Nov 7, 2023
00:00
Welcome to the Oracle University Podcast, the first stop on your
cloud journey. During this series of informative podcasts, we’ll
bring you foundational training on the most popular Oracle
technologies. Let’s get started.
00:26
Lois: Hello and welcome to the Oracle University Podcast. I’m Lois
Houston, Director of Innovation Programs with Oracle University,
and with me is Nikita Abraham, Principal Technical Editor.
Nikita: Hi everyone. In our last episode, we looked at Invoice to
Cash, which is the first business process within the Oracle Cloud
Financials Business Process Model. Invoice to Cash refers to
everything from the moment a receivable invoice is created until
the customer's receipt is settled and reconciled with the bank
statement. If you missed that episode, do go back and give it a
listen.
01:01
Lois: Today, David “Barney” Barnacle, our Sr. Principal ERP
Learning Strategist is back on the podcast to tell us about the
next two business processes, Procure to Pay and Asset Acquisition
to Retirement.
Nikita: Hi Barney! Thanks for being back with us. So, what is the
Procure to Pay process?
01:20
Barney: Hi Niki. Hi Lois. Good to be here. Let’s focus on Procure
to Pay or P2P for short, which is an integral financial process
within any organization. It integrates purchasing with accounts
payables activities and involves a series of tasks. These could
include placing a purchase requisition or a purchase order,
receiving and inspecting the delivered goods or services, capturing
the supplier invoices, which is the company’s liability to the
supplier, matching the unit quantity and price to the original PO,
calculating the relevant taxes or withholding taxes, approving the
charges for final payment by the company, and finally, recording
the bank statement lines with all payments made to suppliers or
employees.
02:04
Barney: Oracle Fusion Cloud: ERP's capacity to use cutting-edge
technologies for effective operations is what distinguishes it from
the competition. The true value is in the automation, which helps
enterprises improve processes, increase efficiency, and get the
latest insights and alerts.
Let me give you some examples within P2P. We have something called
Intelligent Document Recognition or IDR for short, which is a fully
integrated invoice recognition solution. As you know, many
suppliers send payables invoices electronically via email. With
Oracle’s cloud solution, IDR extracts invoice information from the
emailed documents to create invoices and then imports them directly
into Payables.
Another interesting feature is the ability to calculate the trip
distance in mileage expense entry by using the Oracle Maps Cloud
service. For mileage expense types, on the Oracle Maps page, you
can enter the start location, subsequent stops, and the end
location. It’s that easy.
03:09
Lois: Oh wow, that’s pretty cool. I remember having to track my
miles manually many years ago. What a nice feature. So, is creating
an invoice the beginning of the P2P process?
Barney: No, Lois. Invoicing is not the beginning but just one part
of the larger parent P2P process. The P2P process can be broken
into three key phases. These phases are set in a repeating loop and
fine-tuned and improved with every cycle. The three phases are the
Purchasing process, the Receiving process, and finally, the Payment
process.
03:46
Barney: During the Purchasing process, purchase requisitions for
goods and services are created and approved. Suppliers are
evaluated and selected. And then, purchase orders are issued for
the required goods and/or services.
Next is the Receiving process, where goods and services are
received. Receiving documents are then reviewed and logged for the
goods.
In the final Payment process, which includes the Invoice, Payment,
and Reconciliation sub-processes, invoices are received and invoice
processing is completed, recording the supplier’s liability.
Invoices are reconciled and cross-checked with the original
purchase orders and goods receipts or receiving documents. This is
called purchase order or receipt matching, and it ensures that the
enterprises only pay for goods and services it has ordered and
received. Errors are recorded and corrected, and approved invoices
are paid, reducing the supplier’s liability. Payments are then
reconciled with bank statement lines.
04:47
Nikita: OK. So, there are multiple activities, like purchasing,
receiving, and invoicing, which are part of the P2P process. But
how do these activities flow with regard to the Oracle Fusion
Cloud: ERP application?
Barney: The Procure to Pay process spans multiple departments
within an organization. And in the Oracle application, it covers
different modules like purchasing, payables, cash management, and
general ledger.
Demand generation for goods or services can originate in the
Manufacturing departments based on planned or actual orders, or by
internal employee orders for goods or services that the business
requires.
