receipt Amounts How to Write off Receipt Amounts in Mass Reversing Receipt Write-offs Viewing Receipt Write-offs Accounting for Receipt Write-offs Receipt Write-off Table Information Receipt Write-off Troubleshooting

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Receipt Write-off Setup The following information must be set up before you can process any receipt write-offs: 1. Receipt Write-off Receivable Activity Define one or more receivable activities with an activity type of Receipt Write-off. Each time an unapplied receipt amount is written-off, a Receipt Write-off type receivable activity must be selected. For Receipt Write-off receivable activities, the GL Account Source must be specified as ‘Activity GL Account’. Select a valid general ledger account number as the Activity GL Account. This account will be credited for the receipt write-off amount. This account may represent a miscellaneous revenue account or expense account. Navigation: Setup>Receipts>Receivable Activities 2. Receipt Write-off User Approval Limits Define approval limit ranges for document type Receipt Write-off for all users who will be allowed to write off unapplied receipt amounts. When you write off an unapplied receipt amount, Receivables uses approval limits that have a document type of Receipt Write-off. You cannot write off an unapplied receipt amount that is outside your user approval limit or outside the system Maximum Write-off Amount (see below). There is no pending feature for receipt write-offs outside of your limits as there is for adjustments. If the amount is outside of the limits, you cannot write it off. You can only write off positive amounts; therefore Receipt Write-off From amount limits cannot be less than zero. Navigation: Setup>Transactions>Approval Limits 3. Receipt Write-off Maximum System Limit Define the system level Maximum Write-off Amount for a single receipt in your functional currency. No users can write off unapplied receipt amounts that are greater than the system maximum - even if their user limits allow it. Therefore the system maximum overrides user approval limits when necessary. Navigation: Setup>System>System Options (T) Miscellaneous

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How to Manually Write off Receipt Amounts The manual receipt write-off process gives you the flexibility to write off unapplied amounts when you enter and apply a receipt, or later at any time. You can enter multiple Receipt write-off lines in the Applications window for a single receipt provided that the total write-off amount for the receipt does not exceed your Receipt Write-off user approval limit or the system Maximum Write-off Amount. NOTE: When you write off an unapplied amount on a foreign currency receipt, Receivables uses the same exchange rate information from the original receipt for the write-off application record. If you adjust the exchange rate of a foreign currency receipt, Receivables reverses the write-off with the original exchange rate and then applies the new exchange rate to a new write-off application record. Receivables completes this process only if the converted amount does not exceed the user approval limit for receipt write-offs or the system Maximum Write-off Amount. If the converted amount exceeds either of these limits, then the write-off amount is left as an unapplied amount. To manually write-off a receipt amount: 1. Navigate to the Receipts window (Receipts>Receipts or Receipts>Batches). 2. Enter a new cash receipt or query an existing cash receipt. 3. Choose the Applications button. (NOTE: You cannot process receipt write-offs using the Mass Apply button.) 4. Verify that the Unapplied amount for the receipt is greater than zero. 5. In the Apply To field, select Receipt Write-off. 6. In the Amount Applied field (you may have to scroll to the right to see this field), enter the unapplied amount to

be written off. (Receivables validates the value you enter is less than or equal to the unapplied amount for the receipt, is within your user write-off approval limit, and does not exceed the system Maximum Write-off Amount.)

7. In the Activity field, select a Receipt Write-off type receivables activity. 8. Save your work. The unapplied amount on the receipt should now be reduced by the write-off amount.

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How to Write off Receipt Amounts in Mass The automatic receipt write-off process gives you the ability to write-off multiple small unapplied receipt amounts with minimal manual intervention to individual receipt records. Unapplied amounts can be written-off based on amount or by percentage. When you submit the Automatic Receipt Write-off request, a concurrent program creates the write-off records. Note: Always use the Generate Report Only option to preview the receipt amounts you want to write off before submitting the update. You can only reverse write-off receipt amounts by manually unapplying each receipt write-off from the Applications window. To create an automatic write-off: 1. Navigate to the Create Receipt Write-off window (Control>Create Receipt Write-off). 2. In the Selection region, enter the currency of the receipts to write off. Receivables considers receipt amounts for

write off only if they are in the same currency as entered here. The default value is your functional currency if the user write-off approval limit has been defined for the functional currency. You can change the default value to another currency.

