Oracle Lockbox Cash Application

Author
Date
Project

: Karun Jain
: 25-Dec-2008
: ARWECSOR

Declaration
I hereby declare that this document is based on my personal experiences and
experiences of my project members. To the best of my knowledge, this
document does not contain any material that infringes the copyrights of any
other individual or organization including the customers of Infosys.
Purpose
This document describes the Auto Lockbox in Oracle to process the
Remittance file provided by the Bank to automatically create and apply
receipts in AR.
Introduction
Lockbox is a service provided by banks to its corporate customers to
automate the receipt creation and hence speed up the cash application. Bank
sends the payment information and the receipts are imported automatically
using the Auto Lockbox functionality in Oracle Receivables therefore saving
the time and money by eliminating the manual data entry.
1.
2.
3.
4.
5.
6.
7.

Invoice is created in AR
Invoice is printed and sent to the Customer
Customer Pays to the Bank
Bank sends the payment file to Oracle
File is imported into Oracle Interface table.
Lockbox process imports the receipt and applies it to the Invoice.
Invoice is closed in AR

Auto Lockbox can also be used to convert receipts from the legacy system.

Process Diagram

Import
Data from the bank file is imported into interface table
AR_PAYMENTS_INTERFACE_ALL using the SQL Loader. Lockbox uses
control file and the transmission format to successfully load the data
into interface table.
Validate
During the validation process, lockbox checks the data in interface
table for errors. Valid records are transferred to INTERIM table. Error
records remain in INTERFACE table and can be corrected manually in
the Maintain Transmission window. Valid records can be reviewed
and updated in Quick Cash window.

Lockbox checks for duplicate receipts. Receipts are considered

to be duplicate if Customer Number, Receipt number, Receipt
amount and Currency are same for a given batch source.
Remittance amount should not be less than the total
application amount
Receipt Item number must be unique within a lockbox batch.
GL date must be in open accounting period

Post Quick Cash

In this step, lockbox creates the receipt and push the data to
receipts base able. This updates the customer balance. Receipts can
be reviewed in Receipts window and it can be reversed and
reapplied.

Lockbox Setup
1. Define Transmission Format
Navigation: Receivables Manager -> Setup -> Receipts ->
Lockboxes -> Transmission Format

Transmission format defines how the lockbox data is organized in the

bank file and it must be compatible with the control file. Following
are few frequently used record types.
Lockbox Header (Record Type = 5)
This record indicates the beginning of data for a specific lockbox. If
one transmission has data for multiple lockboxes then this record will
appear once for each lockbox. This record has information such as
Lockbox Number, Deposit Date, Origination, Destination Account,
Lockbox Amount and Lockbox Record Account.
Lockbox Number (Required)
This is the number provided by the bank and must be defined
in the Lockbox window.
Deposit Date (Required)
This is the data on which the cash was actually deposited to the
bank account.
Lockbox Batch Count (Optional)

It indicates the number of batches in the current lockbox.

Lockbox Record Count (Optional)

It indicates the number of records in the current lockbox.
Lockbox Amount (Optional)
It indicates the total receipt amount in the current lockbox.
Destination Account (Optional)
This is the organization account number in which money will
be deposited by the bank. In Oracle, it is the bank account
assigned to the Receipt class which is in turn assigned to the
Receipt batch source. While defining the lockbox, batch
source is assigned in the lockbox window.
Origination (Optional)
This indicates the Bank routing number and if specified then it
must match the Origination provided in the lockbox window.
Payment (Record Type = 6)
Lockbox Number (Required)
This is the number provided by the bank and must be defined
in the Lockbox window.
Batch Name (Required)
For a given lockbox, we can have multiple batches and each
batch can have multiple receipts. Receipts are grouped based
on the value provided in this column and the separate batch is
created in Oracle.
Item Number (Required)
This column indicates the order of receipts in the current
batch. Item number must be unique within a batch.
Remittance Amount (Required)
This is the amount paid by the customer for the current
receipt.
Currency Code (Optional)
This indicates the currency of the receipt. If it is left blank
then Oracle will default it to the value provided in the
Remittance Bank window.
Receipt Date (Required)
This is the data on the check deposited by customer.
Check Number (Required)
This is number printed on the check. This is used to populate
the Receipt number field on the Receipt window.
Customer Number (Optional)

