Slide 4 - Oracle Financials Cloud

Cross_Currency_Payments / Thursday, October 18, 2018

Slide 4 - Oracle Financials Cloud

Release 9

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Hello, my name is Narayana Palukuri. Welcome to the Release 9 Training for Oracle Fusion Payables. In this session, we’ll cover the Cross-Currency Payments enhancement we have made in this release.

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Slide 5 - Agenda

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For the enhancement covered in this training, we’ll give an overview, followed by more detail to explain how you can use it, and what business value it brings.

Then we’ll walk you through a demonstration.

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Slide 6 - Enhancement Overview

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Let’s now look at what is a cross-currency payment.

A cross-currency payment is a payment that can pay invoices in any currency, irrespective of the currency on the invoice.

For example, you can make a payment in Canadian Dollars for invoices created in US Dollars.

In today’s global business environment customer transactions go across several countries. More and more customers are looking for the business opportunities across countries. For customers to operate globally they need to be more agile, streamline their processes and look for the opportunities to improve operational efficiencies. Cross-currency payments that is payments made in a currency different from the invoice currency is one of the common payment scenarios for the customers doing business across countries. For customers especially in Europe, Asia and Latin America cross-currency payments is a very common practice.

Cross-currency payments address these challenges faced by the customers and helps them effectively manage their cross-border transactions.

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Slide 7 - Enhancements Overview: Glossary

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In order to easily relate to the actual terms provided in the application, we will be using the following terms quite frequently during this session

Cross-currency rate type: Rate type used to convert invoice currency to payment currency

Cross-currency rate: Converts the invoice currency to the payment currency

Invoice conversion rate: Converts the invoice currency to the ledger currency

Payment conversion rate: Converts the payment currency to the ledger currency

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Slide 8 - Create Invoice for Cross-Currency Payment

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Now we shall go through the enhancements made in the application to support this new feature.

Now invoices can be created with payment currency different from the invoice currency. Payment Currency field has been added to the invoices pages to support this enhancement; this field is shown in the page in ‘Show More’ mode. During invoice creation once supplier Now invoices can be created with a payment currency different from the invoice currency. The Payment Currency field has been added to the invoices pages to support this enhancement, this field is shown on the Create Invoice page in the Show More mode. During invoice creation, once the supplier information is entered, the payment currency field will be defaulted based on your setup. Users can review it and they can also change the defaulted value before saving the invoice.

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Slide 9 - Create Invoice for Cross-Currency Payment

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You can set up a default payment currency on:

A supplier site on the Invoicing tab of the Supplier Site page

An invoice business unit on the Manage Invoice Options page

Based on the setup, the payment currency will be defaulted on to the invoice during creation. Users can change the defaulted payment currency before saving the invoice during manual invoice creation.

The Payment Currency field is also added in the Create Invoices spreadsheet and Excel template. This will help users to specify the payment currency for an invoice during import using these features.

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Slide 10 - Prepayment Application to Cross-Currency Invoices

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The cross-currency payment feature is supported for prepayment type invoices also. A prepayment type invoice can also be created as a cross-currency invoice that is, the invoice currency is different from the payment currency.

The prepayment application is feature is enhanced to support cross-currency transactions. You can apply the prepayment to an invoice provided the invoice currency of the invoice and the invoice currency of the prepayment are one and the same.

Let us take an example,

If we create a prepayment with invoice currency as US dollar and payment currency as Canadian dollar.

You can apply this prepayment to any invoice as long as the invoice currency of that invoice is US dollars.

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Slide 11 - Create Cross-Currency Payments - Single Payment

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On the Create Payment page, you can create a single payment for invoices irrespective of the currency on the invoice as long as they have the same payment currency. The Invoices to Pay page has been enhanced to display all the invoices matching the payment currency entered on the payment details page.

The Create Payment page has also been enhanced to capture cross-currency rate information. You can enter cross-currency rate type information on the Advanced tab of this page for non-User rate type scenarios. You can enter user rates for User rate type scenarios using the Add Cross-Currency User Rates dialog box.

