Professional Documents
Culture Documents
Implementing Lockbox PDF
Implementing Lockbox PDF
Anil R. Patil
Implementing Lockbox
Contents
Objective ....................................................................................................................................................... 3
Lockbox ................................................................................................................................................... 11
Conclusion ................................................................................................................................................... 31
oracle.anilrpatil.com Page 2
Implementing Lockbox
Objective
The Objective of this document is to explain how to use the Oracle Receivables Lockbox functionality. This
document will explain some of the key setups required for implementing Lockbox and will guide you for setting up
the Lockbox format and also generating a sample lockbox file for testing purpose.
Overview of Lockbox
Lockbox is a service offered by banks to companies in which the company receives payments from their customers
by mail to a post office box and the bank picks up the payments and deposits it in the company’s bank account. In a
way, the company is outsourcing its AR function of collecting the checks and depositing it in the bank. The bank
then informs the company of all the payments received. They normally send a Flat file (text file) to the company that
gives all the details of the deposits made in the bank account. The details captured in the flat file depend on the
arrangement between the bank and the company. This flat file is referred to as the Lockbox file. The company can
then import this Lockbox file in their system to create receipts and apply these receipts to the open invoices. Oracle
Receivables provide a standard functionality to import the lockbox file to create the receipts. It also provides you
with the flexibility to define customized lockbox formats to enable you to accept the lockbox file in any format for
any of the banks. The Oracle Lockbox functionality can also be extended to convert Receipts information from any
other legacy system or from the remittance advice the company gets directly from their customers.
Implementing a lockbox solution by importing a lockbox file from the bank goes beyond just Oracle Receivables
configurations. You need to contact the bank, discuss and agree on the lockbox file format before you start your
work on Oracle Receivables. You need to decide how much information you want the bank to capture, how the bank
will capture the information and so on. In most cases, the bank captures the remittance information by scanning the
scan-line included in the payment coupon. This payment coupon is sent to the customers along with the Invoice
(Generally the bottom of the first page of the Invoice). The scan-line will include information such as Account
number, remittance amount, invoice number and so on. This is how a typical payment coupon looks like
Once the bank receives the payment along with the payment coupon, the bank scans the Scan line to capture the
required information to be included in the Lockbox file. Each digit in the scan line indicates some important
information. For e.g. the last 5 digits in the scan line above indicate the amount.
oracle.anilrpatil.com Page 3
Implementing Lockbox
oracle.anilrpatil.com Page 4
Implementing Lockbox
Navigation: Setup => Receipts => Banks (You could also setup Banks from Cash Management responsibility)
You define your internal bank accounts in Accounts Receivables. This is the bank account where the customer
payments are deposited. Please note that the Bank setup and the bank security access have changed in Release 12.
For more details on bank security access, you can refer the following metalink document
NOTE:403975.1 - How to Setup Bank Account Access Security In Release 12
You also need to run the CE UMX Security Wizard to be able to provide Bank Account access to Legal entities.
Follow the following steps to run the wizard
1) Log in as Sysadmin.
2) Go to the User Management Responsibility.
3) Path: Roles & Role Inheritance
4) In the Type field select Roles and Responsibilities
5) Wait until a new field appears, you will see the category field, please select Miscellaneous
6) In the Application select 'Cash Management' and click on GO button.
7) Search your Cash Management responsibility (Hit go) and look for role <Cash Management Responsibility
Name>
8) Click on the update icon for role <Cash Management Responsibility Name>
9) A new window will be displayed, please click in the Security wizard Tab. Hit ‘Save and Proceed”
10) For CE UMX Security wizard click on the Run Wizard.
11) In this window you should add the legal entities that you want to grant the access to all the bank accounts
within a legal entity and choose the privileges that you want to assign to this role on the bank accounts such
as: USE, MAINTENANCE and BANK ACCOUNT TRANSFERS.
oracle.anilrpatil.com Page 5
Implementing Lockbox
12) Click “Add Legal Entities”. Click “Go” and then select the legal entities from the list.
Next screen select all required options for the legal entities and hit “Apply”. On the next screen also hit
“Apply”
13) Save and apply the changes and then verify in Cash management responsibility if you now are
able to see that legal entity in the bank account creation form.
oracle.anilrpatil.com Page 6
Implementing Lockbox
oracle.anilrpatil.com Page 7
Implementing Lockbox
• Use Clearance Method ‘Directly’, if you want the receipts to be cleared at the time of receipt
entry.
