9Define Bills Receivable

This chapter contains the following:

Enable Receivables system options that help you manage the processing of bills receivable transactions and receipts.

Set these Cash Processing Receivables System Options to enable and manage bills receivable:

  • Allow payment of unrelated transactions option: Enable this option if you want to apply transactions of unrelated customers to a bill receivable.

    If you don't enable this option, then you can only apply transactions that belong to the customer drawee and its related customers.

  • Enable bills receivable option: You must enable this option to use bills receivable.

  • Bills Receivable Transaction Source: You can optionally select a default bills receivable transaction source. The transaction source that you select appears by default on all bills receivable transactions.

    You must set up bills receivable transaction sources before you can set this option.

  • Allow factoring of bills receivable without recourse option: Enable this option if you want to create factored bills receivable remittances without recourse.

    Enabling this option lets you disable the Factored with recourse option on the Bills Receivable Remittance Batch pages. If you don't enable this option, then the Factored with recourse option is enabled and read only.

Create bills receivable creation receipt methods to create bills receivable from transactions automatically using the Create Bills Receivable Batch process. The receipt method designates the transaction type, maturity date, bill number, and if necessary the minimum and maximum bill amounts, and determines how transactions are grouped into bills receivable.

After you create bills receivable creation receipt methods, you must assign both a bills receivable creation receipt method and a bill-to customer defined as drawee to transactions that you want to automatically batch for bills receivable.

To create a new bills receivable creation receipt method:

  1. Navigate to the Create Receipt Class and Methods page.

  2. Name the receipt class and, in the Creation Method field, select Bills Receivable.

  3. Create a receipt method.

  4. Navigate to the Bills Receivable tab.

  5. If applicable, enable the Bills receivable inherit transaction numbers option to use the transaction number as the bill number.

    This only applies if there is one transaction in the bill receivable. If the bill receivable contains more than one transaction, then Receivables assigns the bill number according to the settings in the bills receivable transaction source.

  6. In the Number of Bills Receivable Rule field, select the rule to use to group transactions into bills receivable:

    1. One per Customer: Group all transactions belonging to a single customer drawee into one bill receivable.

    2. One per Customer Due Date: Group all transactions belonging to a single customer drawee that have the same payment schedule due date into one bill receivable.

      If a transaction uses the payment terms Immediate, then this transaction is included in the first available bill receivable that can accommodate the transaction amount, without regard to the due date. In this case the effective grouping rule is the same as One per Customer.

    3. One per Invoice: Group all payment schedules for a single transaction into one bill receivable.

    4. One per Payment Schedule: Create a separate bill receivable for each transaction payment schedule (no grouping).

    5. One per Site: Group all transactions for a single customer drawee site into one bill receivable.

    6. One per Site Due Date: Group all transactions for a single customer drawee and bill-to site that have the same payment schedule due date into one bill receivable.

      If a transaction uses the payment terms Immediate, then this transaction is included in the first available bill receivable that can accommodate the transaction amount, without regard to the due date. In this case the effective grouping rule is the same as One per Site.

  7. In the Bills Receivable Maturity Date Rule field, select Earliest or Latest to indicate whether to derive the maturity date for a bill receivable from the earliest or latest due date of all transactions applied to the bill.

  8. Enter the bills receivable transaction type to use with this receipt method. All bills receivable created from transactions use the settings of this transaction type.

  9. In the Lead Days field, enter the number of days before the transaction due date that a transaction can be applied to a bill receivable.

  10. Use the Minimum Amount and Maximum Amount fields to enter minimum and maximum amounts for bills receivable created from transactions.

    • If you enter a minimum amount, then a bill receivable is not created for the applicable transactions unless their sum is greater than this amount.

    • If you enter a maximum amount, then the total amount of the bill receivable must match this amount exactly.

      After applying a transaction to a bill receivable, a partial transaction amount that exceeds the maximum amount of the bill can remain unapplied. For example, an invoice of $1000 applied to a bill receivable with a maximum amount of $900 leaves an open amount of $100 on the transaction.

If you plan to generate bills receivable from transactions using the Create Bills Receivable Batch process, you must prepare transactions to make them eligible for inclusion in a bills receivable batch.

