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HWI Client Needs Freight Accrual Mechanism To Book Freight Liability W PO & Pay Invoices Against It (Doc ID 2372453.1)

Last updated on NOVEMBER 07, 2019

Applies to:

Oracle Fusion Payables Cloud Service - Version and later
Information in this document applies to any platform.


HWI procures Raw Material from overseas - the freight charges to get to HWI the raw material are significant and come from multiple freight carriers (Ship, Barge, Truck haulers). Today when they create PO for Material - they have corresponding Accrual they book (approx. 15% of Material Cost) and as charges come in - the Accrual is reduced - this is an automated process in current system and they need a means to track in Oracle - likely an enhancement request.
Key points: The PO reference for Raw Material is key - that is what books the accrual and reduces it as charges come in. There are millions of dollars that accumulate in these accruals and they need to reconcile by PO and make decision of when to consider the Accrual closed and write-off remaining balance. All of this is done in Payables today.
AP Options I can think of:
Enter a Prepayment Invoice - Pay it to the (Accrual rather than Cash Account) and as charges come in - somehow apply them against the Prepayment. The Prepayment Invoice Number could be the PO number for matching. However - the real invoices would still need to be paid - and apply them to the Prepayment would mark them as being paid without actually paying them because the prepayment was never actually paid. Also - I have multiple Suppliers hauling this material and all getting paid separately - so how do I have a single Prepayment (or even a single PO) that would have multiple supplier invoices applied against it? This I believe would be AN ENHANCEMENT option that could work.
Another Option - A second PO that is created for the Freight Charges - however multiple suppliers would send invoices against this PO. Which Oracle seems to only allow 1 Supplier per PO.
Third option - Manually book a Journal in GL for the Accrual - referencing the Material PO - then Invoices coming in would need to get charged against the Accrual Account rather than the Freight Expense Account - but How can PO be referenced on Accrual JE and Invoices.


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