This chapter provides overviews of prepayment processing and prepayment processing setup, and discusses how to:
Authorize credit card transactions.
Update prepayment transactions.
Update the transaction status manually.
Settle prepayment transactions.
Work with drafts for prepayments.
When you enter orders for customers, you can send out invoices to the customers for received goods. Occasionally, customers may make a form of payment in advance, which is immediately after order entry. With prepayment processing, you can generate an invoice as a customer receipt, with the order total noted as prepaid on the invoice.
Prepayment of an order takes place when a seller receives a form of payment from the customer at the time of order entry. There are many types of prepayments that a customer can use, such as cash, check, and credit card. When you make any type of prepayment, the system records transaction information for each order detail line, and indicates the payment on the invoice.
There are two types of prepayment transactions:
Two-party prepayment
Two-party prepayments are typically cash or check transactions, which occur between you and the customer. When an order is prepaid with cash or a check, the system indicates the prepayment form, transaction, and total on the invoice.
Three-party prepayment
Three-party prepayments are typically credit card transactions, which occur between you, the customer, and the credit card company.
In the system, the transaction is an electronic transmission of transaction information between the bank, the credit card company, and the credit card processor.
The prepayment processing system provides an interface between JD Edwards EnterpriseOne applications, such as Sales Order Entry (P4210), and a seller's designated credit card processor. With the prepayment processing system, you can integrate credit card authorizations and final settlements with the company's business processes, such as order entry and invoicing procedures.
For three-party prepayment transactions, the system does not include middleware or credit card transaction processors. To complete credit card prepayment processes, you must select a credit card processor, a third-party vendor or a middleware solution, with which you can transmit information between JD Edwards EnterpriseOne, the credit card company, and the company's bank.
Verify that you have performed the appropriate setup for the credit card processor. This information includes merchant ID, terminal ID, authorization and settlement phone numbers, and other information that is necessary for successful electronic transmission.
Verify that you have performed the appropriate setup for the Sales Order Entry program (P4210). This includes setting the processing options on the prepayment tab.
See Also
Before you can process two- or three-party transactions, you must identify the points in the process where the system authorizes orders with the credit card company, transaction types, and the status at which you perform the settlements.
This section discusses prepayment status codes, prepayment types, and prepayment hold codes.
Authorization usually occurs after order entry. Settlement usually occurs after shipment confirmation, but before invoicing. The system follows the order activity rules for the order type and line type combination. You can set up override status codes in the processing options for these programs:
Sales Order Entry (P4210).
Shipment Confirmation (P4205).
Print Invoices (R42565).
Held Order Release (P43070).
Sales Update (R42800).
You inquire on orders using the Prepayment Processing Information program (P004201). On the Work with Prepayment Transactions form, you can identify the status of transactions, such as transactions that are ready to be authorized, settled, or declined, based on the prepayment status codes in the user-defined code (UDC) table (00/SP). These statuses have been predefined:
Blank: Pre-authorization.
01: Sent for Authorization.
02: Authorized.
03: Ready to Settle.
04: Sent for Settlement.
05: Settled.
06: Authorization Declined/Error.
07: Settlement Declined/Error.
Payment instrument codes (00/PY) indicate various methods of payment, such as draft, check, and electronic funds transfer. You assign a payment instrument code to each invoice or voucher. Set up a code for each type of payment instrument that you use. The system also uses this user-defined code table in the JD Edwards EnterpriseOne general business systems from Oracle for vouchers and invoices. To identify transactions for prepayment processing, you must use payment types with assigned handling codes. Blank is the default value.
Hard-coded Codes
Hard-coded values include:
X, Electronic data interchange (EDI) Remote Draft (AR & AP).
Y, EDI Remove Wire (AR & AP).
Z, EDI Remote Check (AR & AP).
?, Credit Card Payment.
., Cash Payment.
!, Check Payment.
