KnowOracle Team – Subject Matter Experts

Dear Readers,        We have a great team of contributors from different areas of Oracle ERP. Looking for your support if you are also like to contribute and support.

below  is list of Contributors / Experts. Be free to post your questions and queries.

1.  Ashish Jain> : Oracle HRMS , Oracle EBS Implementation – Project Management ,  Mobility Applications

2. Devendra Gulve> Oracle Supply Chain & Manufacturing Modules

3. Fabiana Berrozpe  –> Oracle EBS Techno-Functional and Latin American localizations.

4. Gaurav Upmanyu –> Oracle Supply Chain ( Order to Cash ) & Configurator

5. Lokesh Surana –> Oracle EBS Technical

6. Md Ahmad -> Oracle HRMS , OTL & Payroll

7.  Muthu Vade -> Oracle EBS Technical – Anything and Everything , Tools & Technology

8. Neeta Shelar> Oracle Projects Accounting , Billing , Costing

9. Puneesh Lamba – ERP Expert

10.  Shivmohan Purohit – Oracle EBS Financials


Conceptually – Step by Step Accounting Process – In General

** This is just an overview of the accounting process. **

The accounting cycle, also commonly referred to as accounting process, is a series of procedures in the collection, processing, and communication of financial information.

Financial information is presented in reports called financial statements. But before they can be prepared, accountants need to gather information about business transactions, record and collate them to come up with the values to be presented in the reports.

Accounting Cycle Diagram

The accounting cycle has eight basic steps, which you can see in the following illustration. These steps are described in the list below.


  1. Transactions

    Financial transactions start the process. Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves the exchange of the company’s assets, the establishment or payoff of a debt, or the deposit from or payout of money to the company’s owners.

  2. Journal entries

    The transaction is listed in the appropriate journal, maintaining the journal’s chronological order of transactions. The journal is also known as the “book of original entry” and is the first place a transaction is listed.

  3. Posting

    The transactions are posted to the account that it impacts. These accounts are part of the General Ledger, where you can find a summary of all the business’s accounts.

  4. Trial balance

    At the end of the accounting period (which may be a month, quarter, or year depending on a business’s practices), you calculate a trial balance.

  5. Worksheet

    Unfortunately, many times your first calculation of the trial balance shows that the books aren’t in balance. If that’s the case, you look for errors and make corrections called adjustments, which are tracked on a worksheet.

    Adjustments are also made to account for the depreciation of assets and to adjust for one-time payments (such as insurance) that should be allocated on a monthly basis to more accurately match monthly expenses with monthly revenues. After you make and record adjustments, you take another trial balance to be sure the accounts are in balance.

  6. Adjusting journal entries

    You post any corrections needed to the affected accounts once your trial balance shows the accounts will be balanced once the adjustments needed are made to the accounts. You don’t need to make adjusting entries until the trial balance process is completed and all needed corrections and adjustments have been identified.

  7. Financial statements

    You prepare the balance sheet and income statement using the corrected account balances.

  8. Closing the books

    You close the books for the revenue and expense accounts and begin the entire cycle again with zero balances in those accounts.

Conceptually : Record to Reporting Cycle – R2R

Record to report or R2R is the management process for providing strategic, financial and operational feedback to understand how a business is performing.

This process involves collecting, transforming and delivering relevant, timely and accurate information to all stakeholders inside and outside the organization, to provide insight into how their expectations have been met.

It covers the steps involved in preparing and reporting the overall accounts which are typically stored in a general or nominal ledger and managed by a comptroller. The detailed steps involved are:

  • data extraction
  • data collection
  • data validation
  • data transformation (generation of voucher)
  • voucher posting (to general ledger)
  • storing vouchers in de-normalized and compressed format
  • generating analysis account trial balance or consolidated analysis account trial balance
  • generating user-defined financial and management reports

In ERP systems , This is part  month end  process in which basically user will close all the periods  and import all the journals in GL from other modules
(Payable, Receivable, Fixed Assets etc.). Then run all the month end GL reports like Trial Balance, Account Analysis  etc.

