In the first installment of our ‘R12 SmartMoves’ series, we will be taking a look at a global gaming company with nearly 3,000 outlets in the UK, Ireland, Spain and Belgium with 800,000 online and mobile users. We will see how, after a large re-implementation programme, they are now revisiting their processes looking to make efficiencies in AR and AP using AGIS. This will allow them to bring in automation that was not considered during the E-Business Suite re-implementation.
After a recent R12 implementation, it started to become apparent that the new system was not delivering the value and efficiencies expected. To drive the maximum value from their E-Business Suite environment, it was determined that better use of the enhanced functionality of R12 would free up key members of the finance team and allow them to focus on other productive areas of the business. Although AGIS (Advanced Global Intercompany System) automation was already implemented, it was expressed that it could also be put to better use by automating the creation and payment of invoices between the multiple legal entities that make up the fabric of the E-Business Suite implementation.
The organisation has Oracle E-Business Suite with around 20 ledgers in GL (General Ledger), representing companies in various countries in Europe. Only three of these ledgers have associated operating units (OU) – UK, Ireland and Gibraltar. These use AP (Accounts Payable) but AR (Accounts Receivable) is not currently configured for these operating units. The operating units handle multiple companies as balancing segments in the chart of accounts. Automatic offsets are configured in AP to correctly account across the companies.
AGIS is configured for intercompany transactions across the organisations legal entities. It is set up so that all transactions occur via GL. This creates a number of issues around approval, invoice production and tax, meaning AGIS is not being used at its full potential.
There are a small volume of genuine third-party ‘customer’ invoices, however these are currently handled outside Oracle, but could be managed in AR once it is configured correctly.
“Oracle Advanced Global Intercompany System is a robust intercompany solution that serves as a forum for subsidiaries to exchange intercompany transactions. Payables and receivables invoices between intercompany trading partners are created accordingly where local statutory compliance requires physical invoices. Intercompany accounting is automatically generated centrally to ensure intercompany transactions are never out-of-balance. The automatic balancing process within Oracle Advanced Global Intercompany System provides transaction level balancing for all subledger applications within the E-Business Suite.” – Oracle
The first step was to create a basic implementation of AR and configure it to match the three main operating units of UK, Ireland and Gibraltar within GL and AP. AR was not previously included in the implementation.
By enabling AR, this now allows more accurate audit trails between the main OUs for VAT purposes. Another advantage has been an introduction of a standardised invoice template for use between OUs.
AGIS was then configured to allow intercompany transactions to be created in AP and AR, but only for companies within the three existing UK, Ireland and Gibraltar OUs. This is because additional operating units will not be created for those companies that are currently handled in GL only. AGIS creates the invoices in AP and AR, but does not handle the settlement (payment) of such invoices. Therefore, a solution was configured to automate payments in AP and receipts in AR, via a clearing bank account linked to a central clearing company. This required mass allocations in GL to transfer the clearing company balances into the UK ledger each month.
Although the project is still in progress, all the deliverables have been implemented and unit tested. The project is now waiting final UAT (User Acceptance Testing) which will start in February.
When this SmartMove has been completed, the organisation will utilise the features of AGIS in a whole new way, saving time across different finance teams, with the automation of previously manual processes. This will increase the value and return on their new implementation of E-Business Suite. Finally, all these have been met in the native configuration of E-Business Suite without the need for any customisations.