About Creating Invoices for Joint Venture Distributions
After you’ve run the processes to identify and distribute joint venture transactions, you can create invoices for the distributions.
You can schedule the "Create Joint Venture Invoices and Journal Entries" process to create the following invoices:
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Receivables invoices for cost distributions
If you use partner contributions to pay the upfront costs of your joint venture and invoice stakeholders for the remaining costs, complete the partner contribution processes before you create receivables invoices.
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Payables invoices for revenue distributions
After you run the process to create invoices, make sure that the following processes are performed to complete the accounting:
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For invoiced costs, an accounts receivable manager must run the standard processes to create accounting entries in Oracle Receivables and post the invoices to Oracle General Ledger.
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For invoiced revenue, an accounts payable manager must run the standard processes to create accounting entries in Oracle Payables and post the invoices in General Ledger.
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To help ensure consistent accounting across Oracle Fusion Cloud Financials, a joint venture accountant then runs this process: Create Joint Venture Invoices and Journal Entries process - Update Accounting for Invoices mode.
This mode stores the information required for retrieving the partner accounts, receivable accounts, and liability accounts for invoiced joint venture distributions. It then updates the distributions with this account information and changes their status to Process Complete.
Criteria for Creating Invoices
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Cost distributions that are associated with operating expenses, capital expenditures, overhead fees and other charges. In the Joint Venture Distributions work area, the cost distributions are recorded using the following account types: Expense, Assets, Overhead, and “Fees and other charges.”
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Revenue distributions recorded as account type Revenue in the Joint Venture Distributions work area.
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Distributions in Available to Process status. Note that distributions marked as Distribution Only automatically have a status of Process Complete and aren't available for invoicing.
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Distributions with a stakeholder preference of Create Invoices.
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The distribution amount is equal to or greater than the minimum amount required to create an invoice.
Minimum invoice amounts are specified in the joint venture definition. For example, you could set a minimum of $500 for receivables invoice amounts and a minimum of $300 for payables invoice amounts. The process will create invoices only when the distribution amount reaches $500 or $300 respectively.
Invoicing Currency
By default, the process creates invoices in the primary ledger currency of the business unit associated with the joint venture.
When a joint venture involves partners from different countries, the partners might request invoices in their currencies. In this case, the managing partner can specify the overriding invoice currency at the invoicing partner or stakeholder level. When the Create Joint Venture Invoices and Journal Entries process is run, it will then generate invoices for stakeholders in the overriding invoice currencies.
Accounting for Receivables and Payables Invoices
For receivables invoices, the process debits the amount in a receivable account that’s derived from AutoAccounting rules or the account specified in the joint venture definition. For payables invoices, the process credits the amount in a default Payables liability account or the account specified in the joint venture definition.
If the managing partner has set up account overrides for the receivable and liability account through subledger accounting rules, the posting process will use the overrides when posting receivables and payables invoices.
For the offset accounting entry, the process writes the amount to what is referred to as “partner account” in Joint Venture Management. This account is set up by the managing partner using subledger accounting rules and is written in the Revenue accounting class for receivables invoices and in the Item Expense accounting class for payables invoices.
The following example illustrates the accounting in Payables for a joint venture invoice.
| Account | Debit | Credit |
|---|---|---|
| Partner Account | 30,000 USD | None |
| Liability | None | 30,000 USD |
The following example illustrates the accounting in Receivables for a joint venture invoice.
| Account | Debit | Credit |
|---|---|---|
| Receivable Account | 30,000 USD | None |
| Partner Account | None | 30,000 USD |
If you use partner contributions to cover distributed costs, you might have a scenario in which the partner contribution balance doesn’t fully cover the costs. In this case, the remaining costs are billed to partners through receivables invoices using the Create Joint Venture Invoices and Journal Entries process. The invoice captures both the partner contribution amount and the invoice amount in separate invoice lines. For the partner contribution invoice line, the process writes the partner contribution amount to an account that’s referred to as "joint venture partner contribution account” in Joint Venture Management. This account is set up by the managing partner when creating the partner contribution and is written in the Revenue accounting class in Oracle Financials. If the managing partner has set up an account override through subledger accounting rules, the posting process will use the account override for the partner contribution line when posting receivables invoices.
The following example illustrates the accounting in Receivables when a distributed cost is completely covered by the partner contribution invoice line, resulting in a zero amount invoice.
| Account | Debit | Credit |
|---|---|---|
Joint venture partner contribution account (11-1001-49003-11-0001) |
50,000 USD | None |
Partner Account (11-1001-49002-11-0001) |
None | 50,000 USD |
| Receivable | 0 | None |
The following example illustrates the accounting in Receivables when a distributed cost is partially covered by the partner contribution invoice line and an invoice line is created to reimburse the remaining amount.
| Account | Debit | Credit |
|---|---|---|
| Receivable | 10,000 USD | None |
Joint venture partner contribution account (11-1001-49003-11-0001) |
20,000 USD | None |
Partner Account (11-1001-49002-11-0001) |
None | 30,000 USD |
Joint Venture Details in Invoices
Invoices include the following joint venture information:
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The business unit, customer or supplier information, currency, and distribution amount associated with each distribution.
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In the receivables invoice header, the name of the joint venture associated with the invoice is displayed in the Reference field.
Note: A user with additional privileges can click Details on a receivable invoice line to view additional joint venture information that is stored in predefined flexfields: joint venture name, primary segment value, joint venture distribution type (asset, expense, partner contribution, and so on), account code combination ID, and joint venture source ID. For more information on these flexfields, see Predefined Flexfields for Joint Venture Receivables Invoices. -
If the invoice line description isn't available in the original transaction, then a description for each invoice line is provided by Joint Venture Management. The line description includes the joint venture name and either “AR Invoice” or “AP Invoice,” or it might include “Partner Contribution” depending on whether you’re using partner contributions to cover cost distributions.
Distribution Statuses Associated with Invoicing
In the Joint Venture Distributions work area, the status of the distribution indicates the stage and the result of the invoicing process.
| Status | Description |
|---|---|
| Invoicing in Progress | Indicates that the invoicing process has started but isn't complete. |
| Accounting in Progress | Indicates that the distribution has been invoiced but the “Create Accounting” and “Update Accounting for Invoices” processes haven’t completed. |
| Process Complete | Indicates that the distribution has been invoiced and fully accounted. |
| Error | Indicates that the distribution wasn't invoiced due to an error. |
Manage Distributions in Error
The process to create joint venture invoices generates logs that the joint venture accountant can use to review the details of any errors and take corrective action. After you correct the error, you can make the distribution available for processing in the next scheduled run of the process.
Or after you review the error, you might need to take one of the following actions:
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Change the distribution status from “Error” to “On Hold” if the error can’t be resolved sooner.
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Mark the distribution as “Distribution Only” if after analysis, you determine that the distribution shouldn’t have been included in the invoicing process.
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Delete the distribution so you can redistribute the transaction and invoice its distributions again. When you delete a distribution in “Error” status, Joint Venture Management deletes all distributions in “Error”, “Available to Process”, or “On Hold” status that originate from the same transaction. The transaction status automatically changes to “Available to Process” in the Joint Venture Transactions work area.
For information about possible errors that you can encounter when creating invoices, see Correcting Issues with Creating Joint Venture Invoices.
If you need to reverse invoices for any reason, for example, incorrect customer or supplier information on the invoice, you must perform the joint venture reversal process to cancel the invoices through credit memos or debit memos. For more information, see Distribution Reversal Methods.