Retroactive Pricing

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Retroactive Pricing
Contents
Introduction……………………………………………………………………………………….3 Setup……………………………………………………………………………………………...3 Methods of Updating the Retroactive Pricing…………………………………………………5 Retroactive Pricing Cycle……………………………………………………………………….5 Change Order Workflow Setup……………………………………………………………….22

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With 11.9. Blanket Releases and Standard Purchase Orders that have not been received or billed will be updated with retroactive price change(s) entered on their corresponding Blanket Agreement / Global Blanket Agreements. even if there has been receiving and invoicing activities against them. In these scenarios it is possible that the updated price is applicable retroactively. With 11. 3 .10. In fact.5. A firm price may get finalized several months into the life of the agreement.Introduction Prices for items on blanket agreements can change over the effective period of an agreement as a result of ongoing negotiations between the buyer and the supplier. Oracle Purchasing can optionally update prices on orders (Blanket Releases & Standard POs) to reflect the latest agreement price. Oracle Purchasing allows buyers to make price changes on global blanket agreements and on blanket agreements.5. it is common practice in certain industries to initiate and execute against an agreement with an interim price.

‘All Releases’ Profile option 'PO: Allow Retroactive Pricing of POs' must be set to determine if blanket releases and standard purchase orders can be mass updated with retroactive price change(s) entered on their corresponding Blanket Agreement. if the archive mode for that operating unit is set to Approve. the Payables department can then process either a payment or a debit memo request against the price adjustment invoice. then retroactive pricing will be performed on all releases (including those which have accrual/liability accounting entries. Oracle Purchasing automatically adjusts the accrued liability to reflect the latest pricing. the ‘Archive on’ for Standard POs and Releases must be set to 'Approve'. ‘Open Releases’. for orders that have been received. Navigation: Purchasing Responsibility Setup > Purchasing > Document Types Retroactive Price Adjustment Account In the Receiving Options Form. Oracle Purchasing automatically generates price adjustment invoices in Oracle Payables. or invoices). Setup Profile Option Setup User Profile Name: ‘PO: Allow Retroactive Pricing of Pos’ Profile Option Name: PO_ALLOW_RETROPRICING_OF_PO Possible Values for the Profile option: blank. If the profile option ‘PO: Allow Retroactive Pricing of Pos’ is set to 'All Releases'. for orders that have been invoiced. Depending on the nature of the change. ‘Never’. Retroactive Price Adjustment Account must be set. If this profile is not set or is set to ‘Never’. Navigation: Purchasing Responsibility Setup > Organizations > Receiving Options 4 . accrued receipt. Archive Mode In the Document Types Form.Additionally. Finally. the 'Apply Retroactive Price Update to Existing PO/Releases' checkbox will be disabled in the Blanket Agreement Approval window and the 'Retroactive Price Update of Purchasing Documents' concurrent program will not update any Releases/Standard POs.

• While approving the Blanket Purchase Agreement. then Retroactive Price Update process will update the associated Standard Purchase Order with the new price. Retroactive Pricing can be updated using any of the following method. Encumbrance Retroactive Pricing is not supported in encumbered environments. the Retroactive Price Update process will update the associated Blanket Releases with the new price. Retroactive Pricing Cycle 5 . • The 'Retroactive Price Update of Purchasing Documents' concurrent program will not perform any processing. If the Global Blanket Agreement line has been updated with a new price. • By running the concurrent program 'Retroactive Price Update on Purchasing Documents'. PO: Allow Retroactive Pricing of POs is set to Open Releases Only. Encumbrance accounting must be turned off. "Cumulative Pricing" checkbox under Agreement tab should be disabled. In the Blanket Purchase Agreement. by selecting the option 'Apply Price Update to Existing POs and Releases'. then: • The 'Apply Retroactive Price Updates to Existing PO/Releases' check box will not be displayed on Blanket Approval window even if the profile option. If PO Encumbrance is on. Methods of updating the Retroactive Pricing Once the Blanket Agreement line has been updated with a new price. In approval Window > Additional Options Tab page.Cumulative Pricing Cumulative Pricing with Retroactive Pricing is not supported.