• Use Clearance Method ‘By Automatic Clearing’, if you want to clear the receipt using the
Automatic Clearing Program.
• Use Clearance Method ‘By Matching’, if you want to clear the receipt by matching the receipt to
Bank Statement line in Cash Management.
For the Receipt Class, enter a Receipt Method name, printed name and effective dates and click ‘Bank Accounts’ to
assign a Bank Account and GL Account Combinations to the Receipt Method.
oracle.anilrpatil.com Page 8
Implementing Lockbox
Navigation: Setup => Receipts => Receipt Classes => (B) Bank Accounts
Select the required bank account and provide the required GL Account combinations. These accounts are used in
receipt accounting whenever a receipt is created using the Receipt Method.
oracle.anilrpatil.com Page 9
Implementing Lockbox
Receipt Source
oracle.anilrpatil.com Page 10
Implementing Lockbox
Lockbox
oracle.anilrpatil.com Page 11
Implementing Lockbox
1) Batch Size: Enter the batch size you want the Lockbox validation program to assign to each receipt batch.
If there is more number of receipts in the lockbox file than the batch size, the receipts are created in more
than one batch.
2) GL Date Source: This source determines the GL date for the receipts created by the Lockbox program. You
can select one of the following values for the GL Date Source
• Constant Date: The GL Date you enter while submitting the Lockbox process is used as the GL
date for your receipts
• Deposit Date: The deposit date from the Lockbox file will be considered as the GL date for your
receipts
• Import Date: The date on which you import the receipts becomes the GL date of the receipt.
3) Exchange Rate Type: If there are foreign currency receipts in your lockbox file without the exchange rate
type, this Exchange Rate Type is used for conversion
4) Receipt Method: This defaults from the Batch Source you have assigned to the Lockbox. You can change
the default Receipt Method.
5) Require Billing Location: If the system option ‘Require Billing Location for receipts’ is set to ‘Yes’, the
‘Require Billing Location’ check box should be checked, else the Lockbox process will display an error
message. This option determines if Lockbox process should be able to create receipts with or without
billing location.
6) Match Receipts By: This option determines how the receipts will be matched (to which number). You can
select one of the following options
oracle.anilrpatil.com Page 12
Implementing Lockbox
oracle.anilrpatil.com Page 13
Implementing Lockbox
1) Auto Associate: The Auto Associate option if checked determines the Customer based on the debit item
number (Invoice number) mentioned in the Lockbox file. If there is no MICR number or Customer number
in the lockbox file and if Auto Associate is set to Yes, Lockbox process will identify the Customer based
on the debit item number given in the Lockbox file. This option is also useful when you have scenarios
wherein customer A makes payment for Customer B’s invoices. If you are using Auto Associate, when
applying payment from Customer A to open invoices of Customer B, the receipt will be identified as paid
by Customer B.
2) Invalid Transaction Number Handling: This option determines how the lockbox process will handle
receipts that were identified by the MICR or Customer number but could not be applied because of invalid
transaction number
• Post Partial Amount as Unapplied: If this option is enabled, Lockbox process applies the Receipt
to valid transactions and the remaining receipt amount that could not be applied because of invalid
transaction numbers is considered as unapplied amount. This option is generally set to Yes.
• Reject Entire Receipt: If there are any invalid transaction numbers in the Lockbox file, the entire
receipt is rejected. The receipts data remains in the ar_payments_interface_all table. You can
update the invalid record using the Maintain Lockbox Transmission Data window.
3) Line Level Cash Application: Default value is set to None.
oracle.anilrpatil.com Page 14
Implementing Lockbox
Transmission Formats
oracle.anilrpatil.com Page 15
Implementing Lockbox
6) Payment: A Payment usually contains information such as MICR number, batch number, item number,
check number, and remittance amount.
7) Service Header: Service Header records contain general information about your transmission.
8) Transmission Header: A Transmission Header marks the beginning of a specific data file. Transmission
Headers usually contain information such as destination account, origination number, deposit date, and
deposit time.
9) Transmission Trailer: A Transmission Trailer marks the end of a specific data file. Transmission Trailers
usually contain information such as total record count.