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Slide 12 - Create Cross-Currency Payments – Payment Process Request

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Similar enhancements have been made even in the payment process request.

While submitting a payment process request you can provide selection criteria based on invoice currency or payment currency or both.

So, if you submit a payment process request with payment currency as selection criteria then all the invoices matching to the payment currency will be selected for payment. Similarly if you specify invoice currency as selection criteria then all the invoices matching to the invoice currency will bed be selected for payment. If the All option is selected all eligible invoices based on other criteria mentioned in the Submit Payment Process Request page will be picked up for processing.

This page is also enhanced to capture cross-currency rate type information. Cross-currency rate information can be specified on the Payment and Processing Options tab.

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Slide 13 - Create Cross-Currency Payments

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The payment amount on cross-currency payments will be calculated by multiplying the invoice amount with the cross-currency rate.

For example if you take an invoice of 100 Pound Sterling and a cross-currency rate of 1.25, the payment amount will be 125 Euros which is arrived at by multiplying 100 with 1.25.

As part of this feature now you can even offset the credit/debit memo with standard invoices as long as they have the same payment currency then make a net payment to the supplier.

Once the payment is created, you can view the paid amounts both in the invoice currency and the payment currency on the Manage Payments page.

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Slide 14 - Accounting for Cross-Currency Payments

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You can account for cross-currency payments individually or through the Create Accounting process. The accounting entries for the payment relieve the liability account in the invoice currency with an offset to the cash or cash clearing account in the payment currency.

Let us take an example to understand the accounting of cross-currency payments in detail:

Let us consider a transaction with an invoice currency of Pound Sterling, payment currency of Euro and ledger currency of US dollars.

Let us consider the conversion rate setup as :

Invoice conversion rate that converts the invoice currency Pound sterling to the ledger currency US dollars is 1.75.

Payment conversion rate that converts the payment currency Euro to the ledger currency US dollars is 1.45.

Cross-currency rate that converts the invoice currency Pound sterling to the payment currency Euro is 1.25.

Let us look at the accounting for the invoice transaction for 100 Pound sterling and a payment of 125 Euro.

The accounting of the invoice will debit the item expense as 100 Pound sterling and the same amount about will be credited as the liability. Similarly 175 US dollars will be accounted in the ledger currency.

When it comes to accounting of the cross-currency payment, the liability will be relieved in the invoice currency that is 100 Pound sterling and Cash clearing will be credited in the payment currency for 125 Euro.

The accounting of the payment in the ledger currency will be in US dollars, in this case the liability will be relieved with the same amount as that of the invoice currency for 175 US dollars. Cash clearing will be credited for 181.25 US dollars after multiplying the payment amount with the payment conversion rate. Gain and loss will be generated for the difference between the liability amount debited and cash clearing credited. In this case it is for 6.25 US dollars.

The balancing entries for the entered currency will be generated if you choose to do that as per your ledger setup.

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Slide 15 - Cross-Currency Payments

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Cross-currency payments will benefit the customers in multiple ways. Let’s discuss them in detail.

1. Cross-currency payments are a very common scenario for large multinational corporations managing their procurement operations centrally and procuring goods from suppliers having global operations. Cross-currency payments will help them manage their cross-border transactions effectively.

2. Save costs by making payments in the most stable currency and avoiding losses due to currency rate fluctuations.

3. In some countries due to the legal restrictions payments cannot be made in a foreign currency even if the invoice was received in a foreign currency. Comply with legal regulations and make payments in the prescribed currency mandated by the country authorities for the resident supplier

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Slide 42 - Summary of Enhancement Capabilities

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Here is the summary of the features I have talked about today:

We have seen how to create a invoice with a payment currency different from the invoice currency

We have seen how to create a cross-currency payment using single payment page and the changes made in this page to support cross-currency payment

We have gone through the changes made in payment process request and how cross-currency payments can be created using payment process request.

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Slide 43 - Implementation Advice

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So that concludes the audio portion of this presentation, thank you for listening. There is no audio in the implementation advice section.

You can easily pause and rewind any of these slides if you require additional time to take in the detail.