Payables shares contract commitment information from the Contract Commitment module to match invoices online. This integration is established using Oracle Purchasing tables. This ensures that only committed contracts are paid.
It is possible to match a single invoice to multiple contract commitments or to match multiple invoices to a single contract commitment account line.
Payables ensures that invoices are matched only to contract commitments for the supplier on the invoice and that the contract commitment and invoice currency match. When matching an invoice to a contract commitment, Payables creates invoice distributions using the contract commitment account and current year payment forecast information. If an invoice is incorrectly matched to a contract commitment, the invoice must be cancelled or the individual distributions reversed to cancel the match.
It is only possible to match invoices to Standard Contract Commitments and Release Contract Commitments if all of the following conditions are valid:
State of the contract is Confirmed.
Approval status of the contract is Approved.
Document control status of the contract is Opened.
In all other cases, it is not possible to match an invoice to a contract commitment. An additional limitation of matching an invoice is that it is only possible to match against payment forecasts of the current fiscal year. It is not possible to match against a payment forecast with a date in a future fiscal year.
The following conditions apply:
Users cannot cancel an invoice that is matched to a completed contract commitment.
Users cannot void payments for invoices that are matched to completed contract commitments.
Integrated information in Payables and Contract Commitment ensures consistency of information between applications and avoids the necessity of having to enter the information more than once.
Contract Commitment shares suppliers with Payables. A supplier can be entered in either application and used to create contract commitments. Within Payables, invoices can be created for the same supplier and the invoices matched to one or more contract commitment payment forecasts.
Payables shares the QuickCodes used during supplier entry. QuickCodes can be entered for the following types in the Payables QuickCodes window:
Supplier Type
Ship Via
FOB
Pay Group
Minority Group
Although matching to contract commitments is based solely on amount, the same matching functionality currently available with Purchasing is used. As there is no material flow within Contract Commitment matching, an invoice to a contract commitment is always based on two-way matching, which means that quantity ordered is matched against quantity billed and invoice price is less than or equal to purchase order price.
If the invoice and the contract commitment do not match within the tolerances, the approval process places a matching hold on the invoice. The hold must be released before the invoice can be paid. In Contract Commitment, a warning that the billed amount exceeds the payment forecast is displayed unless the entered amount is greater than or equal to the billed amount. It does not prevent users from making changes to the contract commitment.
Contract Commitment uses the Purchase Order tables to support online matching. The table below describes the mapping of a contract commitment with a standard purchase order:
| Purchase Order | Contract Commitment | |
|---|---|---|
| 1 | Purchase order header | Contract Commitment header |
| 2 | Purchase order PO line | Contract Commitment accounting line |
| 3 | Purchase order shipment line | Contract Commitment accounting line |
| 4 | Purchase order distribution line | Contract Commitment payment forecast |
If matching an invoice to a contract commitment, contract commitment information is translated to Purchasing information. As shown in the table above, a contract commitment accounting line is translated to a Purchase order shipment line. Current year payment forecasts are translated to Purchase order distribution lines with the approval flag set to Yes and future year payment forecasts are translated to Purchase order distribution lines with the approval flag set to No. If users are billed for a portion of an accounting line, they can distribute this amount to ensure that the correct distribution line and payment forecasts are charged. If users choose to match at the shipment line level, the amounts are distributed by ratio on the distribution line level.
The contract commitment matches can be reversed in the Distribution window of the Invoice Workbench. Invoices matched to contract commitments can be cancelled in the Actions window of the Invoice Workbench. If an invoice matched to a contract commitment is cancelled in addition to creating reversing distributions, Payables reduces the billed amount on the matched contract commitment payment forecast to their original amounts. These contract commitment payment forecasts can be matched to other invoices.
If users know the contract commitment to match to but do not know which contract commitment account lines or payment forecasts to match to, the PO default is entered as the invoice type. When entering a PO default invoice type in the Invoice Workbench, Payables prompts users to enter the contract commitment number and automatically copies the supplier name, supplier number, supplier site, and currency from that contract commitment to the invoice.
When Match is clicked, Payables retrieves all contract commitment account lines associated with the specified contract commitment. Users can match to any account line or payment forecast.
If users want to match an invoice to all account lines on a contract commitment, QuickMatch is entered as the invoice type. This is only possible if all payment forecasts are entered in the current fiscal year. If there is a payment forecast with a date that belongs to a future fiscal year, the contract commitment payment forecast is overbilled, and the invoice is put on hold. When entering a QuickMatch invoice type in the Invoice Workbench, Payables prompts users to enter the contract commitment number in the Purchase Orders window and automatically enters the supplier name, supplier number, supplier site, and the purchase order currency for the invoice currency.
When Match is clicked, Payables automatically navigates to the Match to Purchase Orders window and selects all account lines and payment forecasts that have an unbilled quantity. Users can choose to complete the match or override the matching information.
Payables supports encumbrance accounting with Contract Commitment. Standard budgetary control is supported but commitment budgetary control is not. To use encumbrance accounting, the encumbered amount for contract commitment to which an invoice is mapped must initially be recorded. If there is a variance between the invoice and its matched contract commitment within the tolerances defined when the approval process approves the invoice, Payables automatically creates an encumbrance journal entry for the amount of the variance. This is only created for standard budgetary control. No encumbrance entries are created for commitment budgetary control if it is enabled.
Note: The approval process uses the Payables table AP_TRANSFER_ENCUMBRANCE if encumbrance accounting is enabled. Payables never drops this table but deletes the appropriate lines from this table at the beginning of the program each time the approval process is initiated. When posting the invoice to General Ledger, Payables relieves both the original encumbrance journal entries created when encumbering the contract commitment and the encumbrance journal entries automatically created for the variance. Payables then creates actual journal entries for the invoice transaction. The variance encumbrance journal entries and the actual journal entries update account balances only when posting the journal entries in General Ledger.
For information, see Encumbrances in Payables, Oracle Payables User's Guide.