Generate Sustainability Activities from Payables Invoices

Hello, and welcome to this demo on Oracle Fusion Cloud Sustainability. Payables invoices are an important source of data for emission calculations. For example, every good or service you purchase adds to your scope 3 category 1 emissions. You probably also receive invoices for fuel and energy that contribute to your scope 1 and scope 2 emissions.

But manual processing of emission calculations from individual invoices is generally not feasible, since most companies receive a very large volume of invoices. This is where invoice classification rules comes in. In this demo, we will learn how to automatically create sustainability activities from payables invoices using invoice classification rules and see how emission calculations can happen automatically.

Let's get a quick overview of the process before we dig in. Invoice classification rules allow Oracle sustainability to determine which activity type and activity type attribute values to use when generating an activity for an eligible invoice distribution, using fields on the invoice line and distribution. The possible list of activity type and activity type attributes are pulled in from emission factor mappings. The process works at invoice distribution level.

Each eligible invoice distribution goes through a rule evaluation process. The outcome of rule evaluation process is an activity type and activity type attribute that apply to that distribution. Oracle Sustainability then uses this information to create the activity, derive the amount and quantity measured from the invoice distribution, and calculate emissions.

It then runs validation checks to see if the activity has all the information needed to be posted to the ledger. You can then go back to the Manage Activities page to review these activities, make any corrections if necessary, and post them all to the ledger. Let's learn how to set this up to ensure a large volume of invoices can be automatically processed with minimal intervention. Let's get going.

I have logged in as a sustainability analyst. I chose the Sustainability tab. And click on Invoice Classification Rules page. As you can see, I have already defined some rules here. I can search and sort to find the rules I want to work on. Exclusion rules get evaluated first. So let's first go there. I'm clicking on Exclusion Rules toggle.

Exclusion rules identify which invoice distribution should not end up as activities. If the invoice distribution matches any of these exclusion rules, we do not process that distribution. For example, I have a rule here that says I want to exclude all prepayment invoices. I have another that excludes all tax lines. This is because my company has determined that the information contained in these invoices doesn't have any emission calculation implication.

Let's say we have invoice distributions that do not meet any exclusion rule criteria. Those distributions will be matched against assignment rules. I'm now going to click on Assignment Rules toggle. Let me sort by rank here.

All these rules will be evaluated in the sequence of rank. If an invoice distribution meets the condition of a particular rule, processing stops there for that distribution. Here are the rules that identify which activity type and activity type attributes must be used when creating activities for all distributions that meet the given rule conditions.

Let's create a new rule. I want to classify all invoices for office chairs or sit-stand desks as furniture purchase so that I can use an industry standard spend-based factor to estimate the scope 3 emissions my company is responsible for. I can do that by clicking on Create Rule.

And give a new name to the rule. Furniture. Your start date. And this is going to be an assignment rule. And I choose to give the rank 140.

Choosing the right rank is important here. If the invoice meets the criteria of any rule that's ranked better than this one, then this rule will never be evaluated. I know that all the rules ranked above 140 do not meet the criteria of the invoice I'm trying to classify. So I'm going ahead with this particular rank.

The activity classification represents the combination of activity type and activity type attributes. The list of valid combinations comes from emission factor mappings you have already loaded. Let me pick Furniture here. Purchase Goods and Services and Furniture.

Let me choose Apply Conditions as Any because I want to check for either line description of chair or desk. And now I can add a rule condition. Click + here. And look for Line description. Look for Contains. And enter Chair. Done.

Let me add another condition. This time, I'm going to again choose the Line description. And choose Contains again. And say Desk.

So what this rule says is, if the invoice line description contains either a chair or a desk, create an activity of type Purchased Goods and Services and with a spend type of Furniture. I now click Save. I have successfully created that particular rule.

Now I have an invoice that contains three lines. The invoice is fully validated and accounted. One of the lines is for an ergonomic chair. Another is for a sit-stand desk. And the third one is for a filing cabinet.

I'm sure it's easy for you to see that the rule we just created takes care of the first two lines. But the third line will not meet the rule conditions. So what happens to the invoice distribution that do not meet any of the rule criteria? As part of the setup, when you configure profile options, you will need to identify the default activity type for invoice classification. I had set it up to be Purchased Goods and Services here.

Now let's see how activities get created for this invoice. I'm now in the Scheduled Processes page. I click on Schedule New Process. And I search for Generate Sustainability Activities for Payables Invoices. Click OK.

I need to choose the sustainability ledger. Only invoices that are assigned to a legal entity that is part of the ledger you choose will be processed into activities. You can optionally restrict this to a single legal entity within the ledger. In my case, I only have one legal entity for the ledger. So I can skip this.

You can also optionally enter the start and end dates. If you do not enter these dates, the start date will be defaulted to the first date of the starting period defined on the sustainability ledger. End date will be defined as defaulted to this date. Let me choose yesterday's date as my start date. When you go live, you can schedule this job to run every day or every week to process the fresh batch of invoices that became eligible in the meantime. Now let me submit this job.

As you can see, three activities were created, one for each invoice line. If any of these lines had multiple distributions, you would see more activities appearing here. As expected, that rule we just created took effect on two of the activities.

For those activities, the spend type was identified correctly. And emission calculations also happened fine. One activity, for the filing cabinet, didn't get classified correctly. And there is an alert. Let me review this activity by clicking on the activity number.

You can see that the activity has all the necessary details from the invoice. Since we have associated the amount measured to the activity type, the amount measure was automatically derived from the invoice. You can see that the emissions couldn't be calculated. That's because the activity got classified as Purchased Goods and Services. But no spend type was assigned. Without the spend type, no matching emission factors will be found.

Now I have two options. Option one: I can edit this activity and identify the spend type. This is the best option if we do not anticipate such invoices in the future. Option two: I can first go update the rule to ensure that this invoice gets classified as furniture. Then I can come back in and delete this particular activity. The next time the job runs, this invoice line and any other lines that meet this criteria will then be classified correctly.

In this demo, I will go with option one. Let me click on Edit. I can update the spend type to Furniture. And click Save. Now you can see that the emissions got calculated correctly. I can now post this activity to the ledger.

That concludes the demo. We have learned how to generate sustainability activities from payables invoices by creating invoice classification rules. The application of rules, automatic derivation of measures, and automatic emission calculation can make this a touch-free process. Thank you.