Customer Acceptance in R12 Order Management

In different countries a number of companies prefer to accept goods formally

before being invoiced by the supplier. To record and view customer acceptance,
Oracle Order Management integrates with Accounts Receivables and Costing.
The customer can accept the goods in any or in combination of the following
ways:

 Pre-Billing Acceptance (goods are accepted before Invoicing) – Implicit or

Explicit
 Post-Billing Acceptance (goods are accepted after Invoicing) – Implicit or
Explicit

What is ‘Customer Acceptance’?

Customer Acceptance is new functionality with R12 that gives a seller control
over the timing of customer invoicing or revenue recognition and provides the
ability to link either of these events with customer satisfaction of a product or
service delivery. Where invoicing used to be automatic based on the standard
fulfillment criteria of shipping a product or service, it can now be delayed until
explicit or implicit customer acceptance criteria are received and logged
against a given shipment (sales order line).

There are some initial concepts that must be understood before configuring and
using Customer Acceptance, and they will be reviewed here.
First, there are 2 fundamentally different flows for handling acceptance: Pre-
Billing Acceptance and Post-Billing Acceptance. Let’s look at each separately
and how they fit into the fulfillment flow.

For ‘Pre-Billing Acceptance’, as the name implies, acceptance must be recorded

before AR invoicing can be
processed. This is accomplished by preventing the Sales Order Line from
interfacing to AR until the acceptance is recorded. Think of it as the Customer
saying ‘Do not bill me until I approve the shipment!’ and having Oracle comply
with that demand.

‘Post-Billing Acceptance’, also as the name implies, affects what occurs after AR
invoicing has already been
processed. Revenue recognition will not occur for a given line/AR invoice until an
acceptance is recorded. From the Customer’s perspective, there is no change
with this type of acceptance. They still receive their invoice with the normal
timing relative to a shipment being confirmed. So in that respect, this
acceptance type is less customer focused and more of an internal (seller’s)
process.

We reviewed the 2 acceptance flows, but within each one there are 2 types or
acceptance – Explicit and Implicit.
Explicit acceptance is one that requires an actual acceptance to be recorded,
so the sales order line workflow will NOT progress until this is recorded. It
requires action either on the part of the customer or customer
service representative in order to open the gate for customer billing (AR
invoicing) or revenue recognition.

Implicit acceptance, on the other hand, is one that will automatically be

generated when a certain interval of time has lapsed beyond a specific event for
the order line. This interval and the event it applies to are both configurable
in AR and will be explained in more detail later.

Note: Even if ‘implicit’ acceptance is engaged, you have the option to enter
‘explicit’ acceptance prior to the
number of expire days elapsing.

So based on the above terms,, there are 4 kinds of Customer Acceptance as

listed below:
1. Pre-Billing Explicit
2. Pre-Billing Implicit
3. Post-Billing Explicit
4. Post-Billing Implicit
The seller does not have to rely on any one of the above types, but rather has the
ability to use any or all of them in the course of their fulfillment cycle.

Customer Acceptance Setups:

Order Management:

1) System parameter in OM "Enable fulfillment acceptance "  to "Yes"

First, and foremost, you must enable the System Parameter in OM. Without it,
Customer Acceptance simply will not work. The reason it is setup as a
parameter, with a default of ‘No’, is that when enabled there is an AR API that is
engaged for every sales order line. This requires system resources and can
result in a performance penalty for the application, so you don’t want to enable
this functionality unless you intend to use it.

2) Show field using the Folder options to show the fields related to  customer

acceptance.
Use Folder – Show Field to add the required mix of acceptance fields, then save
as a named folder, and make it your default with the option of making it public.
If Customer Service intends to use this functionality, I would suggest you setup
a public folder so that every CSR sees the same data when responding to
customer inquiries.
Sales order lines- Others tab

3)Enable function security within the Menu

Below are 2 OM functions which must be enabled on the menu structure in order
to use Customer Acceptance. By
default, they should be enabled on the ‘ONT_SALES_ORDERS’ menu, but you
might need to verify these in System Administrator if you run into any
difficulties. By enabling or disabling these functions within a given
responsibility, you can enforce functional security for who can and cannot
perform Customer Acceptance.

