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Oracle Lease and Finance Management User's Guide
Release 12.1
Part Number E13583-05
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Origination

This chapter covers the following topics:

Origination Overview

Lease and Finance Management Origination

Oracle Lease and Finance Management customer companies who invest in leasing type transactions require a transaction processing application that accommodates deals originating from a variety of sources. The source of origination depends on their business market strategy and corporate structure.

Captive companies, which lease and finance the products of a parent company, are generally owned or controlled in large part by an equipment manufacturer and focus primarily on financing the sales of that manufacturer. Independents, which may include banks, may engage in a wide variety of financing and a broad spectrum of equipment types. Direct sales are made by the manufacturers’ sales reps and sold directly to the market, whereas indirect sales are made through one or more distribution channels.

Depending on the origination source and method of marketing, Lease and Finance Management provides different features and levels of control. As a general rule, the more external sources or partners that are involved in the origination process, the more controls that are required. Depending on the relative size and volume of transactions, companies require different levels of automation. Higher volume and smaller transaction size require more automation and efficiency.

The following table shows possible origination sources.

Origination Sources
Sale Type Captive Independent
Direct Sale Lessor sales reps directly originate lease quotes
Lessor organization owned by manufacturer
Independents rarely originate their own deals
May use brokers for larger ticket deals
Indirect Sale Vendor sales reps originate lease quotes for lessor
Vendors are usually dealers for the manufacturer
Vendor sales reps originate lease quotes for lessor
Lessor and vendor usually sign an operating agreement

Objectives

An origination system has the following key objectives.

  1. To track opportunities for sales planning and management purposes

  2. To price potential transactions for prospects

  3. To insure potential transactions are profitable for the expected risk

  4. To assist users in processing transactions prior to booking

To achieve these objectives, an origination system must support the activities of a variety of different users, including the following:

  1. Sales representatives (both internal and external)

  2. Sales support representatives

  3. Sales managers

  4. Pricing analysts and managers

  5. Credit analysts and managers

  6. Contract administrators and managers

Key Business Objects

The following table describes the key business objects in the Lease and Finance Management origination process.

Business Object Description
Quick Quote A standalone quote for estimating pricing using existing pricing policies. Quick quotes require no prospect. You estimate pricing based on inventory categories.
Lease Opportunity Provides a central object for you to associate multiple pricing estimates and lease quotes provided to a prospect or customer. You can only accept one Lease Quote for each Opportunity.
Estimate A quick quote that is associated to a lease opportunity. You use estimates to get a quick pricing estimate using existing pricing policies. You estimate pricing based on inventory categories. You may create multiple estimates for a single lease opportunity.
Prospect Or Customer A party created in Oracle Trading Community Architecture with a type of Prospect or Customer. You may associate addresses and, for customers, other account information.
Lease Quote Created and managed in Lease and Finance Management as part of a lease opportunity for detailed pricing. You add specific inventory items, fees, services, taxes and other adjustments to model the most accurate estimate of payments and interest rates. You may create multiple lease quotes for a single lease opportunity.
Lease Application Created and managed in Oracle Lease and Finance Management for the purpose of obtaining a credit approval from Oracle Credit Management. The lease application is made up of a single lease quote and a credit application.
Case Folder Created in Oracle Credit Management when you submit a Lease Application from Lease and Finance Management. The credit Case Folder is a central repository for collecting all data related to a credit request and storing all credit decision recommendations and approvals.
Lease Contract Created and managed in Oracle Lease and Finance Management. Lease contracts may have any book classification (including Loan). The lease contracts are activated to provide the basis of all accounting and business transactions for a deal. You can use an accepted Lease Quote or an approved Lease Application as the source for a new Lease Contract.

You progress your deal through the origination process by continuing to add more details as they become available in prospect or customer interactions. For example, you may provide pricing estimates through the creation of a Quick Quote, then progress the Quick Quote to a full Lease Quote and associated Lease Opportunity when the customer accepts the estimated pricing. By this method, data does not need to be re-entered, and more detail can be added to a deal as it progresses. Certain business objects can be converted or linked to other objects to complete the origination process flow.