Step 2 – Create Release Navigation: Purchase Orders > Releases  Create Release against the BPA 6 . Profile option: 'PO: Allow Retroactive Pricing of POs' is set as ‘All Releases’ Retroactive Price Adjustment Account Value: Method 1: Responsibility: Purchasing Responsibility Step 1 – Create BPA Navigation: Purchase Orders > Purchase Orders  Create and approve a Blanket Purchase Agreement. The same cycle is also applicable for the Standard Purchase Order created based on the Global Blanket Purchase Agreement.The following steps outline the Retroactive Pricing Cycle with an Example of Blanket Release.  Ensure that ‘Cumulative Pricing’ under Agreement Tab is disabled.

7 .Release: 5894-1 Release: 5894-2 Release: 5894-3 Step 3 – Create Receipt Navigation: Receiving > Receipts  Create Receipt against the Release 5894-1.

Select the Transaction Type > Choose Tools menu > View Accounting.Step 4 – Accounting Details (Informational Step – No Action Taken) Navigation: Receiving > Receiving Transactions Summary    Find the Receipt 9837. Receive Transaction:   Receiving Inspection Account – Debit @ (PO Unit Price * Received Quantity) Accrual Account – Credit @ (PO Unit Price * Received Quantity) Deliver Transaction: 8 . Check the accounting information for the Receive and Deliver Transactions.

Material Valuation Account – Debit @ Standard Cost of the item. Check the Accounting Details for the Deliver Transaction. 9 .Responsibility: Inventory Responsibility Navigation: Transactions > Material Transactions      Query for the Source Document 5894. Receiving Inspection Account – Credit @ (PO Unit Price * Received Quantity) Purchase Price Variance Account – Credit @ Difference in Price.

Step 6 – Accounting Details (Informational Step – No Action Taken) Navigation: Invoices > Entry > Invoices  Tools menu > View Accounting Step 7 – Release Details (Informational Step – No Action Taken) Responsibility: Purchasing Responsibility 10 .Step 5 – Create Invoice Responsibility: Payables Responsibility Navigation: Invoices > Entry > Invoices   Create Invoice for the Release 5894-1. Validate and Create Accounting for the invoice.

select the option 'Apply Price Update to Existing POs and Releases' 11 . While approving the BPA. Quantity Received & Quantity Billed.Navigation: Purchase Orders > Releases   Query the Release 5894-1. Change the Price. Step 8 – Modify the BPA Price Navigation: Purchase Orders > Purchase Orders   Query the Blanket Purchase Agreement 5894. Check the Status. In approval Window > Additional Options Tab page. (Changed the Price from 7 to 8) Step 9 – Approve the BPA  Approve the BPA.

 Note the Workflow Activity ‘Mass Update Releases/Std Pos’ is in Deferred Status. The workflow activity 'Retroactive Update Invoiced Releases/Std POs. Step 10 – Workflow Details (Informational Step – No Action Taken) Navigation: Purchase Orders > Purchase Order Summary  Find the BPA 5894  Check the Approval Workflow Details.  BPA Status is changed to ‘Approved’. Released amount still shows the same value. 12 .' is designed to run in DEFERRED mode.  Choose Inquire menu > View Approval through Workflow.

Step 13 – Check the Release Details (Informational Step – No Action Taken) Navigation: Purchase Orders > Releases 13 . BPA Released amount is changed to new value. Step 12 – Check the BPA (Informational Step – No Action Taken) Navigation: Purchase Orders > Purchase Orders   Query the Blanket Purchase Agreement 5894.Step 11 – Run Workflow Background Process Navigation: Reports > Run  Single Request .execute the request ‘Workflow Background Process’ for the item type ‘PO Approval’ and ‘Process Deferred’ as ‘Yes’.

14 .     Check the Releases created against the BPA 5894. Incomplete Release. Received & Billed. Release price for all the 3 releases are changed to the new BPA price. Approved Release. Not yet Received / Billed. Release 5894-1. Release: 5894-1 Release: 5894-2 Release: 5894-3 Step 14 – Receipt Accounting Details (Informational Step – No Action Taken) Navigation: Receiving > Receiving Transactions Summary  Find the Receipt 9837. Approved Release. Release 5894-3. Release 5894-2.

Select the Transaction Type > Choose Tools menu > View Accounting.   Check the accounting information for the Receive and Deliver Transactions. Receiving Inspection Account – Credit for the Changed Amount. Deliver Transaction:    Retroactive Account – Debit for the Changed Amount. 15 . Receive Transaction:   Receiving Inspection Account – Debit for the Changed Amount Accrual Account – Credit for the Changed Amount. No Accounting Entries happen in Inventory Subledger. Accounting for Retroactive Pricing got created.