05:23
Barney: This demand gets converted into requisitions within the
Purchasing department. Everything from the creation all the way to
the authorization of these requisitions is performed within the
Purchasing department. Once the requests have been authorized, the
buyers or procurement agents consolidate the requests and convert
them into a purchasing document, like a purchase order.
Next, the process of receiving goods or services against the
purchasing document is typically carried out by the employees
requesting those goods or services or by the staff at the receiving
location.
05:54
Nikita: And a receiving location could be a warehouse, for example,
right? So there is a purchasing department processing purchased
orders and another receiving department recording the receipt of
goods.
Barney: Exactly, Niki. And once the goods are received and
recorded, the transaction flows into the Payables department within
the finance business function. Supplier Invoice to Payment, which
comes within the finance business function, touches internal as
well as external parties involved with an organization.
06:23
Barney: For example, when talking about the process of expense
reimbursement, employees are considered internal parties. In this
process, employees record and submit expenses incurred on behalf of
the organization and are reimbursed for the authorized items.
For an external party, the process of recording invoices against
goods or services used by the organization and the subsequent
process of making payment to clear these invoices is also a key
part of the Procure to Pay process.
For example, organizations purchase assets like printers or
furniture, which are recorded as part of the purchasing process.
Oracle Assets is a fully integrated solution to track internal
products and assets at internal or external sites, while providing
the ability to capture financial transactions with back-office
automation.
07:10
Barney: And then there is the Treasury department that some
companies may call the Cash department, which, at periodic
intervals, receives bank statements and reconciles the statement
lines with payments made to suppliers. The key focus of the
Treasury department is to determine the cash position and to assist
in managing the cash forecasting process.
These are just some activities of the Procure to Pay process that
touch multiple departments within the business.
07:35
Lois: You mentioned expense reimbursement and making payments to
external suppliers for goods received. How does this fit into the
Oracle Financials Business Process Model?
Barney: As we discussed, P2P involves multiple processes spanning
procurement to cash, specifically payables invoice to cash. Let me
list out the processes that are aligned with Oracle Financials
business processes as part of the P2P process. First, we have the
Expense Report to Reimbursement process that deals with getting
business expenses reimbursed for employees and contract workers,
also known as contingency workers.
08:13
Barney: The Supplier Invoice to Payment process deals with
recording liability for purchases made by the organization directly
from external parties and paying for those purchases.
The Capture Tax process deals with applying transactional tax or
withholding taxes based on the information entered in an invoice
and invoice line level, and legislative requirements.
The Bank Transaction to Cash Position process deals with matching
bank statement lines to payments made to suppliers. Accountants
working in the Treasury department can prepare the expected cash
position based on the expected receipts and payments within that
specific period.
08:51
Lois: Each of the Oracle business processes you mentioned seem to
be aligned with the general flow of activities in a typical
organization. What are the advantages of having such a streamlined
P2P process?
Barney: A streamlined and automated Procure to Pay process helps
organizations remain compliant with supplier-related contractual
terms and legislative tax requirements. It also helps them reduce
the risk of fraud with risk migration controls in place and
automation within the process.
09:18
Barney: It results in better supplier management in terms of
sourcing and evaluating suppliers, and monitoring and controlling
supplier invoice aging, resulting in timely payments being made to
suppliers.
The ability to capture supplier invoices from multiple channels,
including scanning and online submission by suppliers to enable
batch processing of payments, results in cost reduction for an
organization and saves hours that would have been spent manually
processing invoices and payments. Most importantly, a streamlined
Procure to Pay process provides the ability to capture data at each
stage, which helps with future decision-making.
09:56
Nikita: What are the job roles associated with the Procure to Pay
business process?
Barney: There are a few key job roles in the P2P business
process.
There’s the employee job role, which identifies the person as an
employee who can create a requisition and an expense report. The
Procurement Agent job role is responsible for transactional aspects
of procurement processing. The Expense Audit job role reviews and
audits expense reports daily to ensure compliance with the
company's reimbursement policy. The Accounts Payable Specialist job
role enters invoices, ensuring accuracy, uniqueness, and
completeness, and matches invoices to the correct purchase orders
or receipts, all while making sure that the invoices comply with
company policy. The Accounts Payables Supervisor job role oversees
the activities of Accounts Payable Specialists, initiates and
manages payment runs, and resolves non-data entry holds. And
finally, the Cash Manager job role protects and develops the
company's liquid assets, maximizing their use and return to the
organization.