Origination Business Process

Business Process Overview

While each company’s origination process may differ depending on the marketing structure and equipment type, there are some key steps in the overall origination flow that are consistent across companies. The Lease and Finance Management origination process has the following parts.

  1. Setup Marketing and Program Policies and Controls

  2. Lead to Opportunity

  3. Lease Quote to Credit Decision

Setup Marketing and Program Policies and Controls

Setup Marketing and Program Policies

In order to manage and control events and transactions in the Lease and Finance Management origination process, marketing and system setups are required. Companies need to control quoting processes in order to enforce their pricing policies. Pricing policies can increase efficiency in a high volume environment. To support pricing policies, you can define details for the following pricing objects and tools:

  1. Item Residuals

  2. End of Term Values

  3. Lease Rate Sets

  4. Standard Rate Templates

  5. Adjustment Matrices

For more information on pricing policies, see Pricing.

Program Controls

To determine when to use certain pricing objects, and whether or not the standard values may be updated, you set up rules and correlated objects. These controls increase your ability to enforce pricing policies for different users, customers, assets, vendors, or deal types. The following rules and objects are used in Lease and Finance Management:

  1. Eligibility Criteria

  2. Vendor Program Agreements

  3. Structured Pricing Authority for Users

For information on these rules and objects, see Pricing.

Lead to Opportunity

Lead to Opportunity Business Process

Once you have set up the marketing and program controls, you can process transactions and events through the lease life cycle using the objects you have defined. As you identify potential deals, you may need to provide sample pricing to qualify leads. Sample pricing can be performed without identifying a prospect party. Once you have identified the prospect and a specific lead, you can begin tracking the opportunity.

The opportunity provides a central repository for you to store information about other activities relating to the deal. It also provides a data structure that allows you to create sales forecasts.

The following table describes the Lease and Finance Management Lead to Opportunity business process.

Business Process Description
Provide Pricing Estimate To provide a pricing estimate for a lead, you create Quick Quotes. Quick Quotes use pricing policies set up during the marketing process, but do not require you to identify specific parties or inventory items.
Define Prospects After a lead is qualified as a leasing opportunity, you create a Lease Opportunity to track your leasing sales activities. The first step is to define the prospect if the prospect or customer does not already exist in Oracle Trading Community Architecture (TCA). From the Create Lease Opportunity page, you can initiate the Create Prospect Party process. After completion of this process, the Prospect will become a party in TCA and can be converted to a customer later by adding account details.
Create and Manage Opportunities After you create a prospect, or identify an existing prospect, you can begin creating your Lease Opportunity. Defaults can be set up on the opportunity that will fill in the details on each quote or estimate created for the opportunity. You can associate the Lease Opportunity to a vendor program agreement to enforce program-related pricing rules. If you convert a Quick Quote to an Estimate, it will automatically create a Lease Opportunity for you.

Lead To Opportunity Automation Features

The Lease and Finance Management Lease to Opportunity process contains the following features:

  1. Convert Quick Quote to Lease Opportunity - After creating pricing estimates for leads, you can convert the Quick Quote to a Lease Opportunity Estimate. The Quick Quote pricing is stored as an estimate for the new Lease Opportunity. Once you convert a Quick Quote to a Lease Opportunity Estimate, you can no longer search for the Quick Quote in the Quick Quote search page.

  2. Default Quote Values- When you create a Lease Opportunity, you may enter data that will default to all the quotes or estimates you create for the opportunity. Each time you create a new quote or estimate, the default data will appear in the correct fields and you have the option of overriding any information you want to update.

  3. Business Events- Each key activity you perform on a Lease Opportunity is associated with an Oracle Workflow Business Event. You can enable these business events and associate them to your workflows to automate your standard activities.