Sales Orders: Fulfillment Acceptance

Sales Orders: Update Acceptance Attributes

4) User Access to Order Information Portal (required to perform

Manual Explicit Acceptance)

Receivables (Revenue Management):

1) Revenue contingency

A ‘revenue contingency’ is an AR setup that affects revenue recognition, and ties

in with the workflow associated with Customer Acceptance. Some seeded
revenue contingencies are provided in AR, but you can add new ones as need be

Contingency removal event is one of the required fields in setting up revenue

contingency

The removal event determines which Customer Acceptance flow will be engaged
in the workflow.
For Pre-Billing Acceptance, set Removal Event to ‘Invoicing’
For Post-Billing Acceptance, set Removal Event to ‘Customer Acceptance’

4
A ‘revenue contingency’ is an AR setup that affects revenue recognition, and ties
in with the workflow associated with Customer Acceptance. Some seeded
revenue contingencies are provided in AR, but you can add new ones as outlined
below. You can define new contingencies using the Revenue Management Super
User responsibility.
The example below is a revenue contingency for Pre-Billing Implicit Acceptance,
automatically recorded 3 days after Ship Confirm.
Fig. 4 – Revenue Contingency Example (implicit pre-billing acceptance)
The removal event determines which Customer Acceptance flow will be engaged
in the workflow.
For Pre-Billing Acceptance, set Removal Event to ‘Invoicing’
For Post-Billing Acceptance, set Removal Event to ‘Customer Acceptance’

The choices for Removal Event are: Contingency Expiration, Customer

Acceptance, Invoicing, Payment, Proof of Delivery.

If you want Explicit Acceptance, leave ‘Optional Time Attributes’ blank. You will
record the actual acceptance data at the appropriate time in the Order
Information Portal (OIP).

If you want Implicit Acceptance, select an Attribute Event and Days Added to

Event Attribute. The acceptance will be automatically generated by a request
set that can be scheduled to run daily in the
application.

Choices for Event Attribute are: Fulfillment Date, Proof of Delivery Date, Ship
Confirm Date, or Transaction Date.
Assignment Rules can be configured to automatically assign the desired revenue
contingency to a sales order line.

Choices can be as general as the Operating Unit, or as specific as a single Item

when shipped to a specific Customer.You define the business scenarios that
require Customer Acceptance with these rules, or you can optionally assign the
acceptance manually in Order Management before booking the sales order.
Do you know in R12, there is Customer-centric functionality called "Customer Acceptance".This is
Integrated with Workflow in OM and AR and utilizes Order Information Portal (OIP) .

Company using these feature can see major benifits as:

 This is Customer-focused enhancement which improve Customer Satisfaction

 Self-service acceptance entry by Customer
 Delayed invoicing can reduce transaction burden of processing RMA

 What is Customer Acceptance ?

 Enables organization to defer invoicing and/or revenue recognition for the shipped goods till
the end customer receives the shipment and accepts the material
 Additional step called ¡§customer acceptance has been introduced in order fulfillment flow in
R12, where customer accepts the goods either before or after billing happens
 Customer Acceptance rules are created in the Receivables Revenue Management module and
they are executed and validated within Order Management

Types of Customer Acceptance Rules

Customer Acceptance can be performed at the following milestones:

 Prior to Invoicing - Pre Billing

  Post Invoicing - Post Billing

Oracle supports both Customer Acceptance rules in both Implicit and Explicit mode. Details are
herewith:

1. Pre-Billing Acceptance:

Invoice is generated after the acceptance criterion is met; either a certain period of time has elapsed
since shipment (Implicit Acceptance) or a user records acceptance using Order Information portal
(Explicit Acceptance). Events are most likly to be:

1. Invoices will only be interfaced to Oracle Receivables after the acceptance is recorded
2. Defers both Invoicing & Revenue Recognition
3. Can be Implicit or Explicit ( refer details next section)
4. Sales Order Line Workflow process is held at Invoice Interface eligible – Pending
Customer Acceptance

Remember this "Line closes and invoice-interfaces after acceptance "

2. Post-billing Acceptance:

Invoice is generated upon delivery of goods/ services but the revenue recognition is deferred until the
customer accepts the products/ services. Acceptance may be recorded implicitly / explicitly at the line
level.Events are most likly to be:

1. Invoices are created but revenue will be recognized after aceptance is recorded
2. Defers only the Revenue Recognition
3. Can be Implicit or Explicit
4. Sales Order Line Workflow process is held at Close Line Eligible – Pending Customer
Acceptance

Remember this "Revenue recognition occurs after acceptance"

Two Basic Types of Acceptance

Oracle has broadly classified the acceptance in two categories:

1. Explicit Acceptance

Requires an actual acceptance from or on behalf of the Customer.Acceptance is recorded using the
Order Information Portal

 Customers or their representative can perform the acceptance by

 Logging into the Self-service Order Information portal
 Through import API
 Recording the acceptance in sales order form
 Acceptance can be recorded Manually or Programmatically
2. Implicit Acceptance:

In this case, acceptance will auto-process after specific interval beyond specified transaction.