To prepare transactions for bills receivable batches, review and, if necessary, complete tasks related to each of the following activities:

  • Prepare Customers

  • Assign Bills Receivable Creation Receipt Methods

  • Review Eligible Transactions for a Bills Receivable Batch

  • Set Up the Customer Drawee Bank Account

Prepare Customers

Prepare customers for bills receivable transactions. You must define customers as drawees, and assign drawees to the applicable transactions.

Perform these two tasks:

  1. Define customers as drawees.

    Define bill-to customer sites as drawee sites for bills receivable. You must define a drawee site for each customer account for which you plan to create bills receivable.

    For each applicable site already defined as a bill-to site:

    1. Navigate to the Edit Site page: Site Details tab.

    2. Assign the business purpose Drawee.

    3. Enter the bills receivable reference accounts: bills receivable, unpaid bills receivable, remitted bills receivable, and factored bills receivable.

  2. Assign drawees to transactions as the bill-to customer.

    Assign a customer drawee to each applicable transaction as the bill-to customer. The drawee, as the responsible party for the goods and services on the transaction, must be designated as the bill-to customer.

Assign Bills Receivable Creation Receipt Methods

Assign a bills receivable creation receipt method to each transaction that you want to apply to bills receivable. The bills receivable creation receipt method designates the transaction type, maturity date, bill receivable number, and minimum and maximum bill amounts for each bill receivable, and determines how transactions are grouped into bills receivable.

You can assign bills receivable creation receipt methods to transactions manually or automatically.

To assign bills receivable creation receipt methods automatically:

  1. Open the Edit Site page for a bill-to site that you defined as a customer drawee.

  2. In the Payment Details tab, add one or more bills receivable creation receipt methods.

  3. Set one of these receipt methods as Primary.

    Receivables automatically assigns the primary receipt method to transactions belonging to this bill-to customer drawee site that you enter manually or import using AutoInvoice.

To assign a bills receivable creation receipt method manually:

  1. Open the transaction in the Edit Transaction page.

  2. Open the Payment tab and select the receipt method that you want in the Receipt Method field. The Receipt Method field choice list contains all receipt methods assigned to the bill-to customer drawee.

Note: If the bills receivable creation receipt method uses the Number of Bills Receivable Rule of either One Per Customer or One Per Customer Due Date, then you must also set Drawee as the primary business purpose for the applicable bill-to customer drawee site in order to generate bills receivable automatically. This is because the customer drawee is the defining element of transactions.

Review Eligible Transactions for a Bills Receivable Batch

When you run the Create Bills Receivable Batch process, the process selects all eligible transactions based on the customer drawees belonging to the business unit and the parameter values that you enter for the process run.

This table describes rules that apply to selecting transactions for a bills receivable batch.

Feature Rule

Ineligible Transactions

You can't assign disputed transactions or other bills receivable to a bill receivable using the Create Bills Receivable Batch process.

Currency

If you enter a value in the Currency parameter, the process only selects transactions in this currency to create bills receivable.

If you don't enter a value in the Currency parameter, the process creates bills receivable in different currencies, according to the currencies of the transactions selected.

The process generates bills receivable from all eligible transactions with the same currency and conversion rate.

Debit Memos and Credit Memos

If you are batching debit memos and credit memos with the payment terms Immediate, Receivables includes these debit memos and credit memos in the first available bill receivable, without regard to the due date grouping rule assigned to the bill.

Note: The amounts of debit memos and credit memos must still respect the maximum amount of the bill receivable, if there is one. If the sum of debit memos and credit memos applied to a bill exceeds the designated maximum amount of the bill, then the process excludes one or more debit memos or credit memos in order to bring the bill to the proper amount.

Set Up the Customer Drawee Bank Account

The currency, conversion rate, bill-to customer bank account, and the settings assigned to the bills receivable creation receipt method determine how transactions are grouped into bills receivable.

The customer drawee bank account on eligible transactions acts as an additional rule for grouping transactions into bills receivable. The Create Bills Receivable Batch process creates individual bills receivable from transactions with the same customer drawee bank account.

Note: The customer drawee bank account must be in the same currency as the transactions applied to the bill receivable.

To automatically assign the customer drawee bank account to transactions that you enter manually or import using AutoInvoice:

  1. In the Edit Site page: Site Details tab, for each applicable customer drawee site, assign the additional business purpose Bill-to.

  2. In the Edit Site page: Payment Details tab: Bank Accounts section, enter the customer drawee bank account for the bill-to site.