3. Enter either an unapplied amount or unapplied amount percentage, or both. Although you can enter any amounts in these fields, Receivables will not select unapplied receipt amounts for write-off if they exceed the user write-off approval limits or system Maximum Write-off Amount. - If you enter an unapplied amount, Receivables selects unapplied receipt amounts that are less than or equal

to this value and that meet the other selection criteria. - If you enter an unapplied percentage, Receivables determines the percentages of each unapplied receipt

amount by dividing the unapplied amount by the original receipt amount and then selects unapplied receipt amounts that are a percentage smaller than or equal to the percentage entered and that meet the other selection criteria.

- If you enter both an unapplied amount and unapplied percentage, then each unapplied receipt amount must meet both the amount and percentage criteria. For example in figure 1, if the unapplied amount is set at $10.00 and the unapplied percentage is set at 20%, then following would apply:

Figure 1 Selected Not Selected $10 receipt / $1.00 unapplied (10%) $10 receipt / $5.00 unapplied (50%) $10 receipt / $2.00 unapplied (20%) $200 receipt / $15.00 unapplied (7.5%) $200 receipt / $5.00 unapplied (2.5%) $200 receipt / $10.00 unapplied (5%)

4. Specify a receipt date range, if desired.

WARNING: When date criteria is used, the logic of this program is to select only those receipts that have receipt dates within both the receipt date range and receipt general ledger date range specified.

5. Specify a receipt general ledger date range, if desired. WARNING: Please exercise caution when setting receipt general ledger date ranges. When date criteria is used, the logic of this program is to select only those receipts that have receipt dates within both the receipt date range and receipt general ledger date range specified.

6. Specify a payment method, if desired. 7. Specify an individual customer name, if desired. 8. Specify an individual customer number, if desired. 9. Specify an individual receipt number, if desired. 10. In the Parameters Region, select a Receipt Write-off receivable activity. This field is optional when submitting the

report and required when creating the write-offs. 11. Enter the apply date. This date is used as the apply date of the write-off application records. 12. Enter the GL Date. This date is used as the GL date of the write-off application records.

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13. Enter comments, if desired. These comments are assigned to each write-off application record and can be viewed from the Applications window.

14. In the Options region, select one of the following options: - Generate Report Only: produces the Write-off Unapplied Receipt Balances: Pre Write-off Report, which lists

the unapplied receipt amounts selected based on your criteria. Use this option to preview the write-off results before running the option to create write-off amounts in mass.

- Create Write-off: submits the Automatic Receipt Write-off program (ARWRTCON ) that creates the write-off application records and generates the Write-off Unapplied Receipt Balances: Write-off Report that lists the unapplied receipt amounts selected based on your criteria.

WARNING: Oracle highly recommends that you always use the Generate Report Only option first before submitting the update. There is no supported means for reversing receipt write-offs in mass. You can only reverse write-off receipt amounts by manually unapplying each receipt write-off from the Applications window.

15. Choose the Submit button.

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Reversing Receipt Write-offs Like other payment applications, receipt write-off amounts can be reversed at any time and the write-off amount will be added to the Unapplied total for the receipt. To reverse a receipt write-off, unapply the original write-off application by unchecking the Apply check box on the Applications window for the write-off amount. To reverse a receipt write-off: 1. Navigate to the Receipts window (Receipts>Receipts or Receipts>Batches). 2. Query the existing cash receipt. 3. Choose the Applications button. 4. Uncheck the Apply box next to the receipt write-off application line you want to reverse. 5. Confirm that the write-off amount is added to the Unapplied total for the receipt. 6. Apply the unapplied amount, if desired. 7. Save your work.

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Viewing Receipt Write-offs Receipt write-off amounts are displayed with other receipt application lines. You can review the applications for a receipt by querying the receipt from the Receipts or Receipts Summary options and then selecting the Applications button. You can also drill down to receipt application information from the Account Details option by querying the receipt number as the Transaction number, then selecting the Activities button. NOTE: At this time, receipt write-off amounts cannot be viewed from the Receipts form, Application Summary tabbed region. Receipt write-off application lines are omitted from this screen. The accounting for receipt write-off amounts is included with the accounting for the receipt. To review receipt write-off information: 1. Navigate to the Receipts or Receipts Summary window (Receipts>Receipts or Receipts>Receipts Summary). 2. Query the receipt to view. 3. If you are in the Receipts window, choose the Applications button. If you are in the Receipts Summary window,

choose Open, then choose the Applications button. 4. View the receipt write-off line(s) and amounts. 5. If you want to view accounting information for receipt write-offs, close the Applications window to return to the

Receipts window. 6. Choose View Accounting from the Tools Menu. View the detail accounting lines for the receipt in the form of a

balanced accounting entry. The receipt write-off amounts display as credits with a line type of ‘Other Receipt Application’ for the account that was defined for the Receipt Write-off receivable activity selected. You should also see that the write-off amount was initially included in the Unapplied line type amounts.