Acceptance is recorded systemically after a certain period of time has elapsed since the shipment. This
period of time is setup in the Receivables module at the time of defining the deferral reason.

 In the Receivables module, The Expiration Period (Expire Days) is pre defined for
the Deferral Reasons
 Implicit Acceptance Request Set is used to record implicit acceptance
 Can only be recorded Programmatically

This make total 4 Acceptance Combinations as:

 Pre-Billing Explicit
 Pre-Billing Implicit
 Post-Billing Explicit
 Post-Billing Implicit

 Basic Set Up

In order to use this , Important setups required for Customer Acceptance feature along with Revenue
Recognition as follows:

 Setting Up Oracle Order Management System Parameters

 Adding Specific Functions to Order Management User Menu
 Create Revenue Contingencies & Assignment Rules
 Create Folder for viewing Customer Acceptance details on Sales Order Line

 A note on Implicit Acceptance Request Set

The Implicit Acceptance Request Set, a part of OM’s standard concurrent programs is launched upon
expiration of ‘Acceptance Days’ and acceptance is recorded.

This request Set has two concurrent requests

1. Generate Pre-billing Acceptance Program for Pre-billing, Implicit Acceptance

2. Revenue Contingency Analyzer for Post-billing, Implicit Acceptance

Customer Acceptance can be a useful tool for improving customer satisfaction by delaying invoicing
until goods or services are accepted and hopefully, utilized to maximize the benefit.
Customer Acceptance (Oracle Apps Release12 Feature).
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Customer Acceptance is new feature introduced in Oracle Application Release 12.Customers in

some industries have need to defer invoicing and/or revenue recognition for shipped goods until the
customer receives the shipment and formally accepts the material.

In Oracle R12 Customer acceptance/rejection can be captured from customers, customer service
representatives, or from an external system.
Customers can perform the acceptance in following manners.

1. Log into the self-service Order Information portal.

2. Import customer acceptance/rejection from an external system with Order Import/Process Order
API.
3. Record Acceptance /Rejection from Sales Order Form.

Oracle Order Management supports only full acceptance or total rejection for each outbound order line.
One can set the number of days for implicit acceptance, after the product has been shipped.

A New System parameter “Enable Fulfillment Acceptance” has been introduced in R12 at Operating
Unit level for this Purpose. Once this parameter is enabled, the Accounts Receivables API is called to
invoke the rules engine to validate customer acceptance on every order line.

The basic business need is to defer invoicing and/or revenue recognition for the shipped goods till the
customer receives the shipment and accepts the material.

Customer Acceptance functionality offers

1. Pre Billing and Post Billing Acceptance
2. Explicit and Implicit Acceptance.
3. It is either Full Acceptance or full rejection, as of now it doesn’t support Partial Acceptance.
4. It support ATP/PTO/KIT/Service & Standard item. Acceptance defined at the parent level (Model) only,
and child will inherit that from parent (e.g. ATO/PTO Model).
As of now Oracle in not support Acceptance in RMA Orders.

Setup for Customer Acceptance:

1.Customer acceptance can be enabled at Operating Unit level through OM systemParameter: Enable
Fulfillment Acceptance – Y/N.
2.We need to enable function security for a given responsibility for the following two
Functions:
a. Sales Orders: Fulfillment Acceptance – This ensures that the action attribute Fulfillment Acceptance is
available in the Actions LOV.
b. Sales Orders: Update Acceptance Attributes – This allows for updating the acceptance attributes of
Acceptance Name and Acceptance Expire days.These are attached to the sales order menu – ONT_
Sales_Order.

3.Define Deferral Reason for Pre – Billing Acceptance

Define 'Deferral reason' under Receivables Revenue Management set up
Navigation: Revenue Management Super User -> Contingency Search / Definition ->
it launches an HTML page.

Define assignment rules to assign the deferral reason to customer, site, item, etc.
a. For defining a Pre-billing Acceptance, use the deferral reason removal event as
Invoicing.

b. For defining a Post-billing Acceptance, use the deferral reason removal event asCustomer
Acceptance.

c. For defining an Implicit Acceptance, we need to define the Optional time attributes – Event Attribute
and Days added to Event attribute.

