In different countries a number of companies prefer to accept goods formally before being invoiced by the supplier. To record and view customer acceptance, Oracle Order Management integrates with Accounts Receivables and Costing. The customer can accept the goods in any or in combination of the following ways:
-
Pre-Billing Acceptance (goods are accepted before Invoicing) – Implicit or
Explicit
- Post-Billing Acceptance (goods are accepted after Invoicing) – Implicit or Explicit
What is ‘Customer Acceptance’?
Customer Acceptance is new functionality with R12 that gives a seller control over the timing of customer invoicing or revenue recognition and provides the ability to link either of these events with customer satisfaction of a product or service delivery. Where invoicing used to be automatic based on the standard fulfillment criteria of shipping a product or service, it can now be delayed until explicit or implicit customer acceptance criteria are received and logged against a given shipment (sales order line).
There are some initial concepts that must be understood before configuring and using Customer Acceptance, and they will be reviewed here.
First, there are 2 fundamentally different flows for handling acceptance: Pre-Billing Acceptance and Post-Billing Acceptance. Let’s look at each separately and how they fit into the fulfillment flow.
For ‘Pre-Billing Acceptance’, as the name implies, acceptance must be recorded before AR invoicing can be
processed. This is accomplished by preventing the Sales Order Line from interfacing to AR until the acceptance is recorded. Think of it as the Customer saying ‘Do not bill me until I approve the shipment!’ and having Oracle comply with that demand.
‘Post-Billing Acceptance’, also as the name implies, affects what occurs after AR invoicing has already been
processed. Revenue recognition will not occur for a given line/AR invoice until an acceptance is recorded. From the Customer’s perspective, there is no change with this type of acceptance. They still receive their invoice with the normal timing relative to a shipment being confirmed. So in that respect, this acceptance type is less customer focused and more of an internal (seller’s) process.
We reviewed the 2 acceptance flows, but within each one there are 2 types or acceptance – Explicit and Implicit.
Explicit acceptance is one that requires an actual acceptance to be recorded, so the sales order line workflow will NOT progress until this is recorded. It requires action either on the part of the customer or customer service representative in order to open the gate for customer billing (AR invoicing) or revenue recognition.
Implicit acceptance, on the other hand, is one that will automatically be generated when a certain interval of time has lapsed beyond a specific event for the order line. This interval and the event it applies to are both configurable in AR and will be explained in more detail later.
Note: Even if ‘implicit’ acceptance is engaged, you have the option to enter ‘explicit’ acceptance prior to the
number of expire days elapsing.
So based on the above terms,, there are 4 kinds of Customer Acceptance as listed below:
1. Pre-Billing Explicit
2. Pre-Billing Implicit
3. Post-Billing Explicit
4. Post-Billing Implicit
The seller does not have to rely on any one of the above types, but rather has the ability to use any or all of them in the course of their fulfillment cycle.
Customer Acceptance Setups:
Order Management:
1) System parameter in OM "Enable fulfillment acceptance " to "Yes"
First, and foremost, you must enable the System Parameter in OM. Without it, Customer Acceptance simply will not work. The reason it is setup as a parameter, with a default of ‘No’, is that when enabled there is an AR API that is engaged for every sales order line. This requires system resources and can result in a performance penalty for the application, so you don’t want to enable this functionality unless you intend to use it.
2) Show field using the Folder options to show the fields related to customer acceptance.
Use Folder – Show Field to add the required mix of acceptance fields, then save as a named folder, and make it your default with the option of making it public. If Customer Service intends to use this functionality, I would suggest you setup a public folder so that every CSR sees the same data when responding to customer inquiries.
Sales order lines- Others tab
3)Enable function security within the Menu
Below are 2 OM functions which must be enabled on the menu structure in order to use Customer Acceptance. By
default, they should be enabled on the ‘ONT_SALES_ORDERS’ menu, but you might need to verify these in System Administrator if you run into any difficulties. By enabling or disabling these functions within a given
responsibility, you can enforce functional security for who can and cannot perform Customer Acceptance.
Sales Orders: Fulfillment Acceptance
Sales Orders: Update Acceptance Attributes
4) User Access to Order Information Portal (required to perform
Manual Explicit Acceptance)
Receivables (Revenue Management):
1) Revenue contingency
A ‘revenue contingency’ is an AR setup that affects revenue recognition, and ties in with the workflow associated with Customer Acceptance. Some seeded revenue contingencies are provided in AR, but you can add new ones as need be
Contingency removal event is one of the required fields in setting up revenue contingency
The removal event determines which Customer Acceptance flow will be engaged in the workflow.
For Pre-Billing Acceptance, set Removal Event to ‘Invoicing’
For Post-Billing Acceptance, set Removal Event to ‘Customer Acceptance’
4
A ‘revenue contingency’ is an AR setup that affects revenue recognition, and ties in with the workflow associated with Customer Acceptance. Some seeded revenue contingencies are provided in AR, but you can add new ones as outlined below. You can define new contingencies using the Revenue Management Super User responsibility.
The example below is a revenue contingency for Pre-Billing Implicit Acceptance, automatically recorded 3 days after Ship Confirm.
Fig. 4 – Revenue Contingency Example (implicit pre-billing acceptance)
The removal event determines which Customer Acceptance flow will be engaged in the workflow.
For Pre-Billing Acceptance, set Removal Event to ‘Invoicing’
For Post-Billing Acceptance, set Removal Event to ‘Customer Acceptance’
The choices for Removal Event are: Contingency Expiration, Customer Acceptance, Invoicing, Payment, Proof of Delivery.
If you want Explicit Acceptance, leave ‘Optional Time Attributes’ blank. You will record the actual acceptance data at the appropriate time in the Order Information Portal (OIP).
If you want Implicit Acceptance, select an Attribute Event and Days Added to Event Attribute. The acceptance will be automatically generated by a request set that can be scheduled to run daily in the
application.
Choices for Event Attribute are: Fulfillment Date, Proof of Delivery Date, Ship Confirm Date, or Transaction Date.
Assignment Rules can be configured to automatically assign the desired revenue contingency to a sales order line.
Choices can be as general as the Operating Unit, or as specific as a single Item when shipped to a specific Customer.You define the business scenarios that require Customer Acceptance with these rules, or you can optionally assign the acceptance manually in Order Management before booking the sales order.
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