Note: Your bank file might not contain all of these record types. You should define your transmission format to only
include the record types that are actually used in the transmission format. You will get the Lockbox file format
details from your bank. If you are using Lockbox to convert AR Receipts from other source, you can define your
own format. The Transmission format shown above is a custom format.
oracle.anilrpatil.com Page 16
Implementing Lockbox
Transmission Fields
Record Type = Lockbox Header Identifier = 2
You can choose one of the following Transmission fields in your format
When defining your transmission fields, you can choose from the following field types:
• Account: Your customer's bank account. The bank account number and the transit routing number make up
your customer's MICR number.
oracle.anilrpatil.com Page 17
Implementing Lockbox
oracle.anilrpatil.com Page 18
Implementing Lockbox
• Lockbox Record Count: The number of payment records in a specific lockbox (this does not include
overflow payments, headers, or trailers).
• Matching Date 1-8: The dates to use to match receipts with transactions if you are using the Match on
Corresponding Date option for this Lockbox.
• Origination: The bank origination number provided by your bank. This number uniquely identifies the
bank branch that sends you lockbox information.
• Overflow Indicator: This type indicates whether there are any additional overflow records for this
payment.
• Overflow Sequence: A sequence number that your bank assigns to each overflow payment.
• Receipt Method: The receipt method associated to this lockbox.
• Payment Number: The identification number of a payment. For example, a check number.
• Receipt Date: The date your customer made a payment.
• Record Identifier: A number that identifies the kind of transmission record. You specify this number in
the Identifier field in the Transmission Formats window.
• Remittance Amount: The amount of a payment.
• Remittance Bank Branch Name: The name of the bank branch from which this payment originated.
• Remittance Bank Name: The name of the bank from which this payment originated.
• Status: The status of this payment.
• Total Record Count: The total number of transmission records in a bank file. This includes headers,
trailers, payments, and overflow records.
• Trans to Receipt Rate 1 to 8: The exchange rate used to convert the receipt amount from the receipt
currency to the transaction currency. This field is used for cross currency receipt applications when the
receipt and transaction currencies do not have a fixed exchange rate (the euro and all NCUs have fixed
exchange rates with each other). If the currencies have a fixed rate, this field is optional (AutoLockbox
derives the rate to use in this case).
• Transit Routing Number: The number that uniquely identifies your customer's bank. The transit routing
number and the customer bank account number make up your customer's MICR number.
• Transmission Amount: The total amount of payments for a bank file.
oracle.anilrpatil.com Page 19
Implementing Lockbox
oracle.anilrpatil.com Page 20
Implementing Lockbox
Control File
There are several seeded control files provided by Oracle for each of the seeded Transmission formats. These
control file are located in the $AR_TOP/bin directory. If you define your own Transmission Format, you must create
a control file that matches with the Transmission format before you import data into Receivables. The control file
should have an extension of .ctl
Below is a sample Control File that matches with the Transmission Format mentioned above
-- $Header: arplbox.ctl 120.1 2009/11/20 10:37:58 apatil noship $
-- Loads Lockbox flat file in to oracle
/************************************************************************************************
--* arplbox.ctl script *
*************************************************************************************************
--Program : Manual AutoLockBox US
--Description : This is a Customized Control File for Auto Lockbox US.It Imports Receipt
-- data from the flat file in to ar_payments_interface_all table
--Notes : This Control file should be in Sync with Transmission format defined.
--Author : Anil Patil
*************************************************************************************************
--Version Date Author Modifications
--1.0 11/20/2009 Anil Patil Initial Version
************************************************************************************************/
LOAD DATA
APPEND
-- Type 4 - Overflow
oracle.anilrpatil.com Page 21
Implementing Lockbox
Data File
If you have a Lockbox service arrangement with the bank, you get the Lockbox data file from the bank. If you are
using Lockbox to convert Receipts data from other system, you can generate your own data file. Below is a sample
data file that was manually generated.