Soft-coded Codes
Soft-coded values include:
C, Check - 8 3/4” (AR & AP).
D, Draft by Invoice (AR & AP).
N, Print Checks - Brazil.
T, Electronic Funds Transfer (EFT) (AR & AP).
W, Check - 8 1/2” (AP only).
Special Handling Codes
Prepayment processing is driven by value in the special handling code column for the payment instrument type. That is, if you set up a handling code for a payment type, the system processes the transaction through the authorization and settlement cycle. There are several predefined payment types with special handling codes:
11, for cash payment.
12, for check payment.
13, for credit card payment.
You can set up order hold information that the system uses to place orders on hold. The system applies this information if you set the appropriate processing options for the Sales Order Entry program (P4210). It is recommended that you define these hold codes for prepayment transactions:
Settlement holds, identified by hold code CS.
Authorization holds, identified by hold code CA.
Authorization Hold Codes
During order entry, you can validate credit information when you accept a credit card as a means of payment. By way of the middleware solution, the system retrieves authorization and updates the prepayment transaction in the system. If the authorization is unsuccessful, then the order is put on authorization hold and the system does not allow further order processing. For this hold to be removed, the authorization process must be successfully run in batch mode.
Settlement Hold Codes
During settlement, you can run the Settle Prepayment Transaction program (R004202) to perform settlement. By way of the middleware solution, the system retrieves settlement information and updates the prepayment transaction in the system. When a settlement is performed, the middleware solution releases funds from a customer's account to the merchant account. If the settlement transactions contain errors, the order is put on settlement hold and the system does not allow further order processing. For this hold to be removed, the settlement process must be successfully run in batch mode.
In the Hold Order Constants program (P42090), you set up the hold code in the UDC table (42/HC) and define the hold information.
In the processing options for the version of Sales Order Entry (P4210) that is defined for prepayment processing, you must enter the authorization and settlement hold codes to activate order hold processing.
See Also
Setting Up Order Hold Information
This section provides an overview of credit card authorization and discusses how to:
Run the Authorize Prepayment Transactions program.
Set processing options for Authorize Prepayment Transactions (R004201).
During order entry, you capture the customer's credit card transaction information and transmit the order amount through the middleware solution, a credit card processor. The processor then checks the cardholder's accounts for available funds and places a hold equivalent to the order amount on the customer's credit line. The credit card processor then returns an authorization code to you.
The authorization process varies based on the credit card processor. If the authorization is successful, the system returns an authorization code and the system updates the transaction status in the Prepayment Transaction table (F004201).
Select Prepayment Processing (G42131), Authorize Prepayment Transactions.
Processing options enable you to specify the default processing for programs and reports.
Defaults
Although processing options are set up during JD Edwards EnterpriseOne implementation, you can change processing options each time you run a program.
1. Authorized Lines |
Enter the Next Status Override UDC (40/AT). |
Holds
Although processing options are set up during JD Edwards EnterpriseOne implementation, you can change processing options each time you run a program.
1. Authorization Hold for Prepayment Processing |
Enter a UDC (42/HC) that identifies why an order is on hold. |
This section discusses prepayment transactions.
When you make a change to an order that affects a prepayment transaction, the system updates the transaction record and activates reprocessing, as necessary. For example, if you cancel an order, the system voids the prepayment transaction. If you increase the quantity, the system initiates the authorization process again.
You can process two-party and three-party transactions through the standard order processing cycle. When you change order information, such as increasing the quantity or canceling the order, the system updates the order with the prepayment status in the Prepayment Transaction table in addition to updating order information in the standard JD Edwards EnterpriseOne Sales Order Management tables, such as Sales Order Header File table (F4201), Sales Order Detail File table (F4211), and S.O Detail Ledger File table (F42199), depending on the order activity rules.
You must activate prepayment processing in the processing options for the JD Edwards EnterpriseOne Sales Order Management programs:
Sales Order Entry (P4210).