16 .‘Create Adjusting Documents in Payables Program’ for the BPA 5894.Step 15 – Invoice Details (Informational Step – No Action Taken) Responsibility: Payables Responsibility Navigation: Invoices > Entry > Invoices  Find the invoice for the BPA 5894  No changes Step 16 – Run ‘Create Adjusting Documents in Payables Program’ Navigation: Other > Requests > Run  Single Request .Execute the request .

17 .Step 17 – Invoice Details (Informational Step – No Action Taken) Navigation: Invoices > Entry > Invoices  Find the invoice for the BPA 5894  PO Price Adjustment invoice is created.

Profile option: 'PO: Allow Retroactive Pricing of POs' is set as ‘Open Releases’ Step 1 – Profile Option Value Responsibility: System Administrator Responsibility Navigation: Profile > System   Query the Profile Option 'PO: Allow Retroactive Pricing of POs' Set the value as ‘Open Releases’ Step 2 – Modify the BPA Price Navigation: Purchase Orders > Purchase Orders   Query the Blanket Purchase Agreement 5894. (Changed the Price from 8 to 8.Method 2: Updating the Retroactive Pricing using the concurrent program 'Retroactive Price Update on Purchasing Documents'. Change the Price.5) 18 .

 Check the workflow to ensure that there is no call related to Retroactive Pricing. Released amount still shows the same value. Do not select the option 'Apply Price Update to Existing POs and Releases'. In approval Window > Additional Options Tab page. Step 4 – Workflow Details (Informational Step – No Action Taken) Navigation: Purchase Orders > Purchase Order Summary 19 . While approving the BPA.  BPA Status is changed to ‘Approved’.Step 3 – Approve the BPA  Approve the BPA.

 Also the activity ‘Does User want to Mass Update Releases’ is returning the value ‘No’. 20 .   Find the BPA 5894 Check the Approval Workflow Details.  Note that the Workflow is completed. Choose Inquire menu > View Approval through Workflow.

Release 5894-1. Release 5894-2. Release: 5894-1 Release: 5894-2 Release: 5894-3 21 . Release price for the releases are not changed to the new BPA price. Incomplete Release. Approved Release. Approved Release.Step 5 – Check the Release Details (Informational Step – No Action Taken) Navigation: Purchase Orders > Releases      Check the Releases created against the BPA 5894. Release 5894-3. Received & Billed. Not yet Received / Billed.

Release 5894-1. Approved Release.  Release 5894-2.execute the request 'Retroactive Price Update on Purchasing Documents' for the BPA 5894. 22 .Step 6 – Run 'Retroactive Price Update on Purchasing Documents' Navigation: Reports > Run  Single Request . Received & Billed. Release price for the Open releases are changed to the new BPA price. Price is NOT changed. Approved Release. Price is changed. Not yet Received / Billed. Step 7 – Check the Release Details (Informational Step – No Action Taken) Navigation: Purchase Orders > Releases    Check the Releases created against the BPA 5894.

When the above attribute is set to No. • Double Click on the attribute 'Change Order Header Auto Approve Retroactively Priced Releases' • Specify the Value as ‘Y’ 23 . 'Change Order Header Auto Approve Retroactively Priced Releases'. the Open Releases/Standard POs that were re-priced will be processed by Standard Change Order Workflow functionality (which includes existing checks made before determining whether the document will go through manual re-approval or Change Order workflow) The workflow file involved is poxwfpoa. • Expand Attributes. • Open the Workflow file in Workflow Builder. Incomplete Release.wft. to Yes to automatically route the Blanket Releases and Standard Purchase Orders re-priced by the concurrent program thorough the Change Order Workflow process without subjecting them to other checks (that are made to determine whether the document needs to be routed thorough' Change Order Workflow. Price is changed. Change Order Workflow Setup The PO Change Order Workflow attribute can be set to facilitate automatic re-approval of Releases re-priced by the Retroactive Price Update of Releases concurrent program. effectively short-circuiting of these checks) • The default value of the attribute would be set to No. Release 5894-3. • Set Header Level Attribute.

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