Understanding the Order Management Business Unit Definition

PeopleSoft Order Management does not post entries directly to General Ledger ChartFields except for incurred revenue from claimback claims. Instead, PeopleSoft Inventory manages the account distribution for the shipping transactions that are involved with a sale, and PeopleSoft Billing handles the distribution for invoice transactions. You can elect to invoice by Order Management business unit, in which case invoice transactions are handled through Order Management business unit links to Billing business units. Or, you can choose to invoice from shipment history through Inventory business unit links to Billing business units.

In either case, distribution codes determine the accounts to debit and credit for invoice transactions and the system passes the information to PeopleSoft General Ledger by using PeopleSoft Billing and Receivables. Distribution codes are defined in PeopleSoft Billing or PeopleSoft Receivables and reflect detailed account distribution by ChartField.

Shipping Transactions

The PeopleSoft Inventory business unit always determines the ChartFields for shipping transactions. For inventory items, that is products that are stocked in a warehouse, the cost element for the item, and the distribution type determine ChartField distribution. For nonstock products, or products that are ordered directly from the supplier, the ChartFields are determined by the cost element that you define for the product that is on the Product Definition, Product Definition - Options2 page and by the distribution type that you define for the product that is on the Mark Lines for Billing Process page. Distribution types are optional.

Warning! If you are invoicing by Order Management business unit, the General Ledger business unit that is associated with the Inventory business unit must be the same as the General Ledger business unit that is linked with the Order Management business unit through the Billing business unit which is on the Order Management Definition - Order Management Setup page. If this is not the case, cost of goods sold accounting (generated by the Inventory business unit) is not accurately reflected against revenue.

Invoice Transactions

You invoice transactions by:

  • Order Management business unit.

    Associate a Billing business unit with an Order Management business unit on the Order Management Definition - Order Management Setup page.

  • Inventory business unit.

    Associate a Billing business unit with an Inventory business unit on the Inventory Definition - Business Unit Definition page.

Warning! You must always associate a Billing business unit with Order Management business units to perform return material authorization (RMA) processing. If you enter a Billing business unit on the Inventory Definition - Business Unit Definition page and the Order Management business unit Order Management Definition - Order Management Setup page, then the Inventory business unit takes precedence for invoice transactions.

Distribution Codes for Invoice Transactions

If you invoice by Order Management business unit, the system determines which distribution codes to pass to PeopleSoft Billing using this order of priority:

  1. Distribution codes for a price adjustment defined in the price rule.

  2. You entered distribution codes manually for order schedules on the Order Schedule - Distribution page or the Revenue Distribution Accounts page for RMAs.

    Note: This option is for revenue distribution only.

  3. Distribution codes are established on the Distribution Sets and Rules pages.

    The code is determined by the distribution rule from the Order Management business unit for sales orders and RMAs.

    See Establishing Distribution Rules and Sets.

  4. You enter default distribution codes on the Order Management business unit Accounting and Billing page for sales orders and RMAs.

If you are invoicing by Inventory business unit, the system determines which distribution codes to pass to PeopleSoft Billing in the same sequence. Instead of using the default distribution codes that are on the Accounting and Billing page for sales orders and the RMA Defaults page for RMAs, however, the system uses the distribution codes that are on the Inventory Definition - Business Unit Options: Revenue and Billing Defaults page for the Inventory business unit.