Following are broader division of activity involved in Record to Report Cycle


  • Intercompany
  • Multiple systems
  • Bank
  • Subsidiary to main set of books
  • Customer
  • Vendor

General Accounting

  • Journal Entries
  • Intercompany accounting
  • Book closures
  • Trial Balance preparation
  • Accruals
  • Consolidations
  • Cost Accounting

Record to Report process might seem simple but it require considerable efforts. It is the only process scrutinized by outside auditors who draw conclusions about controls in place during financial close and reporting cycle.

Conceptually : Order To Cash Cycle – O2C

“Order to cash” (O2C or OTC) normally refers to the business process for receiving and processing customer sales.

Order to Cash, referred to as O2C or OTC, is the end-to-end business process for receiving and processing customer orders (sales). The Order to Cash process is initiated with the establishment of a new customer. The customer enters an agreement with your company, a sales contract is created and a credit rating is established. Orders are then received from your customer, allowing your business to begin fulfilling the orders, invoicing and collecting cash. Many businesses also save the data from this process and use it to develop analytics to better understand and plan for future fulfillment of their customer’s needs and expectations.

The fulfillment portion of the Order to Cash process is particularly important – this is where order taking meets supply chain delivery. Products ordered by the customer must be physically removed from stock or manufactured, prepared for shipment, and delivered to the customer. Your inventory management, production/operations and logistics functions are key to ensuring that the order can be fulfilled and meet customer needs for on time delivery.

The final steps in the process include invoicing, collections and cash application. Once your customer receives the products ordered and is provided with an invoice or bill, they must then pay for the products they have received. The billing and collections process involves monitoring all inbound invoice payments and working with your customers to collect any payments in arrears.

If we consider the ERP system flow, this is typically categorized into the following eight sub-processes:

  • Customer Entry
  • Order entry (creation of order / booking of order)
  • Order fulfillment (physical & digital fulfillment)
  • Distribution
  • Invoicing
  • Customer payments / collection
  • Cash Application
  • Deductions (If invoice Short Paid by Customer).
  • Collection

Order to case in Oracle

  • This cycle starts with the Order Management Module where an order is created with 5 lines. This order is then booked and passed to Pick Release.
  • Pick Release finds and releases the order and creates a move order request. The process of transacting move orders creates a reservation against the source subinventory.
  • Ship confirm is the process of confirming that items have shipped. Shipping Execution confirms that the delivery lines associated with the delivery have shipped.
  • ITS creates a trip and related stops for all eligible deliveries that has not been assigned to a trip.
  • A manual Invoice is created based on the Customer and the items, which are ordered previously.
  • In order to complete the business cycle, these manually created invoices are then moved to the General Ledger Module by way of a Concurrent Program, and finally after a review of these Journal Entries in the General Ledger they are Auto-Posted in the respective accounts, thus ending the complete cycle.

Thanks – Shiv

Conceptually – Procure to Pay Cycle – P2P

Procure to pay (purchase to pay or P2P) is the process of obtaining and managing the raw materials needed for manufacturing a product or providing a service. It involves the transactional flow of data that is sent to a supplier as well as the data that surrounds the fulfillment of the actual order and payment for the product or service.

The Typical Procure-to-Pay Cycle

These steps are usually involved in your typical procure to pay cycle:

  • Identification of Requirement
  • Authorization of Purchase Request
  • Final Approval of Purchase Request
  • Procurement
  • Identification of Suppliers
  • Inquiries
  • Receipt of the Quotation
  • Negotiation
  • Selection of the Vendor
  • Purchase Order Acknowledgement
  • Advance Shipment Notice
  • Goods Receipt
  • Invoice Recording
  • 3 Way Match
  • Payment to Supplier

Identification of requirement: At this stage the team member of user department (Maintenance, Production, Sales and distribution, administration etc) identifies the requirement and raises the Purchase requisition /Purchase request (PR). This document normally contains description of material, quantity, approx cost, material requirement date, preferred or Standard vendor etc

Authorisation of Purchase Request/ Purchase Requisition : If the purchasing value of the PR is higher than that of approval limit of originator then this document is sent to the next higher level (normally immediate supervisor of the originator) for approval. At this stage, the supervisor may return the PR to the originator for modification or can approve it.

