One user posted a question on OTN forums for Payables – http://forums.oracle.com/forums/thread.jspa?messageID=3785430#3785430

Hi all,

I have a scenario involving discount on the purchase of an Item. My invoice, as received as the supplier is as follows:

$
Item xxx 100
Discount (10)


Total 90
VAT(15%) 15.50


Net 103.50


When I create an invoice in AP, I add a line with amount $100 and assign a tax of 15%
The above create a total of $115 and i add this total as header amount in the invoice.
AND in the Scheduled Payment tab at line level, I add a discount amount of $10 for the “First Discount” Info.

When I make payment for the above invoice, a pop-up appears indicating discount will be applied. But the Payment amount is $105 (Invoice header amount minus discount).

Is this the only way to treat discount in AP?
I need the payment amount to be $103.50 after applying discount.

My response was:

If I understand correctly, it seems like you are manually calculating the tax and entering it to the invoice amount. If you configure your taxes in Oracle, and then enter the invoice for the actual amount, then Oracle will know the true invoice amount which is the discount basis and create the tax line according to the configurations (the way you want it). What you are doing now is adding the tax outside Apps configuration and then expecting Apps to calculate the appropriate discount. If you want to use the standard functionality, you need to set up all dependent parts of that functionality. If tax calculation is a dependency of the discount basis, which is certainly a dependency of discount payment terms, then you need to set it up properly.

This really demonstrates one major theme that I consistently encounter with Oracle Apps consultants.  There is a lack of true understanding of the fundamentals behind the applications.  I’m not saying that is the case for this particular user because I don’t know him/her but it is the case for the majority of consultants that are staffed into most projects.

Everything in the ERP system is part of a business flow.  For a company that sells products, it is something similar to
- Leads to Quotes to Sales to [PO|Manufacturing to] Shipping to Invoice to Receipt to Cash to Financials

For Payables it is something like
- Purchasing to Receipt to Accrual to Invoice to Payment

For Discount Payment Term it is going to be
- Invoice /w Discount Terms to Payment with Discount Taken

Most vendors are going to exclude tax and freight from the discount allowed by prompt payment of the invoice.  So obviously if you want Oracle to calculate the amount to take on an invoice with discount terms, it is going to need to know what portion of the Invoice is for freight and tax.  Expecting the discount to be applied to only the $100 of a $115 ($15 from tax) invoice when the invoice is entered as $115 invoice is not going to work.  Have you ever heard of a tax line?

R12 does complicate the management of taxes with the E-Business Tax module.  I know of several consultants who are “experts” in R12 E-Tax and are getting great bill rates as they help setup the new module.

I learned R12 EBTax but not without several weeks of continuous headaches.  I won’t take projects to setup the R12 EBTax because it is tedious.  Regardless, it is important for Oracle apps consultants to be aware of how taxes work in R12 or you run into situations where things are not working the way you want and you don’t know why.  To someone who understands the applications, it jus seems like you lack common sense.

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