10:58
Lois: For an organization to have an optimized Procure to Pay
process, I’m sure they need to track certain key performance
indicators, right?
Barney: Yes, and they do. Some of the KPIs that are tracked for the
P2P process are Expenses vs. Budget, Invoice Payment Days, %
Discount Taken, Time to Settlement, Time to Reconcile, and Payables
Overdue Invoices.
11:20
Lois: Barney, earlier you spoke about how easy it is to raise
expenses and use the Maps functionality. Are there other emerging
technologies used by the ERP application in the Procure to Pay
process?
Barney: Yes Lois, Oracle Fusion Cloud: ERP uses the latest emerging
technologies like artificial intelligence, digital assistants, and
image scanning in different areas of the Procure to Pay process.
Adaptive Intelligence models are used in the Payables module to
calculate and recommend discounts for single payments. Intelligent
Document Recognition is used to scan and automate the invoice
creation process in Payables, incorporating the required reviews
and approvals. Within the Expenses module, Digital Assistants are
used to punch in expenses and submit them automatically. You can
also click photos of receipts and process them to input the
required expenses.
12:16
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12:47
Nikita: Welcome back. Barney, you mentioned that Payables is one of
the starting points to capture or track assets in the application.
Can you help us understand how this is built in to Oracle Fusion
Cloud?
Barney: In the Oracle Financials Business Process Model, Asset
Acquisition to Retirement is a key process that covers all the main
activities that occur during the life of an asset, anything from
acquiring it to disposing it at the end of its useful life. There
are many things a business will need to do with assets. Capture
asset acquisition, record financial transactions, track asset
movement for reporting and regulatory purposes, and so on. We can
manage these assets and simplify fixed asset accounting tasks with
the help of Oracle Fusion Assets. It has the ability to record
leased assets in line with the requirements of the two new
accounting standards.
13:37
Barney: Oracle Assets integrates with other modules like Payables,
Subledger Accounting, and Projects. You can add assets and cost
adjustments directly into Assets from invoice information in
Payables. The Create Mass Additions for Assets process sends valid
invoice line distributions and associated discounts from Payables
to the Mass Additions interface table in Assets. You can then
review the mass addition lines in Assets and determine whether to
create assets from them.
14:03
Nikita: So, what are the different stages in the Asset Acquisition
to Retirement life cycle? I’m sure the first one has to be
acquiring the asset.
Barney: You’re absolutely right there, Niki. The Asset Acquisition
to Retirement life cycle starts with the Asset Acquisition stage. A
business can acquire an asset through the Procure to Pay life cycle
and record the asset in the asset register. An asset can be
acquired by purchasing it, leasing it, constructing/developing it
(i.e. by the use of Oracle Fusion Projects), or by mergers or
acquisitions. And by acquiring assets, we mean capturing and
recording the purchase of assets from all business locations.
14:42
Barney: The next stage is Monitoring and Tracking. Once an asset
has been created and added to the asset register, you can perform
various activities during the asset’s life cycle. These activities
could be changing its category or financial details, transferring
assets, i.e. from locations, or running or changing
depreciation.
Any finally, we have Retirement. When you sell an asset, or an
asset is lost, or the asset reaches the end of its useful life, you
must remove it from the asset register.
15:14
Lois: And before we let you go for today, remind us – what job
roles perform the functions related to this life cycle, Barney?
Barney: There are two main job roles involved in this process. One
is the Asset Accountant, the basic user who performs all functions
in the asset management module. Then there’s also the Asset
Accounting Manager who has much of the same access as the asset
accountant, along with extra access in terms of reporting and
running accounting processes.
15:40
Nikita: I think we’ve discussed these two important Oracle business
processes quite thoroughly. Thank you so much, Barney, for taking
us through them.
Barney: Thanks for having me!
Lois: Yes, thanks, Barney. This is a great introduction. Next week
will be our final episode on the Oracle Financials Business Process
Model, where we’ll cover the Accounting Transformation and Budget
to Report business processes. And don’t forget to head over to
mylearn.oracle.com to learn more about these processes and get
certified. Until next time, this is Lois Houston…
Nikita: And Nikita Abraham, signing off!
16:13
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