It indicates the customer the receipt belongs to. This is

optional and automatically populated by Oracle if Auto
Associate is enabled for the lockbox. If lockbox is not able to
derive the customer number then the receipt will be created
with status Unidentified.
Invoice1-8 (Optional)
It indicates the Invoices to be paid using the current receipt.
It is not required to populate all the eight columns. All the
eight columns can be left blank and Invoices can be specified
in the overflow record. If no Invoice is mentioned then the
receipt will be created with status Unapplied.
Amount Applied 1-8 (Optional)
It indicates the receipt amount to be applied to the
corresponding Invoices. If nothing is mentioned in this column
the Oracle starts with the oldest schedule first. Amount
mentioned in these columns are in the Invoice currency.
Amount Applied From 1-8 (Optional)
It indicates the receipt amount to be applied to the
corresponding Invoices. Amount mentioned in these columns are
in the Receipt currency.
Comments (Optional)
It is a free text column and value entered in this field appears
on the Receipt Window in the comments field.
Overflow Payment (Record Type = 4)
Lockbox file may or may not have Overflow Payment. Overflow
Payment record is always associated to a Payment record and
defines additional Invoices to be paid against the receipt.
Payment and Overflow record are linked by the filed
ITEM_NUMBER.
Overflow Indicator
This column indicates if overflow records exist for the current
receipt. Set the overflow indicator to 0 if there are overflow
records and set it to 9 for the last overflow record for a given
receipt.
Overflow Sequence
This column indicates the order of Overflow records.
Invoice1-8 (Optional)
It indicates the Invoices to be paid using the current receipt.
It is not required to populate all the eight columns. If no
Invoice is mentioned then the receipt will be created with
status Unapplied.
Amount Applied 1-8 (Optional)
It indicates the receipt amount to be applied to the
corresponding Invoices. If nothing is mentioned in this column
the Oracle starts with the oldest schedule first. Amount
mentioned in these columns are in the Invoice currency.
Amount Applied From 1-8 (Optional)

It indicates the receipt amount to be applied to the

corresponding Invoices. Amount mentioned in these columns are
in the Receipt currency.
Example
Following data will create receipt CHECK01 to pay three Invoices
INV001, INV002 and INV003. In one payment record, we can pay up
to eight invoices but it is not mandatory to use all the eight columns
Invoice1-8.

Invoice1

Amount_applied1

Overflow Indicator

SequenceOverflow

Receipt Date

Check
Number

NumberItem

$35
0

12MAR
200
8

INV0
01

$10
0

BOALKBX
01

B0
1

BOALKBX
01
BOALKBX
01

B0
1
B0
1

BOALKBX
01

AmountRemittance

BOALKBX
01

TypeRecord

NameBatch

Lockbox
Number

In the following example, receipt CHECK02 does not have any

overflow records.

B0
1

4
4

0
1

CHECK
01

0
1
0
1
0
2

0
1
2

CHECK
02

$50
0

12MAR
200
8

0
9

INV0
02
INV0
03
INV0
04

$50
$20
0
$50
0

2. Create Control File with extension ctl and place it under

$AR_TOP/bin.
Data is loaded into AR_PAYMENTS_INTERFACE_ALL based on the
control file. Control file should be in line with Transmission
format. Control file name is passed as the input parameter while
submitting the Auto Lockbox program.

3. Define Bank
Define the organization bank account where the money is
deposited. This is attached to the payment method defined for
the lockbox.

4. Define Receipt Class

Define the payment method which will be used by the Auto
Lockbox program to create the receipt. Attach the Bank account
created in previous step and define the GL accounts. These
accounts are used to create accounting entries for the Receipts.

