AR Deposit Setup and Process

Setup:

1. Define a transaction type for deposit with “Deposit” transaction class.

 

 

 

 

 

 

 

 

2. Define a receipt class and payment method to receive deposit transaction. (Optional)

Process:

1. Create AR transaction with deposit transaction type and complete it.
Dr. Receivables
Cr. Offset Account (Deposit Account, a kind of liability account)

2. Create Receipt for deposit.
Dr.  Cash/Bank
Cr. Receivables

3. AR invoice created automatically or manually
Dr.  Receivables
Cr. Revenue

4. Apply Deposit with AR invoice
Dr.  Offset Account
Cr. Receivables

Below is the screen dump to deposit application:

 

Prepayment Receipt vs. Deposit in Oracle Receivables

Oracle receivables have a “deposit” transaction class and meantime have a “prepayment” receipt type. From business view, it looks the same, but why does Oracle designed “duplicated”? What’s the difference between them? I think it for a long time, and get some points to share with our friends here. Hopefully it is helpful for your implementation and support.

1. When deposit or prepayment created in AR, the actual AR invoice for goods or services have not been generated. This is normal business process for concept of deposit/prepayment. Deposit is created in Oracle Receivables independently for a customer. It is not able to be associated or called matched directly with any prior business documents before AR invoice, like sales order in OM. But Prepayment type receipt is generated from feeder module(like OM), it is associated with sales order in sales order additional information.

2. One AR invoice can apply with only one deposit, but one ar invoice can apply multiple prepayment type receipts. It is also means that one sales order can be prepaid for multiple times before ship confirm. This is very useful for multiple times prepayment/deposit.

3. Payment term flexibility: deposit can have its own payment term, while sales order/AR invoice can have different payment term. It is very flexible for customer balance control. As prepayment is a receipt type and it is auto generated from sales order,  it is must be immediate.  And sales order must have a payment term which is prepayment enable.

At last, I would like to say the offset account for both deposit and prepayment should be set up as an actual liability account.  Some customers use on-account receipt for prepayment business before. It is not recommended, as on-account account is always set up as an actual asset account.

 

Apply Multiple Deposit to an AR Invoice

Sometimes, we have received an deposit and get the payment from customer for this deposit. Then we received another deposit from the same customer for the same transaction(contract). When we finished business, we create an AR invoice to customer. We have two deposits for this invoice. How to apply these two deposit for this one invoice?

From Oracle standard functionality we can only apply one deposit to one invoice. We can’t apply multiple deposit to the AR invoice. The workaround to handle this case is unapply the payments from the original deposits, credit the original deposits, and then make a new deposit, apply the multiple payments to the new deposit, and then apply the new deposit to the AR invoice.

Is there any other better solutions? Waiting for Oracle……