Lease Quote to Credit Decision

The Lease Quote to Credit Decision process contains the following two parts.

  1. Opportunity to Lease Quote

  2. Lease Application to Booking

Opportunity to Lease Quote

Opportunity to Lease Quote Business Process

Once you identify a prospect and create an opportunity, more specific pricing may be generated. In addition to adding new pricing estimate scenarios on the Lease Opportunity, you create Lease Quotes by selecting specific inventory items, fees, services and other quote adjustments to reflect the most accurate possible deal . You can then obtain pricing approvals and indicate prospect acceptance on a Lease Quote. Only one lease quote may be accepted for a Lease Opportunity.

The following table describes the Lease and Finance Management Opportunity to Lease Quote business process.

Business Process Description
1. Create Estimates An Estimate is the same as a Quick Quote except that it is associated to a Lease Opportunity. You can create Estimates after you have created the Lease Opportunity. Estimates can also be converted to standard Lease Quotes.
2. Create and Manage Lease Quotes After creating a Lease Opportunity, you can create standard Lease Quotes. First you define the quote configuration by adding lines for assets, capitalized fees and financed fees. You then add financing adjustments such as down payments, subsidies, and trade-ins. Once you have the financed amount determined, you add estimated costs for items such as taxes, services, insurance and other fees. When you go to price the quote, any available pricing options that you set up as Marketing programs, such as rate cards or standard interest rates, are automatically looked up and displayed for you. You can select an option for the quote or for a specific line, or enter your own pricing values if you have the appropriate level of security. With the correct user profile setting, you can update payments, rates, or other options for structured pricing.
The quote is then priced to determine any missing values and calculate the yields based on the pricing method you selected.
You can create multiple quotes for a single opportunity and submit them for pricing approval using Oracle Workflow and Approvals Manager. Only approved quotes can be accepted, and you can only accept one quote per opportunity.

Opportunity to Lease Quote Automation Features

The Lease and Finance Management Lease Quote to Credit Decision process contains the following features:

  1. Tax - You define tax settings on a Lease Quote used to estimate any upfront taxes that may apply to a quote. Any taxes you decide to finance will be automatically added to the configuration as a financed fee and you can define a payment so the fee is re-paid with interest.

  2. Convert Estimate to Lease Quote Default Quote Values- After you create a pricing Estimate using estimated values and inventory categories, you can use the conversion train to turn the Estimate into a standard Lease Quote. The train defaults many values on the Lease Quote and allows you to distribute estimated amounts over more specific asset and fee quote lines or specify details for adjustments such as subsidies.

  3. Business Events- Each key activity you perform on a Lease Opportunity is associated with an Oracle Workflow Business Event. You can enable these business events and associate them to your workflows to automate your activities.

  4. Oracle Workflow - You can use the Oracle Workflow associated to the pricing approval step to automate your process for approving quote pricing. Workflow can include routing, notifications and other tasks or activities.

  5. Oracle Approval Manager - You can enable your pricing approval workflow to use Oracle Approval Manager. Approval Manager allows you to automatically route notifications to a hierarchy of users based on their relationships defined in your Resource Manager set ups for Oracle Sales.

Pricing Methods

When you price a quote, you determine the values you know and the values you are trying to calculate by selecting a pricing method. The pricing method determines the inputs required for a quote, such as rates, payments, or financed amounts, and what values you are trying to calculate, such as a payment, yield, or subsidy amount.

For more information on Pricing Methods, see Pricing Overview.

Lease Application to Booking

Lease Application to Booking Business Process

Once the prospect has accepted a quote, you can convert a Lease Quote into a Lease Application and submit for approval. You add credit data to the Lease Application along with the pricing information from the quote to create an application. Through integration with Oracle Credit Management, a credit analyst decides if the application approved or rejected. The decision and decision approval process may be automated using Credit Management’s scoring and decision tools.