  3. Set this bank account as Primary.

Bills receivable created by the Create Bills Receivable Batch process inherit the bank account on the transaction if both of these conditions apply:

  • The customer drawee site is also a bill-to site.

  • The bills receivable creation receipt method doesn't use the Number of Bills Receivable Rule of either One Per Customer or One Per Customer Due Date.

If the Number of Bills Receivable Rule on the bills receivable creation receipt method is One Per Customer or One Per Customer Due Date, then bills receivable created by the Create Bills Receivable Batch process inherit the bank account on the transaction only if both of these conditions apply:

  • The bank account is assigned to the customer drawee site marked as Primary.

  • The primary drawee site is also a bill-to site.

If the bank account on eligible transactions is not assigned to the primary drawee site, then the process creates bills receivable without a customer drawee bank account.

Create bills receivable remittance receipt methods to use with bills receivable remittance batches. A bills receivable remittance batch processes all eligible bills receivable and prepares them for remittance to your bank.

These settings on the Create and Edit Receipt Class and Methods pages apply to bills receivable remittance receipt methods:

  • Creation Method field: Select Bills Receivable Remittance.

  • Remittance Method field: Select Standard for standard bills receivable and Factoring for factored bills receivable with or without recourse.

  • Debit Memos Inherit Receipt Numbers option: Enable this option if you want debit memo reversals of receipts applied to a bill receivable that are remitted with this receipt method to inherit the receipt number.

  • Receipts inherit bills receivable number option: Enable this option if you want receipts created for bills receivable remitted with this receipt method to inherit the bill numbers.

  • Remittance Bank Accounts tab: Click this tab and create a remittance bank account to use with this receipt method.

    The remittance bank contains both the bank account information to use for remittances and the accounting for remitted bills receivable and the subsequent receipt.

Create a remittance bank account to use with bills receivable remittance receipt methods. The remittance bank account determines how bills receivable are grouped and remitted, and provides accounting information for both bills receivable transactions and receipts.

These settings on the Create and Edit Remittance Bank Account pages apply to bills receivable remittance bank accounts:

  • Primary option: Enable this option if this is the primary bank account for this receipt method. If you are creating more than one remittance bank account in the same currency, then you must set one bank account as Primary.

  • Override bank option: Enable this option if you want to be able to change the remittance bank information on a bills receivable remittance batch after it is created.

  • Clearing Days field:

    • If this receipt method is for standard remitted bills receivable, enter the number of days it will take for the bank to clear the customer drawee receipt.

    • If this receipt method is for bills receivable factored with recourse, enter the number of days it will take for the bank to clear the cash advance (short-term debt) receipt.

  • Risk Elimination Days field: If this receipt method is for bills receivable factored with recourse, enter the number of days after the maturity date to clear the short-term debt.

  • Remitted Bills Receivable and Factored Bills Receivable fields: Enter the remitted bills receivable and factored bills receivable accounts used for bills receivable transactions.

  • Collection Days field: If this receipt method is for standard remitted bills receivable, enter the minimum number of days that the remittance bank uses to collect on a bill remitted after the maturity date.

  • Short Term Debt field: Enter the short-term debt account to use for factored bills receivable with this receipt method.

    Note: The Factoring field is not used for bills receivable. Bills receivable receipts are not factored, but rather created as remitted.

FAQs for Define Bills Receivable

By creating at least one customer site for the customer account with both the business purposes Drawee and Bill-to. You must create a bill-to customer drawee site for each customer account for which you plan to use bills receivable.

If you plan to create bills receivable from customer transactions, then you must also assign the customer drawee site as the bill-to customer on these transactions.

A signed bill receivable requires acceptance by the customer drawee before you can complete the bill and make it available for remittance.

You can initiate an unsigned bill receivable without requiring acceptance by the customer drawee. The unsigned bill receivable itself becomes the document necessary to claim repayment.

To create an unsigned bill receivable transaction type, leave both the Signed and Issued by drawee options unchecked.

When the customer drawee wants to create a bill receivable with a promise to repay a specific amount on a specific date. This is also called a promissory note. Promissory notes are usually guaranteed by the bank that issues the note.

You can only present late charges on bills receivable as a debit memo or invoice. You can't present late charges as an adjustment, because you can't make adjustments to bills receivable transactions.

If you select Adjustment as the late charge type, then late charges are generated for all overdue transactions except bills receivable.