Earnings Credit Rate

Oracle Revenue Management and Billing enables you to generate the earnings credit rate (ECR) when the account is eligible for earnings credit rate and is associated with a contract of a contract type where the Financial Transaction Distribution Object characteristic is defined. In other words, the system enables you to create the financial transaction distribution (ECR) object when the adjustment and/or bill segment financial transaction created against an ECR contract is frozen. The status of the financial transaction distribution object is set to Pending.

To enable the Earnings Credit Rate (ECR) feature, you need to setup the following:

• Financial Transaction Distribution Type - A financial transaction distribution type is an object which controls the distribution of a credit and debit bill segment or adjustment financial transaction. It is associated to a contract type through a financial transaction distribution object. It helps the system to determine:

  • Whether it is defined for adjustment or bill segment financial transactions whose credit or debit amount should be distributed.

  • The type of adjustment (such as transfer adjustment) should be created when the credit or debit amount on the financial transaction distribution object is distributed.

  • The financial transaction distribution rule using which the credit or debit amount on the financial transaction distribution object should be distributed.

  • Whether the credit or debit amount on the financial transaction distribution object should be used to offset an adjustment or bill segment of the same account (where ECR is earned), another account of the customer (for whom ECR is earned), or the account identified as per the distribution hierarchy.

  • Whether the credit or debit amount on the financial transaction distribution object should be written off when it is equal to or less than the write off threshold amount.

  • The type of adjustment that should be created when the credit or debit amount on the financial transaction distribution object is written off.

  • The type of adjustment that should be created when the credit or debit amount on the financial transaction distribution object is expired.

  • The type of adjustment that should be created when the excess credit amount on the financial transaction distribution object is refunded at the end of the year.

  • The business object using which the financial transaction distribution object should be created.

• Financial Transaction Distribution Rule - A financial transaction distribution rule is associated with one or more financial transaction distribution types. It helps the system to determine:

  • The method using which the credit or debit amount on the financial transaction distribution object should be distributed. If the distribution method is set to Fee Based, the system will distribute the credit or debit amount on the financial transaction distribution object to offset fees starting from the highest to lowest amount. If the distribution method is set to Priority Based, the system will distribute the credit or debit amount on the financial transaction distribution object to the accounts in the order of their account distribution priority. If the distribution method is set to Weighted Average, the system will distribute the credit or debit amount on the financial transaction distribution object to the accounts in the weighted average ratio.

  • The distribution hierarchy using which the accounts, to which the credit or debit amount on the financial transaction distribution object should be distributed, should be derived.

  • The priority in which the objects, such as adjustments of a particular adjustment type or bill segments created for a particular price item, should be offset using the credit or debit amount on the financial transaction distribution object.

  • The objects, such as adjustments of a particular adjustment type or bill segments created for a particular price item, should be excluded from offsetting.

  • Algorithms that should be used to select the accounts, interpret the order of distribution, and then distribute the credit or debit amount.

• Expiration Cycle - An expiration cycle is an extendable lookup reference object which indicates the frequency at which the financial transaction distribution object created for the account should be expired (i.e. after two months or 45 days from the date of creation). You can associate an expiration cycle with one or more accounts.

• Distribution Hierarchy - A distribution hierarchy is an extendable lookup reference object which indicates the list of hierarchies that should be considered while deriving accounts for offsetting the credit or debit amount on the financial transaction distribution object. The valid hierarchy lists are:

  • IGA Member Accounts Same Division - If this option is selected, the system will first offset the credit or debit amount on the financial transaction distribution object against the source account, other accounts of the source customer, and then against other member accounts of an invoicing group in which the source account is also a member account.

  • Person Relationship (Child) Same Division - If this option is selected, the system will first offset the credit or debit amount on the financial transaction distribution object against the source account, other accounts of the source customer, and then against the child persons' accounts who are related to the parent person (i.e. source customer) using a particular relationship type and belongs to the same division.

  • Person Relationship (Child) Other Division - If this option is selected, the system will first offset the credit or debit amount on the financial transaction distribution object against the source account, other accounts of the source customer, and then against the child persons' accounts who are related to the parent person (i.e. source customer) using a particular relationship type and belongs to a different division.

  • Person Relationship (Parent) Same Division - If this option is selected, the system will first offset the credit or debit amount on the financial transaction distribution object against the source account, other accounts of the source customer, and then against the parent persons’ accounts who are related to the child person (i.e. source customer) using a particular relationship type and belongs to the same division.

  • Person Relationship (Parent) Other Division - If this option is selected, the system will first offset the credit or debit amount on the financial transaction distribution object against the source account, other accounts of the source customer, and then against the parent persons’ accounts who are related to the child person (i.e. source customer) using a particular relationship type and belongs to a different division.

  You can associate a distribution hierarchy with one or more financial transaction distribution rules.

• Financial Transaction Distribution Object - A financial transaction distribution type is associated to a contract type through a financial transaction distribution object. You can include multiple financial transaction distribution types in a financial transaction distribution object. You can associate a financial transaction distribution object to one or more contract types.

• Earnings Credit Rate Eligibility - You can define earnings credit rate eligibility for each account in the system. It helps the system to determine:

  • Whether the account is eligible for generating earnings credit rate (i.e. financial transaction distribution object).

  • Whether the credit or debit amount on the financial transaction distribution object can be offset against the source account, other accounts of the source customer, or against the accounts identified in the distribution hierarchy.

  • The priority in which the account should be considered while distributing the credit or debit amount on the financial transaction distribution object.

  • The expiration cycle for the account.

The following two batches are introduced in this release:

• Financial Transaction Distribution Monitor (C1-FTDPR) - It is used to monitor or check whether there are any financial transaction distribution objects in the Pending status. If there is a financial transaction distribution object in the Pending status, the system validates the financial transaction distribution object and changes the status of the financial transaction distribution object to Validated. From the Validated status, the status of the financial transaction distribution object is changed to either of the following:

  • Refund (when there is excess credit amount on the financial transaction distribution object at the end of the year and the source account belongs to a particular customer class where is refund is allowed).

  • Write Off (when the credit or debit amount on the financial transaction distribution object is equal to or less than the write off threshold amount)

  • Expire (when the credit or debit amount on the financial transaction distribution object is expired)

  Accordingly, the refund, write off, and expire adjustments are created. However, if none of the above conditions are met, the status of the financial transaction distribution object remains as Validated.

• FT Distribution Single Threaded Transition Batch (C1-FTDTS) - It is used to monitor or check whether there are any financial transaction distribution objects in the Validated status. If there is a financial transaction distribution object in the Validated status, the system changes the status of the financial transaction distribution object to Apply Rule and executes the algorithm attached to the Apply Rule system event on the financial transaction distribution rule version which is effective on the batch business date. Once the credit or debit distribution array of accounts is created, the status of the financial transaction distribution object is changed to Distributed and then the algorithm attached to the Distribute system event on the financial transaction distribution rule version which is effective on the batch business date is executed. On the credit or debit amount distribution, two adjustments are created - one against the source contract and another against the bill segment or adjustment's contract to which the amount is distributed. Once the credit or debit amount on the financial transaction distribution object is fully distributed, the status of the financial transaction distribution object is changed to Complete. However, if the credit or debit amount on the financial transaction distribution object is not yet fully distributed, the status of the financial transaction distribution object is changed to Validated.

Related Topics

Parent Topic: Oracle Revenue Management and Billing Financial Services Business Processes