As shown above please note that Order Management supports Ship Confirm Date as only event
attribute for the current release.
The Days added to Event Attribute gets defaulted as Acceptance Expire days inSales Order Line.

Note: The deferral reason defined in AR's Revenue Management setup page is actually used as
Acceptance Name in Order Management
Enable Folder fields for Customer Acceptance in Sales Order Form as well as Quick Sales Order Form.

The Invoice Interface Workflow sub process handles sending interface data to Oracle Receivable for
invoice and credit memo creation.It us ysed to handle pre-billing Customer acceptance. If an order line
requires pre-billing Customer Acceptance, this sub-process will prevent the order line from being
interfaced to Receivables.

Pre-Billing Acceptance
Sales Order Line in Pending Pre-billing Acceptance.
· Record Acceptance – explicit or implicit .
· Line status moves to closed and line gets interfaced to AR.
· Invoice generation and Revenue Recognition happen subsequently.

Post-Billing Acceptance
Sales Order Line in Pending Post-billing Acceptance .
· Invoice generation .
· Record Acceptance – explicit or implicit.
· Line status moves to closed .
· Revenue Recognition happens once acceptance is completed .

Explicit Acceptance:
1. Acceptance through Order Information Portal, click on Sales Order Actions –Fulfillment Acceptance
from Header or Lines.
2. Through Order Import.

Implicit Acceptance:
1. Deferral reason has to be defined in AR with event attribute as Ship Confirm date and expiration days.
2. An Implicit Acceptance Request set that records Implicit Acceptance consists of the following
concurrent programs:
· Generate Pre-billing Acceptance Program for Pre-billing, Implicit Acceptance
· Revenue Contingency Analyzer for Post-billing, Implicit Acceptance
Process Flow (Explicit Acceptance).
1.Enter orders that need to be accepted by the customer and this acceptance is to be Recorded by the
Customer Sales Representative.

2.View/update Acceptance fields on the order line. The Others tab of the sales orders line displays the
folder enabled Acceptance fields.

3.Sales Order Acknowledgment Report prints Acceptance Required.

4.Ship Confirm the items mview the line status 'Pending Pre-Billing / Pending Post-Billing Acceptance'.
5.Perform Acceptance/Rejection.(Below is Example of Pre-Billing Explicit Acceptance).
6.View Acceptance Details in Sales Orders line.

Process Flow (ONLY Screen short) of Implicit Acceptance

6 comments:

1.

mattNovember 25, 2010 at 8:53 AM

Great info! it's good to see this information in your post, I'm very happy to know more information
about this software and I will pass it on to our audience billing & revenue recognition .
Reply

2.

SanthoshFebruary 9, 2013 at 11:43 AM

Thanks for sharing this article. Kindly let me know how to add "Fulfillment Acceptance" in action
button and add "Update Acceptance Attribute" in tools menu of sales order.
Reply

3.

eoracleappsFebruary 9, 2013 at 5:57 PM

Hi Santhosh

as I have documented my my blog Spot , Enable the System parameter "Enable Fulfillment
Acceptance = Yes" for your OU.Once done you can see Fulfillment Acceptance Under Action.
Reply

4.

eoracleappsFebruary 9, 2013 at 6:07 PM

you can also refer

http://eoracleapps.blogspot.com/2013/02/customer-acceptance-2-oracle-apps.html
 Reply

5.

Customer Care Contact NumberJuly 2, 2013 at 10:14 PM

Nice Blog ,Thanks for Sharing the information.Customer Satisfaction is very important to grow up
the business.
Reply

6.

Hung-Yi ChenJuly 11, 2013 at 9:47 AM

This is a very helpful steps. thank you so much.

Reply

CUSTOMER ACCEPTANCE

R12 Revenue-COGS Matching Part II : Customer

Acceptance
17th July 2008, 11:32 am by Nagamohan Uppara

http://www.oraclebusinessapps.com/2008/07/17/r12-revenue-cogs-matching-part-ii-customer-acceptance/

This is second article in the series of articles on revenue-COGS matching. As discussed in the first article,
with the introduction of deferred COGS accounting, COGS accounting does not take place unless
revenue is recognized so that the revenue and COGS recognition happen in the same period. In this
article let us discuss customer acceptance process in relation to the revenue COGS matching. In fact 
introduction of deferred COGS functionality gave room for this feature.