7. If you want to view the detail accounting as t-accounts, select the T Accounts button.

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Accounting for Receipt Write-offs As a cash receipt is entered, general ledger entries are created for each step in the process. Therefore, to explain the entries for a receipt write-off, you need to first understand the entries for receipts in general. If a receipt is initially saved as unidentified (a customer is not selected), then the following entries are made: DR Cash CR Unidentified However, most cash receipts are not saved before the customer is identified; therefore the following entries are typically the initial accounting entries created for a receipt: DR Cash CR Unapplied As you apply the receipt, entries are made to move the money from Unapplied to Applied (Receivable). For example, if a $100 receipt is entered and applied in full, the following entries are made: DR Cash 100 CR Unapplied 100 DR Unapplied 100 CR Receivable 100 When a receipt write-off is processed, the money is moved from Unapplied and put to the account defined for the Receipt Write-off receivable activity selected. For example, if a $100 receipt is entered and $95 is applied and $5 is written off, then the following entries are made: DR Cash 100 CR Unapplied 100 DR Unapplied 95 CR Receivable 95 DR Unapplied 5 CR Write-off 5 If you later decide to reverse the write-off, then the following additional entries are made: DR Write-off 5 CR Unapplied 5

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Receipt Write-off Table Information Receipt write-off amounts are stored in Oracle Receivables like other receipt application rows. Following is a description of each table that is updated when a cash receipt is entered. Only the AR_PAYMENT_SCHEDULES_ALL, AR_RECEIVABLE_APPLICATIONS_ALL, and AR_DISTRIBUTIONS_ALL tables are impacted by receipt write-off amounts.

- AR_CASH_RECEIPTS_ALL: One record is created per cash receipt. Receipt write-off amounts do not impact the values in this table. However, Oracle Receivables assigns a status to each receipt based on how it is applied. So it is important to understand how statuses are assigned and how receipt write-offs are considered in assigning these statuses. Available statuses are: Applied (APP), Unidentified (UNID), Unapplied (UNAPP), and Reversed (REV). If the receipt is reversed (regardless of how it was applied), then the status REV is used. If any portion of the receipt is unapplied (regardless of how the rest of the receipt is applied), then the status UNAPP is used. If a customer has not yet been assigned to the receipt, then UNID is used. And if the receipt is applied in full, that includes applications to debit and credit items, as well as on account and receipt write-off amounts, then the status APP is used. Other relevant columns for receipts include those described in Figure 2:

Figure 2

Cash_receipt_id Unique identifier of receipt (primary key) Receipt_number Cash receipt number, not necessarily unique Amount Amount of the payment Currency_code Currency code assigned to the receipt Receipt_date Date of receipt Type CASH Confirmed_flag Y or N Pay_from_customer Identifier of the customer for this receipt

- AR_CASH_RECEIPT_HISTORY_ALL: One record is created for each life cycle of a receipt. For example, a

typical receipt (applied or unapplied) will have one row with a status of CLEARED. If a receipt has been reversed, then it will have two rows with statuses of: CLEARED and REVERSED. Automatic receipts can have additional rows depending upon the confirmation levels required. So an automatic receipt could have three rows with statuses of: APPROVED, CONFIRMED, and REMITTED. Other relevant columns for receipts include these described in Figure 3:

Figure 3

Cash_receipt_history_id Unique identifier of the cash receipt history record (primary key)

Cash_receipt_id Unique identifier of receipt, although multiple rows can have the same cash_receipt_id

Amount Receipt amount in currency assigned to the receipt Acctd_amount Receipt amount in your functional currency First_posted_record_flag Y – when this is the first row that has been posted Gl_date The general ledger date used to debit the CASH

account_code_combination_id Account_code_combination_id Code representing the CASH account that will be

debited (and possibly credited) for the row Current_record_flag Indicates which row is the current one for the cash

receipt (Y or N) Reversal_gl_date The general ledger date used to credit the CASH

account_code_combination_id. It also signifies that this row of the receipt has been reversed.