2ANILRPATIL0123456789L820
6L820ZXC0010071935604 L13 091120
4L820ZXC001001015099 0030000103148394
4L820ZXC001002015102 00300001031-77336
4L820ZXC001003015103 00300001031-13526
4L820ZXC001004015104 00300001031-56719
4L820ZXC001005060876151 0030000103181406
4L820ZXC001006060876153 0030000103181406
4L820ZXC001007060876155 00300001031162812
4L820ZXC001008060876158 0030000103181406
4L820ZXC001009060876159 0030000103181406
4L820ZXC001010060876160 0030000103181406
4L820ZXC001011060876163 0030000103181406
4L820ZXC001012060876164 0030000103181406
4L820ZXC001013060876165 0030000103181406
4L820ZXC001014060876167 0030000103181406
4L820ZXC001015060876169 0030000103181406
4L820ZXC001016060876170 0030000103181406
4L820ZXC001017060876171 0030000103181406
4L820ZXC001018060876174 00300001031162812
4L820ZXC001019060876175 0030000103181406
4L820ZXC001020060876177 00300001031158276
4L820ZXC001021060876178 00300001031158276
4L820ZXC001022060876179 0030000103181406
4L820ZXC001023060876180 0030000103173658
4L820ZXC001024961019788 0030000103181406
oracle.anilrpatil.com Page 22
Implementing Lockbox
Reading the Data file: The data for record type 4 has been highlighted in different columns to explain how to make
sure that the data in the Lockbox File and the Transmission Format are in sync.
• The first column (Position 01:01) indicates the record identifier. In this case, the value is 4 since this is the
value we gave to the record type Overflow Payment.
oracle.anilrpatil.com Page 23
Implementing Lockbox
• The second column (Position 02:05) indicates the Lockbox Number. (Value = L820).
• The third column (Position 06:08) indicates the Batch Name. (Value = ZXC).
• The fourth column (Position 09:011) indicates Item Number. The Item Number would remain the same
value for one receipt.
• The fifth column (Position 12:14) indicates Overflow Sequence. The overflow sequence is normally a
sequential numbering.
• The sixth column (Position 15:15) indicates Overflow Indicator. This type indicates whether there are any
additional overflow records for this payment. In this case the overflow indicator value is gives as 0. When
the Lockbox process gets a value of 0, it will go to the next record for overflow payment application. A
non-zero value (in this case 9) indicates end of Overflow Payments.
• The seventh column (Position 16:30) indicates the Invoice number. Note that the Invoice number is Left
justified and the fill symbol is Blank. Hence you see blank spaces after the Invoice number.
• The eighth column contains data that you do not need in your Lockbox process and hence you have not
included it in the Transmission Format.
• The ninth column (Position 34:41) indicates the Customer Number. Note that the Customer number is
Right justified and the fill symbol is Zero. The Customer Number in this case is 1031 and since it is right
justified with zero fill symbol, the value in the file for the customer number should be 00001031.
• The tenth column (Position 42:51) indicates the amount that needs to be applied to the Invoice. Note that
the value of 48294 would actually mean 482.94 because the Format Amount is set to Yes. If the format
amount is Yes, Oracle Receivables will round the amount to the same degree of precision and the same
number of decimal places as your functional currency format.
oracle.anilrpatil.com Page 24
Implementing Lockbox
Start
Copy
Lockbox
Data file in
required
folder
Run Submit
Lockbox Process
Step 1: Import
YES
Run Submit
Lockbox Process Any Errors?
Step 2: Validation
Run Submit
Lockbox Process
Step 3: PostQuick
Cash
End
oracle.anilrpatil.com Page 25
Implementing Lockbox
oracle.anilrpatil.com Page 26
Implementing Lockbox
• GL Date: Enter the date to post the receipt and batch records in this lockbox transmission to your general
ledger in the GL Date field. If you defined your GL Date as 'Constant Date' in the Lockboxes window,
you must enter a GL Date; if you specified a GL Date of 'Deposit Date' or 'Import Date', Receivables uses
this as the GL date.
• Report Format: Specify All if you want a detail validation report of all records. Specify Rejects Only if you
only want details of the records that failed validation
• Complete Batches Only: Check this option if you want Receivables to create receipts only if all the receipt
records of the batch are valid. If this option is unchecked, receivables will create receipts for the valid
records and the non valid records will be rejected.
• Allow Payment of Unrelated Invoices: Check this option if you want Receivables to apply Payments to
unrelated Invoices (Invoices belonging to unrelated Customers)
• Post Partial Amount as unapplied: If this option is enabled, Lockbox process applies the Receipt to valid
transactions and the remaining receipt amount that could not be applied because of invalid transaction
numbers is considered as unapplied amount. This option is generally set to Yes.
• Reject Entire Receipt: If there are any invalid transaction numbers in the Lockbox file, the entire receipt is
rejected. The receipts data remains in the ar_payments_interface_all table. You can update the invalid
record using the Maintain Lockbox Transmission Data window.
