Overview of AP / AR Netting

Oracle AP/AR Netting allows you to net your Payables invoice balances against your Receivables invoice balances for those
Customers who are also your Suppliers.
For example, If you have a customer who is also your supplier, then rather than him paying you and then you paying him,AP/AR
netting allows you to pay the net difference between how much you owe the supplier and how much he owes you.
After establishing a netting agreement with such trading partners, you set up the agreement and the rules associated with it in
eBusiness Suite and you can then start to net AP and AR transactions.
Setup Requirements for AP / AR Netting
1. Define a Netting Bank Account in Payables
Responsibility: GECM Setup User
Navigation: Setup > BanksBank account

Which account we will use for netting ,for that both the checkbox should be checked so that we will be use this account for netting

Enable the checkbox Multiple currencies Allowed ,if you want to do the multicurrency payment.
Netting Account=Yes

2. Associate your Bank Account to the Receipt Class AP/AR Netting in Receivables
Responsibility: GEAR Setup User
Navigation: Setup > Receipts > Receipt Class
For ar/ar netting receipt class creation method should be AP/AR Netting

Attached the Bank account in the receipt class

3. Check the Allow payment of unrelated transactions in Receivables

Responsibility: GEAR Setup User
Navigation: Setup > System > System Options

4. Define Sequential Numbering Setup

To Define the sequential Numbering, Add the profile option Sequential Numbering for the responsibility GEAR Setup User (US
Appliances)

Add the profile option Sequential Numbering for the responsibility GEAP Setup User (US Appliances)

5. Define Payables Document Sequence Setup

Navigation: Application > Document > Define

Types : sequence numbering type

Sequence numbering types are Automatic, Gapless, and Manual.

Automatic numbering assigns a unique system generated number to each document. Automatic numbering is sequential
by date and time of creation.

Gapless numbering also automatically generates a unique number for each document, but ensures that the document
was successfully generated before assigning the number. With Gapless numbering, no sequence numbers are lost due to
incomplete or failed document creation. This is a legal requirement in some countries.

Manual numbering requires a user to enter a unique number for each document created. With Manual numbering,
numerical ordering and completeness are not enforced. Users can skip or omit numbers when entering the sequence
value.

Assign the Document sequential to categories.

Navigation: Application > Document > Assign

Select Assignment

Define Receivable Document Sequence Setup

Navigation: Application > Document > Define

Assign the Document sequential to categories.

Navigation: Application > Document > Assign

Select Assignment

6. Netting Agreement .
Creating netting agreement to setup the rules that will decide which trasactions are selected for netting and how they are processed
once selected.

Responsibility: GEAR Setup User

Navigation: Receipt NettingNetting Agreement
Select create Agreement

Operating Unit: select the operating for which you want to use this agreement
Netting Agreement Name: Enter a agreement name
Start date : enter one date from which date you want to use this agreement
Netting Bank Account: which account we created for netting account ,enter here that account.
Select only past due Receivables Trasations: Yes :system will select only past due Receivables Trasations

Payable Invoice Type we can chose for netting only Standard invoice,Credit Memo,Debit Memo,Mixed Invoice.
Receivable Invoice type we can chose for netting only Invoice, Credit Memo,Debit Memo,Chargeback.

Step 7.create invoices in Payable and transactions in Receivable

Invoices in Payable
Invoice Number : AP_NETTING_2016

Transactions in Receivable

8. Netting Batch
Responsibility: GEAR Setup User

Navigation: Receipt NettingNetting Batch

Settlement date: This date identifies the date you require the netting batch to be paid/settled.
Settlement date will be used as the Receipt date for the Receipts created from the netting batch. GL date is used for GL date of the
receipt when netting creates a AR receipt.

Netting Data Extract output.