Final Approval of PR/Role of Inventory Controller: Once the PR has been authorised by user department then it is available to the inventory controller. Inventory controller shall review the PR and shall check the Open Purchase orders (PO), any other scheduled or planned delivery for the material. If there is any planned delivery or any existing open PO then Inventory controller can return the PR or request the user department to revise the quantity of the material. After the approval of Inventory controller, the approved PR is available to the Procurement department

Procurement: After final authorization of PR, it is available to Buyer. Buyer shall check for any existing Annual Rate Contract or any other contract for the material. If any contract exists then a Call-Off shall be generated and shall be sent to the supplier. In case no contract exists then the Buyer shall initiate supplier search and floating enquiries.

Identification of Suppliers: Buyer shall interact with the user for the possible suppliers, search on the Internet, use referrals, search data base, etc. to identify the suppliers for the material.
Floating of Enquiries: Once the suppliers are identified, Buyer shall send the Request For Quotations/Proposal ( RFQ/RFP) to the supplies. RFQ normally contains Description, Technical Specifications of the material, quantity of the material, term and conditions, delivery date of the material, date of submission of the RFQ,Quality standards, Validity of the suppliers offer, etc.

Receipt of Technical Quotations: After sending the RFQ/RFP to vendors , the buyer shall receive the quotations from the suppliers. Normally, vendors are instructed to send their quotation in a sealed envelope, mentioning only RFQ reference no on it. Quotations are normally opened and signed by 2 or more persons of the department.

Technical Evaluation of Quotations : Quotations are sent to technical department for technical evaluations of the quotations. Here, technical department shall shortlist the quotationsa based on the technical specifications
Receipt of Commercial Quotations: Once the Technical Evaluation is over, the buyer shall send the advice to shortlisted suppliers for commercial quotations, After receiving the commercial quotations, these shall be opened by two people. Quotation comparison statement is prepared by the buyer to compare all the quotations of the supplies and suppliers are short listed for negotiations.

Negotiation: Short listed suppliers are invited for negotiations. In negotiation buyer can negotiate with the supplier for :
Reduction in the prices of the materials
Year on year reduction in prices
Quantity and Price breaks
Delivery Terms and conditions
Year on year improvement in the quality
Quality i.e. reduction in the nos of defects per lot etc
Freight charges
Insurance charges
Payment terms—for extended payment terms

Selection of the Vendor: After negotiations with all the selected vendors revised quotations are prepared and vendor is finalized for award of contract based on the weightage to the commecial, technical parameters, previous performance of the vendor, delivery dates of the material, etc.

Award of Contract : After the vendor is finalized LOI can be sent to him and he may be asked to deposit security or bank guaranty before signing the agreement. Agreement can be of Fixed or Blanket (the same can be mentioned in the RFQ)

Purchase Order : The buyer shall raise the call offs against contracts (Fixed or Blanket). If the value of the PO is more than that of his approval limit he shall forward it to his supervisor for approval else he shall approve and send the purchase order to the supplier.

PO acknowledgement: After receiving the PO the supplier send the acknowledgement to buyer and buyer records the acknowledgement. If any ERP is being used for procurement functions then supplier can remotely download purchase orders and can acknowledge the PO

Advance Shipment Note : The supplier sends the Advance Shipment to buyer as soon as he ships the material to the buying organization. This note normally contains Ship Date, Transporter’s name , Airway Bill No, No of packages, weight of the packages, receiving location address, PO No, description of goods, etc

Goods Receipt : When the goods are received at the warehouse of buyer organization, the receiving staff checks the delivery note, PO no etc and acknowledges the receipt of material. After the material is received the same is checked for quantity in case of discrepancy the same is reported to the vendor.
After the quantity verification the material is kept at inspection locations and material inspector is called for inspection of material. If material is rejected by the inspector the same is sent back to the vendor or the vendor is asked for the rectification at the site. The sound material is moved to respective warehouse locations.

If the buying organization is usingERP then stock account gets debited and liability account gets credited.

Invoice Recording : Vendor send the invoice to accounts department of buying organization for claiming payment. This invoice is entered in to the system, After the entry of invoice in the system, supplier account gets credited and liability account gets debited.

Payment to Supplier : After the supplier account gets credited the payment is released to the vendor

Thanks – Shivmohan Purohit

Procure to Pay Process Flow