Remit bills receivable to your remittance bank or other financial institution to initiate the collection process from your customers. Before remitting to a bank, you must create, approve, and format/print bills receivable using a remittance batch.
Receivables lets you record the following types of bills receivable remittances:
- Standard remittances: You remit bills receivable to your bank, and the bank manages the collection process. On the bill receivable maturity date, the bank collects payment in full from your customers and transfers the funds directly to your bank account, less any fees or other charges. With standard remittances, you bear the financial risk of customer default.
- Factored remittances: You remit bills receivable as collateral in return for cash advances or loans from your bank. Receivables creates a receipt for the bill receivable upon remittance. If the bill receivable is factored with recourse, you bear the financial risk of customer default, and Receivables records a short-term debt for the default risk. If the bill receivable is factored without recourse, the bank assumes the risk of customer default, and Receivables closes the bill upon creation of the receipt.
When you create a bills receivable remittance, the receipt class determines the remittance processes, and the bills receivable remittance payment method that is assigned to the receipt class determines the accounting for the bills receivable. Receivables selects qualifying bills receivable for remittance and groups them according to the remittance bank that is assigned to each bill.
Receipts for Bills Receivable Remittances
Receivables creates a receipt for each bill receivable that is remitted to the bank. The remittance method for the remittance batch determines when a receipt is created. You create a receipt to record the accounting event of the expected fund transfer.
Standard remittances: Run the Bills Receivable Maturity and Risk program to create receipts and apply them to bills receivable, either at the maturity date plus the number of collection days or at the remittance date plus the number of collection days, whichever comes later. Receivables updates the status of the bill receivable to Closed when the receipt is applied to the bill receivable.
Factored remittances: Receivables creates a receipt when a remittance is approved. For bills receivable that are factored with recourse, the receipt is applied to short-term debt and the status of the bill is updated to Remitted. For bills receivable factored without recourse, the receipt is applied to the bill receivable upon remittance and the status of the bill is updated to Closed
Clearing Receipts for Bills Receivable Remittances
The clearing method of the bills receivable receipt class determines when Receivables clears receipts and recognizes cash in the remittance process of bills receivable. You indicate a clearing method when you define the receipt class with a creation method of Bills Receivable Remittance. You enter the number of clearing days and risk elimination days when you define the bills receivable remittance payment method assigned to the receipt class. Choose one of these clearing methods:
Directly: Receivables clears the receipt upon creation, and recognizes cash on the receipt date.
Automatic Clearing: Run the Automatic Clearing program to clear receipts on the receipt dates plus the number of clearing days. For standard remittances, the receipt date is either the maturity date plus the number of collection days or the remittance date plus the number of collection days, whichever comes later. For factored remittances, the receipt date is simply the remittance date.
By Matching: Use Oracle Cash Management to clear the receipt and reconcile cash to your bank statements