Once the credit decision is approved, the decision and any other recommendations are updated on the Lease Application and the submitter views the results. Applications with an Approved decision may be used to create lease contracts. Any recommendations that are conditions associated with the credit decision are recorded on a checklist that is invoked during booking or funding to insure the conditions have been met. If you do not agree with the credit decision or any of the recommendations, you can appeal the decision using a new lease application. The new application is linked to the existing application. If you want to accept any credit recommended changes to the pricing, you can resubmit a new lease application with the credit recommended offer. The new application is linked to the existing application. You can also withdraw an application up to the point where the credit decision and recommendations are finally approved. If you decide to extend credit through a credit line, the credit analyst may create and activate a Credit Line with an approved amount. The Credit Line may be associated to one or more contracts and checked for an available balance with each funding. Credit Lines may also have checklists to insure that conditions for activating or using the Credit Line have been met. However, Credit Lines are not associated with a Lease Application

If you do not agree with the credit decision, or any of the recommendations, or if the deal has been modified after the credit approval is final, you can appeal the decision or resubmit the lease application using a new lease application. The new application is linked to the existing application and the existing application status is updated to Appealed or Resubmitted.

If you want to change any parts of the lease application or accept a credit recommended pricing change, you can resubmit a new lease application and accept a credit recommended offer. The new application is linked to the existing application. You can also withdraw an application up to the point where the credit decision and recommendations are finally approved.

The following table describes the Lease and Finance Management Lease Application to Booking business process.

Business Process Description
1. Create and Manage Lease Applications You can create Lease Applications and submit them for credit approval. The application includes both quote details and credit application details. Credit decisions are made using Oracle Credit Management when you submit the Lease Application. After the credit decision is entered and approved, the Lease Application is updated with the decision and any credit recommendation conditions. You can use the lease application to create a new contract if you agree with the credit decision. You can also resubmit the application, appeal the decision or withdraw the application. Lease Applications can be created using an accepted Lease Quote.
2. Create Checklists You create checklists for data or activities that you want to check for when a contract is booked or funded. You also create checklists for data or activities you want to check before a credit line can be activated. After activating a checklist, you associate it to a Credit Line or Lease Application template. When contracts associated to the Credit Line or Lease Application are booked or funded, the data or activities listed on the checklist are reviewed. Mandatory items must be met before the funding request or contract booking can be submitted for approval. You are notified with a warning if optional items are not met prior to submitting a request for approval.
3. Create Master Leases If you negotiate master leases with your lessees, you can create a Master Lease Agreement. After you enter the details on the Master Lease, you activate it. Active Master Lease Agreements can be associated to one or more Lease Contracts. The terms of the Master Lease Agreement may be used in processes for the contract during its life cycle.
4. Create and Activate Credit Lines If you want to approve credit for multiple deals, you can create Credit Lines. After entering a Credit Line and associating a credit line amount, you activate it. Active Credit Lines may be associated to Master Leases or to one or more Lease Contracts. When you request a funding for a contract, the associated Credit Line is verified to insure the credit limit amount has not been exceeded by previous approved funding requests. If the contract has no credit line or associated lease application, the credit line associated to the master lease for the contract is used to track the credit limit. Contracts associated with Lease Applications cannot use credit lines to track credit limits. Credit Lines may be expired, increased or decreased. You can associate checklists to Credit Lines and your Lease Applications that insure your credit conditions are met before the line becomes active or for each funding associated to the line or lease application through a contract.
5. Create and Activate Contracts After you enter all of the details for a Lease Contract, you can activate it. Activation requires you to validate the contract, generate streams and yields for the contract and submit it for approval. Upon activation, journal entries are created to record the new contract in your ledgers. In addition, assets are set up in Oracle Assets asset and tax books based on the book classification (e.g., operating lease, loan) and the asset is registered in Oracle Install Base for location and serial number tracking.
After activation, you can begin billing and accruing for the contract.
6. Create and Approve Funding Requests In order to pay for the assets and expenses you put on Lease Contracts, you create funding requests. After creating the funding request and associating the contract lines and amounts you wish to pay for, you submit the request for approval. If the contract is associated with a checklist through the Lease Application or Credit Line, the items on the checklist are evaluated during the approval step to insure they have been met. The request is then routed for approval using Oracle Workflow.
After approval, an invoice is created in Oracle Payables. You can also adjust previous funding using an adjustment funding request (pre-funding request type with a negative amount). Adjustment requests create debit notes in Oracle Payables.
After the funding request is approved, you can view a summary of the funding totals against the credit limit of any associated Credit Line or Lease Application.

