1. Accounts Receivable Implementation Guide
  2. Understanding the AR/AP Netting Process

Understanding the AR/AP Netting Process

There are three types of documents with which you work when you perform AR/AP netting:

  • Source documents are documents that you reclassify to the JD Edwards EnterpriseOne Accounts Receivable or Accounts Payable systems.

  • Transfer documents are documents that the system creates to close source documents.

  • Result documents are documents that the system creates to offset source documents.

For example, if you reclassify a credit memo in Accounts Receivable, the system creates a negative receipt and a voucher. The credit memo is the source document, the negative receipt is the transfer document, and the voucher is the result document.

This table lists examples of source documents and the corresponding transfer and result documents that the system creates when you reclassify the source document:

Source Document

Transfer Document

Result Document

Invoice (RI)

Cash Receipt (RC)

Debit Memo (PD)

Credit Memo (RM)

Negative Receipt (RC)

Voucher (PV)

Unapplied Cash (RU)

N/A

Voucher (PV)

Voucher (PV)

Manual Payment (PN)

Credit Memo (RM)

Debit Memo (PD)

Manual Payment (PN)

Invoice (RI)
Note: You can specify unique document types in the Voucher Entry MBF Processing Options (P0400047) and Invoice Entry MBF Processing Options (P03B0011) programs that the system assigns to result documents. Therefore, the document types that the system assigns to the result documents might differ from the document types that are listed in the preceding table.
Note:

You cannot perform AR/AP netting for these documents:

Drafts (R1, P1)

Chargebacks (RB)

Deductions (R5)

Partially paid transactions

To perform AR/AP netting, use the Manual Netting program (P03B455) to create netting transactions. To create netting transactions, select transactions in either Accounts Receivable or Accounts Payable for which you want to reclassify and then post the transfer and result documents. You can specify whether posted or posted and unposted transactions are eligible for netting using the Posted Documents processing option.

When you create netting transactions, the system:

  • Creates transfer documents in a transfer batch to close the source documents.

    When you post the transfer document batch, the system offsets the entry to the A/P or A/R trade account using the account specified by AAI item NC.

  • Updates the source document pay status to P (paid) and the open amount to zero.

  • Creates result documents in a result batch to offset the source documents.

    When you post the result document batch, the system offsets the entry to the A/P or A/R trade account using the account specified by AAI item NC.

  • Assigns values to the Netting Transaction ID, Netting Doc Number (netting document number) and Netting Line ID fields on source, transfer and result documents.

  • Updates the result document Netting Status field to 0 (Ineligible for Netting) to specify that the transaction is ineligible for AR/AP netting.

  • Updates the Originating System field (OMOD) on Accounts Receivable result documents with a value of 5 (AR/AP Netting) to indicate that the document was created by the AR/AP netting process.

Note: If source documents contain tax and discount amounts, the system does not transfer these amounts to result documents. Taxes and discounts are processed in the source system.

Regardless of whether you perform AR netting or AP netting, you can select transactions from both systems to display a net total of the selected transactions. However, the system reclassifies only those transactions that apply to the method of netting that you perform.

For example, when you perform AR netting, you can select transactions in both Accounts Payable and Accounts Receivable. When you complete the netting entry, the system reclassifies the selected Accounts Payable transactions to Accounts Receivable, but the system does not reclassify or otherwise close or revise the transactions that you select in Accounts Receivable. If you perform AP netting, the system reclassifies the selected Accounts Receivable transactions to Accounts Payable but does not reclassify the selected Accounts Payable transactions. By selecting transactions in both systems, you can determine on which side the liability exists (for example, if the balance of the selected Accounts Receivable transactions is greater than the balance of the selected Accounts Payable transactions and vice versa). This can assist you in determining whether to perform AR/AP netting.

Note: Only those transactions that contain a 1 in the Netting Status field are eligible for AR/AP netting. The system updates this field with a 1 if the Address Book record of the customer/supplier contains a Y in the AR/AP Netting field. If you entered transactions in Accounts Payable and Accounts Receivable with the AR/AP Netting field set to N (No), you can use the Speed Status Change program (P03B114 and P0411S) to update the Netting Status field on these transactions to 1.

See "Preparing Vouchers for Payment, Using Speed Status Change to Review and Revise Vouchers" in the JD Edwards EnterpriseOne Applications Accounts Payable Implementation Guide.

See Updating an Individual Invoice Using Speed Status Change.

See Updating a Group of Invoices Using Speed Status Change.