5. Define Receipt Source

Define the receipt source and attach the payment method
created in previous step. The batch source is assigned to the
lockbox while setting it up in the Lockbox Window.

6. Define Lockbox

Number
Enter the Lockbox Number provided by the back. This number
comes in the transmission file and gets stored in the column
ar_payments_interface_all.lockbox_number.
Batch Source
Enter the batch source created in step five. Bank Account,
Bank Name and the Address attached to the receipt source
will be populated automatically.
While importing receipts, Auto lockbox uses the Payment
Method and Bank account attached to the batch source to
create receipts and accounting entries.
Bank Origination Number
Enter the Origination Number provided by the back. This
number identifies the bank branch and gets stored in the
column ar_payments_interface_all.origination.

Batch Size
Enter the maximum number of receipts in a batch. Auto
lockbox will create multiple batches based on the value
entered in this field. E.g. If the batch size is 100 and there
are 500 receipts in the lockbox file for a given batch name
and deposit date then Auto lockbox will create 5 batches with
100 receipts in each batch.
GL Date Source
Enter the source for Receipt GL date. There are three possible
values.
Constant date: Lockbox uses date passed in the GL Date
field while submitting the Auto Lockbox program from the
Submit Lockbox Processing window (Navigation ->
Receivables Manager -> Interfaces -> Lockbox).
Deposit Date: Lockbox uses the receipt deposit date provided
by the bank in the lockbox file
(ar_payments_interface_all.deposit_date).
Import Date: Lockbox uses the date on which the receipts are
imported into the system.
Receipt Method
Lockbox uses this Receipt method to create the receipts.
Oracle defaults it to the Receipt method attached to the
Receipt batch source.
Require Billing Location

This field determines if the Bill To Site is required to create

the receipts. If unchecked then receipts can be imported
without Bill to Location.
Match Receipts By
Bank sends the Transaction number against which the
payment is to be made. We can specify if the number
provided by the bank (ar_payments_interface_all.invoice1-8)
is Invoice Number, Consolidated Billing Number, Sales Order
or Purchase Order.

Auto Associate
If checked then Auto Lockbox derives the customer
information from the Invoice else the customer provided by
bank will be used to create the receipt.
Unidentified Receipts: If lockbox is not able to derive the
customer then receipt is created with status as Unidentified.
Unapplied Receipts: If lockbox is not able to derive the
transactions to be paid then receipt is created with status as
Unapplied.
Evaluate for Claim Eligibility
If Trade Management is installed and the filed is checked then
Auto lockbox automatically creates claims for the eligible
lines.
Running Lockbox
Navigation: Receivables Manager -> Interfaces -> Lockbox

Submit Lockbox Processing

Use this form to Import, Validate and Post the Lockbox data.
1. Import

New Transmission: Check this box if importing a new bank file and enter
Transmission name. This can be used to search records in the Maintain
Transmission window for making corrections.
Submit Import: If checked then Auto Lockbox will import records from the
bank file mentioned in the subsequent fields. This field can be left
unchecked if data already exists in interface table
ar_payments_interface_all.

2. Validate
Submit Validation: If checked then Auto Lockbox will validate data in table
ar_payments_interface_all belonging to the specified Transmission name.
Complete Batches Only: Check this box if you want to import data only if all
records pass the validation. Lockbox will not import anything if even a single
record is in error.
Allow Payment of Unrelated Invoices: If checked then Auto Lockbox will allow
payment of Invoices for unrelated customers.
Invalid Transaction Number handling: Select Post Partial Amount as
Unapplied if you want to import the receipt even if refers to invalid Invoices.
If Reject Entire Receipt is selected then Auto Lockbox will reject the entire
receipt in case any of the Invoice reference is invalid.

3. Post Quick Cash

Submit PostQuickCash: Check this box to transfer the valid receipts from
Interim tables to base tables.

Reference
Oracle Receivables User Guide Release 11i