What is Customer Acceptance and how it is related to Revenue – COGS matching?

 Customer acceptance is a
process where you cannot recognize revenue and COGS until customer has accepted the delivery. As we
have discussed in the earlier article, starting R12, when goods are shipped always Deferred COGS
account is debited (instead of actual COGS) irrespective of customer acceptance. As we could delay this
recognition, now we can add this extra step of customer acceptance. The following is the table of revenue
contingencies that are used in customer acceptance process. Of course we can create custom
contingecies, but the removal events are always seeded. So these contigencies are more identified with
the removal events rather than contingency name itself.

These contingencies are of three types: 

1. Prevent creation of invoice if the customer does not accept the goods. But as soon the customer
accepts the goods, order is interfaced to AR and invoice is created and revenue is immediately
recognized. This is called pre-billing acceptance. The line status is placed in Pre-Billing
Acceptance status and removal event is customer acceptance and invoice creation.
2. Create invoice but do not recognize revenue until customer accepts the goods. This is called
post billing acceptance. Contingencies Explicit acceptance and Installation required, fall into
this category. The line status is placed in Post-Billing Acceptance status. Once the customer
accepts the goods, revenue is recognized immediately (invoice is already created) and line is
closed.
3. The last one is called proof of delivery. The difference between this one and other two is that,
this neither can be defaulted into the order line nor can be picked up manually in the LOV when
the order line is created. If the order line attributes (like bill to customer or site, AR transaction
type associated with order type or line type so on) match the assignment rules set up in for the
revenue contingency, delviery contingency is applied when order line is invoiced. Unfortunately
at this point of time there is no user interface to record the proof of delivery. This, I am sure on the
 way in the coming releases.  But there is a group API that can be used to remove this contigency
and the sample code for the same is here.

Setup and Behavior

These contingencies can be defaulted into order line based on the setup. As shown in the associated
table, value for the OM system parameter, Fulfillment Acceptace Required can be set as Yes. This allows
acceptance name to be chosen from the LOV in the order lines when an order line is being created.
These are hidden fields in the Others tab and folders can be used to open them up. But if  contingency
assignment rules are setup, say with bill to customer name parameter and value as Business World, and
if the order is entered for the same customer as bill to, acceptance contingency automatically gets
defaulted once the order line is saved ( this is delayed request in the order line creation and not part of
the defaulting rules). The following the list of parameters that can be used to setup the assignment rules.
  In Revenue
Management Super User, when these contingencies are assigned to a rule with any of the parameters as
shown in the table, order creation process matches the values in the order with the setup rules. If the
matching is found, then the contingency is defaulted into the order line. Even if there is no setup done,
contingency can be manually assigned to the order line.

 Finally coming to the transactions, if acceptance exists, when the order line shipped line status is
placed in one of the statuses mentioned above based on the type of contingency.

Acceptance can be performed by customers themselves or internally by the users. For external users to
perform this step, these users should be registered against the customers (as person parties) and should
be assigned with a responsibility called Order Information Super User. Once the goods have reached
them, they can log in to this customer portal (iStore or iSupport) and accept or reject the goods. Also if
they reject them, they can request for RMA. Rest of the process follows as discussed earlier from revenue
accounting perspective. For the COGS recognition, the steps mentioned in the part I of this article should
be followed.

PDF CUSTOMER ACCEPTANCE

Q: What is Customer Acceptance?

  Customer-driven functionality, new to R12.
 Satisfies a business need to defer invoicing and/or revenue recognition until goods are accepted
by the Customer, either implicitly or explicitly.

Key Benefits

•Customer-focused enhancement

•Potential to improve Customer Satisfaction

•Self-service acceptance entry by Customer

•Delayed invoicing can reduce transaction burden of processing RMA (returns)

2 Fundamentally Different Flows

Pre-Billing Acceptance

•Occurs before invoicing

•Line closes and invoice-interfaces after acceptance

Post-Billing Acceptance

•Occurs after invoicing

•Revenue recognition occurs after acceptance

2 Basic Types of Acceptance

Explicit

Requires an actual acceptance from or on behalf of the Customer.

Implicit

Acceptance will auto-process after specific interval beyond specified transaction.

(4) Acceptance Combinations

•Pre-Billing Explicit

•Pre-Billing Implicit

•Post-Billing Explicit

•Post-Billing Implicit