Shipment Confirmation (P4205).
Print Invoices (R42565).
Held Order Release (P43070).
Sales Update (R42800).
See Setting Processing Options for Sales Order Entry (P4210).
Work with Prepayment Information During Order Entry
You can enter or update prepayment during order entry if the prepayment processing options for Sales Order Entry (P4210) are defined for prepayment processing. After you enter an order, you can access Prepayment Transaction Revisions to enter check number or credit card information. The system retrieves the order amount, plus the calculated taxes as the prepayment amount. When you enter prepayment information, the system writes a record to the F004201 table.
If you inquire on an order and change the information, you might need additional authorization. After you accept changes to the order, the system compares the order total against the authorized amount in the F004201 table. If the order amount is greater than the authorized amount, the system updates the status of the transaction to get authorization.
If an order detail line is partially backordered or canceled, then a new authorization is not necessary unless the other transactions are moved to a settled status. Only one prepayment type for the order is currently allowed.
Release Held Orders for Authorization and Settlement
If an order is placed on hold because it did not pass authorization or settlement, you can use the Held Order Release program (P43070) to return an order to the processing cycle. However, the system does not process this customer's orders until you release them. You must have appropriate security access to release an order.
You must set the prepayment processing options in the Held Order Release program to update the prepayment status to Ready to Authorize or Ready to Settle when an held order is released. You can print the Print Held Sales Orders report (R42640) to review all sales orders that are on hold.
Update Transaction Status during Shipment Confirmation
If an order detail line is overshipped, or an additional order detail line is added to the order, you must receive a new authorization.
Print Prepayment Information on Invoices
When you print invoices, you can set the processing options to print prepayment information on the document. When you activate prepayment processing in the Print Invoices program (R42565), you cannot summarize invoices.
Update Prepayment Information at Sales Update
In Sales Update (R42800), you must activate prepayment processing options, and if the settlement transaction is valid, and no errors are found in Sales Update, then the system generates a draft, requesting funds from the credit card company's bank.
When you set up a version of Sales Update for Prepayment Transactions, you can set the processing options so that the system assigns an invoice number if you have not processed the orders through Print Invoices (R42565). However, you cannot summarize invoices.
If the processing option for prepayment processing is on and settlement of a prepayment transaction has occurred, the system writes a draft record for receivables due from the credit card company's bank. During Sales Update, call the version of Preauthorized Drafts to generate draft records. After drafts are written, they can be closed using these programs:
Journal Entries (P0911).
A/R Draft Collection (R03B680).
See Also
Understanding Sales Order Detail Information
Understanding Shipment Confirmations
This section provides an overview of updates to the transaction status and discusses how to update transaction statues codes.
You can enter or update prepayment during order entry if the prepayment processing options for Sales Order Entry (P4210) are defined for prepayment processing. After you enter an order, you can access Prepayment Transaction Revisions to enter check number or credit card information. The system retrieves the order amount, plus the calculated taxes, as the prepayment amount. When you enter prepayment information, the system writes a record to the F004201 table.
You can review prepayment status for a particular customer or status. You can modify the prepayment status of a transaction by using the Work With Prepayment Processing Information program (P004201).
Examples: Impact of Setting Processing Options
This table illustrates the impact on the Prepayment Transaction Status and the required action when the Sales Order Entry Prepayment tab processing options are set:
Prepayment tab: Process Authorization Value |
Prepayment tab: Process Settlement Value |
Prepayment Transaction Status |
Action |
blank |
blank |
blank |
Manually run the Authorize Prepayment Transactions program to change the transaction status to 2. |
1 or 2 |
blank |
2 (authorized) |
Manually run the Settle Prepayment Transactions program or at Ship Confirm. |
1 or 2 |
1 or 2 |
5 (settled) |
No action required. |
Form Name |
FormID |
Navigation |
Usage |
Work with Prepayment Transactions |
W004201A |
Prepayment Processing (G42131), Prepayment Processing Information |
Review the status of the prepayment and select records to revise. |
Prepayment Transaction Revisions |
W004201E |
Select a transaction on the Work with Prepayment Transactions form. |
Revise the Prepayment Transaction Status field. |
Access the Prepayment Transaction Revisions form.
