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Thursday, April 28, 2016

Letter of credit (LC Matching) feature in Oracle R12

Background of Letter of Credit (LC):
letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

In Oracle R12, this feature is a part of India Localization and it works at the customer level. It is different than Credit Check functionality available in base apps.

Let’s see how it works in system:
Say I want to ship material of amount for which customer has given be LC.

While saving the sale order make sure ‘LC Flag’ is selected in ‘Sales Order India Localization’ form.
Rest of the process of entering/booking sales order is normal.

* We will try to ship only one quantity
Perform below steps
  1. Split the line to 1 qty.
  2. Pick release order line

Now try to ship confirm the shipment.
Though at sales order level ‘LC Flag’, we did not match the LC with this shipment. In such cases, shipment will not go thru, system will show below error and the time of ship confirm.

Below is the form where we can create LC in system. As and when LC is applied to shipments, ‘Balance Amount’ value would get reduced.
Note: LC amount shall be inclusive of tax amount. Example: If sale order line amount is 100 and taxes on that line is 10.23, then LC need to be created of amount equal to or more than 110.23

Below is the screen where we can apply LC to order shipment, it is applied at Delivery details ID level.

Scroll to right side to see more columns. Feed all required details and click on ‘Apply’ button.

Once LC is applied to the line, balance amount of LC shall reduce by applied amount. Let’s verify it.

Sales Order base price
Sales Order line total (1+2)

LC amount
Sales Order line total
LC balance amount (1-2)

Transactional details of LC will be available if you click buttons at bottom of the form… like ‘Qty Amendment’, ‘View Transaction’

Now as LC is applied to the shipment, system will allow to ‘Ship Confirm’.

You may be interested in below article as it given insight of accounting of LC.

1 comment:

  1. I found your blog quite interesting and the concern in the blog is really impressive

    Shipping A Vehicle From Hawaii


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