Posting_control_id Receivables posting batch identifier. –3 designates

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unposted rows, a positive number designates posted rows.

Reversal_posting_control_id Receivables posting batch identifier for the reversal of the row. –3 designates an unposted reversal, a positive number designates a posted reversal.

- AR_PAYMENT_SCHEDULES_ALL: One record is created per cash receipt to reflect the overall status of the

receipt. Oracle Receivables updates this table each time activity occurs for a receipt. All cash receipts are identified with a class of PMT. When a receipt is applied or written-off, the amount is updated to the amount_applied column and reduces the amount_due_remaining. When a receipt is completely applied (includes write-offs), Oracle Receivables changes the status from open (OP) to closed (CL). Unapplied, on account, and unidentified amounts are included in the amount_due_remaining and the receipt will not close until these amounts are applied. All receipt amounts are stored as negative numbers in this table. Additional AR_PAYMENT_SCHEDULES_ALL records can be created for receipts when debit memo reversals or chargebacks are created. Other relevant columns for receipts include these described in Figure 4:

Figure 4

Payment_schedule_id Unique identifier for the payment schedule row (primary key)

Amount_due_original Amount of the payment (negative) Amount_due_remaining Sum of unapplied, on account, and unidentified

amounts in the receipt currency or the payment amount minus applied and receipt write-off amounts (negative)

Acctd_amount_due_remaining

Amount_due_remaining in your functional currency (negative)

Status OP for open, CL for closed. A closed receipt is one that is fully applied.

Class PMT Customer_id Identifier of the customer for this receipt Cash_receipt_id Unique identifier of receipt, although multiple rows

can have the same cash_receipt_id Gl_date_closed The accounting date on which the schedule was

closed. The default value for open rows is ‘31-DEC-4712’.

Amount_applied Sum of applied and receipt write-off amounts (negative)

Trx_number Cash receipt number, not necessarily unique Trx_date The transaction date of the row

- AR_RECEIVABLE_APPLICATIONS_ALL: One record is created for every type of transaction processed on a receipt. This table is essentially an audit trail of all accounting entries for your cash and credit memo receipt applications. A row is written in this table for each time you select the Apply or Unapply button – regardless of whether you manually save the changes – they are always stored here. Each row includes the amount applied, status, accounting flexfield information, and a posting control id. Possible statuses include applied (APP), unapplied (UNAPP), on account (ACC), unidentified (UNID), and receipt write-off (ACTIVITY). For example, if you write-off a $1.00 unapplied amount, two rows will be created: UNAPP for -$1.00 and ACTIVITY for $1.00.

There are two kinds of applications (CASH and CM – for credit memo applications) stored in this table and designated by application_type. Credit memo lines applied with a receipt are stored in this table with the other applications for the receipt. Other relevant columns for receipts include these described in Figure 5:

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Figure 5

Receivable_application_id Unique identifier of the receivable application row (primary key)

Amount_applied Total amount of the line in the receipt’s currency. This includes line amounts, tax, freight, and finance charges. Write-off amounts are included here as well.

Acctd_amount_applied_from Amount_applied in your functional currency Status APP, UNAPP, ACC, UNID, and ACTIVITY (receipt

write-offs) Gl_date Date this application row will post to the general

ledger Code_combination_id General ledger account number code combination id Payment_schedule_id Identifies the cash receipt or credit memo being

applied Cash_receipt_id Unique identifier of receipt, although multiple rows

can have the same cash_receipt_id Applied_customer_trx_id Identifies the transaction being paid / reversed Applied_customer_trx_line_id Identifies the line of the transaction being paid /

reversed Customer_trx_id Identifier of the credit memo being applied Gl_posted_date Date this row was posted to the general ledger Postable Y or N to indicate whether the row is postable to the

general ledger Posting_control_id Receivables posting batch identifier. –3 designates

unposted rows, a positive number designates posted rows.