Step 3: PostQuick Cash Process
• Submit PostQuick Cash: Check the Submit PostQuick Cash check box, if you want the Lockbox process to
run PostQuick Cash process. When Receipts are created using AutoLockbox, Receivables stores the receipt
information in interim tables. Running PostQuick Cash applies the receipt and updates your customer’s
receivable balance.
oracle.anilrpatil.com Page 27
Implementing Lockbox
Within each transmission, Receivables displays the lockbox and batch records first, followed by the receipts and
overflow records. The lockbox import program assigns a date to transmission records that you import into
Receivables and displays transmissions by date when you query them in this window.
Check the error messages in the Status field. If the error is contained in the control, receipt, or application
information, you can make changes to the invalid records by selecting the record, then choosing one of the
following:
• Receipt : Choose this button to review and edit specific receipt information. You can change the values of
fields that are included in your transmission format
• Receipt Attributes: Choose this button to review and maintain receipt descriptive flexfield information
imported with your lockbox transmission. You can change the values of fields that are included in your
transmission format
oracle.anilrpatil.com Page 28
Implementing Lockbox
• Applications: Choose this button to review and maintain application information for each receipt within
this transmission.
• Control: Choose this button to review the lockbox transmission control information that corresponds to this
transmission record. You can change the values for fields that are included in your transmission format
oracle.anilrpatil.com Page 29
Implementing Lockbox
1) Customer Number
If a Customer Number is provided in the Lockbox File that you import through AutoLockbox, Receivables
will try to apply the receipts using whatever application information is provided in your Transmission
Format. E.g. If you have a customer number in the Overflow Payment record type (Record Identifier = 6 in
the example shown above), Receivables will apply the receipt to the Customer Number mentioned in your
Lockbox File.
2) MICR Number
MICR stands for Magnetic Ink Character Recognition). A MICR number consists of two segments. The first
segment is the Transit Routing Number and the second segment is the Customer’s Account Number. The
Transit Routing Number identifies the bank from which your Customer draws the Check. In Oracle
Receivables, this number should be entered in the Bank Branch Number of the Banks window. The Customer
Account Number should be entered in the Bank Account Number field of the Banks window. AutoLockbox
uses the MICR number to identify and associate the Customer with a receipt only if both the following
conditions are True
In the Transmission Format example shown above, you will notice that you have the Transit Routing Number
and Account Number transmission fields included in your Payment record type. You also have the Customer
Number field in your Overflow Payment record type. However in the Lockbox data file, you only have values
for Customer Number and therefore Receivables associates the Customer based on the Customer Number
mentioned in the Overflow Payment records.
If you had values in the Lockbox data file for both i.e. MICR number of Payment record type (Transit
Routing Number + Account Number) and Customer Number of Overflow Payment record type, Receivables
will ignore the MICR number and associate the Customer based on the Customer Number of your Overflow
Payment record.
3) AutoAssociate
If Receivables cannot determine the Customer based on the MICR number or the Customer number, you can
use AutoAssociate to determine the Customer based on the debit item number (Invoice number) mentioned in
the Lockbox file. If there is no MICR number or Customer number in the lockbox file and if Auto Associate
is set to Yes, Lockbox process will identify the Customer based on the debit item number given in the
Lockbox file. This option is also useful when you have scenarios wherein customer A makes payment for
Customer B’s invoices. If you are using Auto Associate, when applying payment from Customer A to open
invoices of Customer B, the receipt will be identified as paid by Customer B.
oracle.anilrpatil.com Page 30
Implementing Lockbox
If the MICR number and Customer number is not included with the receipt record and if AutoAssociate is set
to No, the Receipts are created by Lockbox with a status of Unidentified.
Conclusion
This document gives you an overview of the Oracle Receivables Lockbox Process and also gives you step by step
instructions on implementing Lockbox functionality from scratch. You should now be able to implement Lockbox
either for a Lockbox service from Bank or for converting Receipts information from any other sources. Many
companies do not utilize the Lockbox service from the bank but would still like to use the Lockbox functionality for
the ease to use approach of the Lockbox design for converting Receipts. This document gives you all the required
information for doing that.
References
Oracle Receivables User Guide Release 12 (Part No: B31211-01)
Oracle Receivables Implementation Guide Release 12 (Part No: B31212-01)
oracle.anilrpatil.com
Implementing Lockbox
Nov 2009
Author: Anil Patil
Email: contact@oracle.anilrpatil.com
oracle.anilrpatil.com Page 31