Introduction to Oracle Joint Venture Management

Joint Venture Management enables a managing partner of a single joint venture or thousands of joint ventures to manage the distribution of financial transactions among joint venture partners. It enables you to manage amounts to report and invoice to partners, both external partners to the managing partner’s organization and any internal partners that operate as a separate business entity within the organization.

After the initial setup, you can schedule Joint Venture Management processes to automatically perform these tasks:

• Identify joint venture transactions in Oracle Fusion Cloud Financials.

• Split transactions based on each partner's percentage of ownership in the joint venture.

• Generate distribution records that contain each partner's share in the transaction.

• Create accounts receivable invoices, payables invoices, or internal transfer journal entries for each partner using the distribution records that are associated with costs and revenue.

Note: If you are a partner in a joint venture that you don’t manage or operate, you can use Joint Venture Management to re-create and track your portion of costs and verify that you were billed the correct amounts by the managing partner. You can also create payables invoices or internal transfer journals to pay the managing partner for your share of costs.

Joint Venture Management gives you the flexibility to adjust for changes in a joint operating agreement (JOA) during the life cycle of a joint venture. You can add or remove partners and adjust for changes in their ownership percentages. Joint Venture Management also supports direct billing, which gives you the option to apply a full transaction amount to an individual partner.

For auditing and tracking purposes, Joint Venture Management retains important information about processed transactions to help you resolve any partner disputes over distributed amounts. It enables you to readily access important details, such as the following information:

• Original transaction information including the transaction date, amount, and the account in which the transaction was initially recorded.

• Partner information including all partners with distributions and each partner’s percentage of ownership.

• The date the split was calculated and distribution amounts were generated.

• Invoice information including the invoice number and date that was assigned to the joint venture invoice when it was created.

• Details about internal transfer journals for internal stakeholders.

Joint Venture Management also provides these capabilities:

• Reporting on joint venture transactions and reports that provide joint venture partners with details about their share of expenses, revenue, assets, and liabilities.

• A Joint Venture Accounting Manager Dashboard that displays charts with metrics about your joint ventures and their associated transactions and distributions.

• Visual indicators to alert users if the setup of a joint venture isn't complete.

• The ability to set up partners once and add them to multiple joint ventures.

• Rounding support to handle the distribution of costs or revenue that remain to help ensure that the total of the split calculations equals the original transaction amount.

• Minimum amount threshold for creating invoices so that a partner is invoiced only when the accumulated distribution amount is significant enough to be invoiced.

Capabilities for Billing Adjustments and Managing Cash Advances

It's common for a managing partner in a joint venture to renegotiate the terms of a joint operating agreement, in particular the percentages of financial transactions shared among joint venture partners. If the new terms impact joint venture transactions that have already been distributed, Joint Venture Management enables you to redistribute transactions retroactively according to the retroactive dates in the joint operating agreement. The process automatically credits any partner invoices or internal transfer journal entries generated prior to the new percentages being put into place. The managing partner can also selectively reverse distributions that've been invoiced or journaled and reassign them to different stakeholders.

Joint Venture Management also enables you to manage cash advances from joint venture partners to cover up-front and continuing costs related to a joint venture. You can associate cash advances, referred to as partner contributions, to the partners in a joint venture. You can then configure Joint Venture Management to automatically draw from the contributions to pay for each partner's share of costs. With automatic draw from partner contributions, you can help ensure that payments are requested from partners only after partner contribution amounts have been exhausted.

Integration with Oracle Project Costing

If you use Project Costing, you can set up an integration between Project Costing and Joint Venture Management to create cost adjustments from joint venture distributions that originate from project-related transactions. A project manager can then import the cost adjustments to Project Costing. When imported into Project Costing, cost adjustments are negative amounts that get subtracted from the gross amount, enabling the project manager to realize the accurate capitalized cost. In addition, project details are included in the invoices and journal entries generated from Joint Venture Management to recoup the partners' share of expenses. This provides traceability to a specific project and task for an individual joint venture partner’s share of costs.

The integration between Project Costing and Joint Venture Management also gives you the option to perform these tasks:

• Identify transactions for distribution based on specific capital projects. See Identify Distributable Transactions by Project Information for more information.

• Override task and expenditure type in cost adjustments to give project accountants the ability to budget and forecast on net costs, gross costs, or both. See Set Up Overrides for Task and Expenditure Type in Cost Adjustments for more information.

Management of Joint Venture Overhead Costs

In Joint Venture Management, you can set up different types of overhead methods to recoup overhead costs from joint venture partners. You can set up an overhead method to periodically bill joint venture partners a fixed overhead amount. Or, you can set up an overhead method to calculate overhead amounts based on any of these factors:

• Percentage of costs

• Percentage of costs with a sliding scale

• Rate

• Rate with a sliding scale

You can also set up a periodic adjustment for an overhead method to automatically adjust the fixed amount, percentage, or rate in an overhead method.

Management of Operational Measures and States

Joint Venture Management enables you to store and manage operational measures and states for your joint ventures. You can use this data for analysis of your joint ventures, as the basis for charging overhead to joint venture partners, or for allocating expenses to your joint ventures.

Carried Interest Configuration and Tracking

Joint Venture Management gives you the option to distribute joint venture transactions according to the terms and conditions of a carried interest agreement. Carried interest processing enables the tracking and reporting of amounts that consenting partners carry for nonconsenting partners in a carried interest agreement.