Confirmed_flag Null or Y for confirmed receipts

AR_DISTRIBUTIONS_ALL: A record is created in this table for the general ledger distributions information generated by the different steps in the life cycle of a cash receipt. This includes distributions based on the rows for the receipt in the AR_CASH_RECEIPT_HISTORY_ALL and AR_RECEIVABLE_APPLICATIONS_ALL tables. Each row includes the amounts to be debited or credited in both the receipt and functional currency, general ledger code combination id, source table, and source type. The source_table indicates which table the row is created from: CRH for AR_CASH_RECEIPT_HISTORY_ALL and RA for AR_RECEIVABLE_APPLICATIONS_ALL. The source_type reflects the type of activity, such as CASH (for the initial debit to Cash for the receipt), REC for applied amounts, UNAPP for unapplied amounts, ACC for on account amounts, and ACTIVITY for receipt write-off amounts. Other relevant columns for receipts include these described in Figure 6:

Figure 6

Line_id Unique identifier for each row in this table Source_id Identifier of the row source from the foreign table. Represents

the cash_receipt_history_id from AR_CASH_RECEIPT_HISTORY_ALL or the receivable_application_id from AR_RECEIVABLE_APPLICATIONS_ALL (primary key).

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Source_table Indicates the origin of the row in the table that was used to create this distribution line: CRH for AR_CASH_RECEIPT_HISTORY_ALL and RA for AR_RECEIVABLE_APPLICATIONS_ALL (primary key)

Source_type Represents the type of general ledger account for which the distribution is created. The source_type varies based on the source_table. For Cleared and Reversed rows in AR_CASH_RECEIPT_HISTORY_ALL, this value is CASH. For rows in AR_RECEIVABLE_APPLICATIONS_ALL, the value in this table is the same as the status in that table except for APP rows. APP status rows get a value of REC in this table. (ACTIVITY rows are created in both tables for receipt write-offs.) (primary key)

Code_combination_id The general ledger account the distribution is created for Amount_dr Debit amount of the journal entry in receipt currency Amount_cr Credit amount of the journal entry in receipt currency Acctd_amount_dr Debit amount of the journal entry in your functional currency Acctd_amount_cr Credit amount of the journal entry in your functional currency

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Receipt Write-off Troubleshooting Following are a list of common issues encountered by customers when working with receipt write-offs. Please refer to the list of Solutions below for their resolutions:

- FRM-40734: Internal Error: PL/SQL error occurred (Solution OSS168534) Cause: Invalid general ledger account number (CCID) set up for Receipt Write-off receivable activity. Fix: Review the receivable activity with an activity type of Receipt Write-off to confirm that a valid CCID is specified as the Activity GL account number. Navigate to: Setup>Receipts>Receivable Activities to confirm setup. Also confirm the following additional receipt write-off setup information that is required: 1. Receipt Write-off approval limits must be defined. Navigate to: Setup>Transactions>Approval Limits to

confirm setup. 2. The Maximum Write-off Amount System option must be set. Navigate to: Setup>System>System Options

(T) Miscellaneous to confirm setup.

- Receipt Write-Off Report Completes With No Data Found (Solution OSS157962) Cause: One of the following items is not set up properly: 1. Receipt Write-off receivable activity 2. User approval limit for writing off receipts 3. Maximum Write-off Amount System option Or the Apply date and GL Date parameters specified exclude the receipts. Fix: Verify setup of the following information: 1. A receivable activity with an activity type of Receipt Write-off must be set up and used when the Receipt

Write-off program is submitted. Navigate to: Setup>Receipts>Receivable Activities to confirm setup. 2. Receipt Write-off approval limits must be defined. Navigate to: Setup>Transactions>Approval Limits to

confirm setup. 3. The Maximum Write-off Amount System option must be set. Navigate to: Setup>System>System Options

(T) Miscellaneous to confirm setup. Confirm that the receipt dates and gl dates of the receipts you are trying to write off are less than the apply date OR gl date parameters specified. Per bug 1784818, the logic of this program is to select only those receipts that have receipt dates less than the apply date OR gl date specified.

- FRM-40735 On Insert trigger raised unhandled exception in AX and MRC Operating Units (Solution OSS143736) Cause: Caused by Bug1989691 Fix: This is fixed in arpltrec.sql version 115.23. Apply patch with this or higher version of the sql.

- APP-AR-96981: Maximum Write-Off amount not set (Solution OSS117138)

Cause: The Maximum Write-Off Amount on System Option form has not been set Fix: Setup the maximum write-off amount on the System Option form

- Missing Receipt Write-off Documentation (Solution OSS166788)

Cause: Latest version of documentation not applied.

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