Prepayment Origination Flag |
Displays a UDC (00/PO) that specifies the system from which prepayment originated. Such as, 01 indicates Sales Order Entry. |
Sequence Number |
Displays a number that specifies the sequence of information. |
Prepayment Transaction Status |
Displays the status of the prepayment transaction. |
Authorize Transaction Amount |
Displays the amount of the prepayment credit card authorization. |
Cash Payment Amt (cash payment amount) |
Displays the amount that is prepaid with cash. |
Check Payment Amt (check payment amount) |
Displays the amount that is prepaid with check. |
Settle Transaction Amount |
Displays the amount of the prepayment settlement. |
This section provides an overview of settling prepayment transactions and discusses how to:
Run the Settle Prepayment Transactions program.
Set processing options for Settle Prepayment Transactions (R004202).
Final settlement occurs between you and the credit card company by way of the selected middleware software solution. At this time, you transmit all authorized transactions to the credit card processor requesting funds.
The settlement process varies based on the credit card processor. If the settlement is successful, the system returns a settlement code and updates the transaction status to Settled in the F004201 table.
The settlement phase should occur after shipment confirmation, but before invoicing. After you confirm shipment for the goods, you can perform a settlement. This way, when you print invoices, you can indicate that the customer has paid the amount.
Select Prepayment Processing (G42131), Settle Prepayment Transactions.
Processing options enable you to specify the default processing for programs and reports.
Defaults
Although processing options are set up during system implementation, you can change processing options each time you run a program.
1. Settled Lines |
Enter a next status override UDC (40/AT), indicating the next step in the order flow of the line type. |
Holds
Although processing options are set up during system implementation, you can change processing options each time you run a program.
1. Settlement Hold for Prepayment Processing |
Enter a UDC (42/HC) that identifies why an order is on hold. |
After the settlement process occurs successfully, you can generate drafts for receivables due from the credit card company's bank. After you write drafts, you can close the draft by entering manual journal entries or by running the A/R Draft Collection program (R03B680).
This section provides overviews of preauthorized drafts and draft collection.
During Sales Update (R42800), you can generate a draft record after the prepayment settlement occurs if you have set the processing options for prepayment process and the settlement has occurred successfully. By using a version of the A/R Batch Draft Creation program (R03B671), the system selects open invoices to be paid as drafts.
The bank collects the funds for the draft from the credit card company's bank on the due date of the draft. On or after the due date, both you and the credit card company recognize the transfer of cash. You update the status of the draft to show that it has been collected.
Some companies prefer to close the draft on the settlement date, while others wait until the payment appears on their bank statement. Depending on company policy, use the A/R Draft Collection program (R03B680) to run:
Sales Order Speed Status Update (P42040) with Journal Entries on the draft due dates to create journal entries.
Sales Order Speed Status Update without Journal Entries on the draft due dates using a pay status code of something other than P (paid).
After you verify that payments have been collected, run Sales Order Speed Status Update with Journal Entries.
Additionally, the credit card company might assess fees for authorizations. To account for all fees, create a separate journal entry in the Journal Entries program (P0911).
You can run this batch process in either proof or final mode:
Mode |
Description of Process |
Proof |
In proof mode, the system:
|
Final |
In final mode, the system works in the same way as proof mode, with these exceptions:
|
This process creates records in the Receipts Detail table (F03B14) and updates records in the Customer Ledger table (F03B11).
Data Selection for Draft Collection with Status Update
You must select drafts for credit card processing on the basis of the payment instrument, which indicates credit card transactions.
See Also
Processing Accounts Receivable Drafts