Understanding AR/AP Netting

When you do a large volume of business with an organization as both a customer and a supplier, you can perform accounts receivable netting and accounts payable netting (AR/AP netting) to increase efficiency and reduce operational costs by consolidating transactions in the JD Edwards EnterpriseOne Accounts Receivable and Accounts Payable systems.

When you perform AR/AP netting in JD Edwards EnterpriseOne, you reclassify transactions in Accounts Payable to Accounts Receivable and vice versa. For example, you can reclassify debit memos in Accounts Payable to invoices in Accounts Receivable, and credit memos in Accounts Receivable to vouchers in Accounts Payable.

Depending to which system you reclassify transactions, you either perform AR netting or AP netting:

• When you perform AR netting, you reclassify transactions in Accounts Payable to Accounts Receivable.

• When you perform AP netting, you reclassify transactions in Accounts Receivable to Accounts Payable.

AR/AP netting is similar to the credit reimbursement process in JD Edwards EnterpriseOne; however, AR/AP netting is a manual process and includes these additional features:

• Enables you to net unapplied cash (RU).

• Enables a bilateral reclassification of transactions in Accounts Receivable and Accounts Payable.

• Provides an audit trail of netting transactions.