Lease Application to Booking Automation Features

The Lease and Finance Management Lease Application to Booking process contains the following features:

  1. Tax - You define tax settings on a Lease Application used to estimate any upfront taxes that may apply to the Lease Application quote. You can also define these parameters on a Lease Contract. Any taxes you decide to finance will be automatically added to the application quote or the contract as a financed fee. You can also set up taxes on a Lease Contract for billing once the contract is activated.

  2. Business Events- Each key activity you perform on a Lease Application or Lease Contract is associated with an Oracle Workflow Business Event. You can enable these business events and associate them to your workflows to automate your standard activities.

  3. Lease Application Templates – You set up Lease Application Templates to identify the type of credit evaluation to be conducted, to specify any standard checklists you want to use, and to default any contract terms and conditions that will apply to the deal if it is approved. Lease Application Templates can be associated to Vendor Program Agreements that will default the correct template based on the selection of the customer and vendor program on the Lease Application.

  4. Contract Templates- You can create Contract Templates that you use to create new contracts. If you use a contract template to create a new contract, the values on the template default to the new contract. You can also associate a contract template to a Lease Application template. The terms and conditions on the contract template will default onto the new contract you create from approved Lease Applications.

  5. Convert Lease Applications to Contracts - You can create new Lease Contracts by copying a Lease Application. You can use an approved Lease Application to create only one contract unless you cancel other contracts created from the same application. Checklists associated to the Lease Application apply to the activation of the contract and all funding for the contract.

  6. Convert Lease Quotes to Contracts - You can create new Lease Contracts by copying a Lease Quote. You can use an accepted Lease Quote to create only one contract unless you cancel other contracts created from the same quote.

  7. Contract Import- You can import contracts so they do not have to be entered manually. When importing, you decide what status the contracts will be in when the import process completes. For example, you can specify that contracts are imported and validated only, or you can specify that contracts are imported, priced and activated during the import process. Contract template and vendor program defaults can be applied to your imported contracts.

  8. Oracle Workflow- You can use the Oracle Workflow associated to the approval step to automate your process for approving a contract for activation or approving funding requests. Workflow can include routing, notifications and other tasks or activities.

  9. Oracle Approval Manager- You can enable your contract activation and funding approval workflow to use Oracle Approval Manager. Approval Manager allows you to automatically route notifications to a hierarchy of users based on their relationships defined in Resource Manager for Oracle Sales (CRM).

Vendor Origination

All estimating and quoting features available to your internal users are also available to third party vendors.

Vendors cannot see quotes or estimates created by other vendors or your internal users. Internal users belonging to the same organization unit may view vendor created quotes and estimates and update them. Once the quote is updated, it belongs to your internal organization and cannot be updated further by third party users.

Oracle Applications Origination Integration

The following table shows where the Lease and Finance Management origination process integrates with other Oracle Applications.

Lease and Finance Management Feature Business Object Oracle Application
Define Prospect Party or Customer Oracle Trading Community Architecture (TCA)
Applications (Underwriting) Credit Application
Case Folder
Oracle Credit Management
Create and Approve Funding Requests Funding Requests
Payable Invoices
Oracle Payables
Create and Activate Contracts Contract Checklists Oracle Assets
Oracle Install Base