FI115 Umoja Accounts Receivable Overview. Umoja Accounts Receivable Overview Version 12 1

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1 FI115 Umoja Accounts Receivable Overview Umoja Accounts Receivable Overview Version 12 Copyright Last Modified: United 14-August-13 Nations 1

2 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 2

3 Course Overview The purpose of the Umoja Accounts Receivable Overview course is to explain the key changes that will take place in the Accounts Receivable process following Umoja implementation. Prerequisite Review The following prerequisites should be completed before taking this course: Umoja Overview Umoja Master Data and Coding Block Overview Course Duration: 2 hours 3

4 Course Objectives After completing this course, you will be able to: Describe the Accounts Receivable process within Umoja List the key roles and responsibilities in the Accounts Receivable process Describe the key changes and benefits of the Umoja Accounts Receivable process Name the elements that constitute Accounts Receivable Master Data Identify the Umoja processes conducted within Accounts Receivable 4

5 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 5

6 Module 1 Objectives After completing this module, you will be able to: List the current challenges in Accounts Receivable List the key changes that will take place after the Umoja implementation Explain the Umoja solution for Accounts Receivable Explain the high-level Accounts Receivable process Explain the interaction between the Accounts Receivable process and other process areas within Umoja 6

7 Roles & Responsibilities The following Umoja Enterprise roles are involved in the A/R process: Financial Accounting User (A/R) Creates A/R customer invoices and credit memos within the Accounts Receivable Sub-ledger and submits them into the workflow Creates dunning notices for customers when items are overdue Clears A/R customer invoices Financial Accounting Approver (A/R) Reviews/Approves/Rejects customer invoices and credit memos created by Financial Accounting User (A/R) within Accounts Receivable Sub-ledger through a workflow Reviews/Rejects printed dunning notices (manual step) Posts parked invoices and clears them 7

8 Key Terminology Key Term Accounts Receivable (A/R) Invoice Billing Credit Memo Customer Master Reconciliation Account Description A legally binding document itemizing money owed for products or services rendered The process of calculating the amount a customer owes the UN for services rendered or products purchased A posting that reduces the balance of receivables. A credit memo is normally created if the goods or services provided are returned or the price charged is too high A data record containing all the information necessary to conduct business with a single customer. Each record includes three levels of data: general level data, company code level data and sales organization level data An account that reflects sub-ledger activity in the General Ledger. Each customer is assigned to a reconciliation account at the time of set up. An example of a reconciliation account could be Accounts Receivable from Member States 8

9 Key Terminology Key Term Dunning Credit Check Business Partner Block Description The process of notifying customers of outstanding debts and systematically applying penalties to ensure payment A static or dynamic mechanism to block sales orders and delivery documents automatically if the customer has any outstanding invoice for a predefined period. In order to classify customers according to the risk they represent and to trigger the relevant checks, risk categories are defined and assigned to customers All roles that a person or legal entity can assume in relation to a business transaction are represented by Business Partners in Umoja A restriction against a customer master data record that prevents it from any future activity against the account. There are different types of blocking such as Posting Block and Payment Block 9

10 Key Terminology Key Term Payment Block Company Code Park Payment Terms Description A block that stops payments to the customer at company code level The highest organizational structure of financial accounting and control under which all structures use the same chart of accounts The intermediate process of saving a document until it is ready to be approved and posted to the General Ledger. In Umoja, documents can be parked in one of the two ways: Save Parked Document or Save as Completed. Documents saved as Save Parked Document remain with the processor. Only the Save as Completed documents enter the Workflow for approval The permissible length of time for a customer to pay the A/R Invoice 10

11 Accounts Receivable The Accounts Receivable (A/R) process area is comprised of all business processes related to recording and tracking receivables from Member States, donors, real estate customers, staff members and any other entity that owes money to the UN. In Umoja, A/R transactions are maintained in the Accounts Receivable sub-ledger. Receivables are tracked to ensure timely payments by customers. In the event of late payments, a Dunning process is implemented that creates reminders or notices automatically in the Umoja system. Dunning will be covered later in this course. 11

12 Accounts Receivable Activities Some of the A/R activities conducted in headquarters and the field are listed below: A/R Activities conducted in the field Goods sold and services rendered Recovery of: VAT from host government Vehicle repair charges from UN Agencies Use of conference facilities Advances and other recoveries from staff members Advance to organize programs Common services used by UN Agencies and NGOs Sale of assets A/R activities conducted at HQ Catering Services Sale of Publications Guided tours Sale of audio/visual products Lease administration for owned and subleased properties Proceeds from the sale of used and surplus property Grants billing to donors, and Transfer of revenue bearing work/service order management to other UN agencies 12

13 Challenges The challenges of the A/R process are listed below: Recoveries are added manually in Sun and IMIS; there is no A/R sub-ledger The Sun system does not prompt a down payment or advance when invoices are settled Credit Management and Dunning (collection reminders) are done manually Matching (allocation) of receipts against receivables is done manually 13

14 Umoja Solution for Accounts Receivable The Umoja solution for A/R involves the implementation of the A/R module to administer customer accounts and receivables. The A/R module in Umoja has the following capabilities: Centralized Data Umoja introduces the concept of centralized master data, eliminating the need to maintain separate customer accounts at each respective location. Automatic Postings in Accounts Receivable Since Sales and Distribution is integrated with Umoja, customer receivables and credit memos are automatically updated in respective accounts as A/R. Credit Management Credit management defines credit limits for each customer at the credit control area level. It includes a credit check to automatically block sales orders if the customer has any outstanding invoice(s) beyond a specified period e.g 60 days. 14

15 Umoja Solution for Accounts Receivable Dunning The Dunning process creates reminders or notices automatically based on the scenarios defined in the Umoja system. The dunning functionality proposes overdue items based on dunning interval, grace days and dunning level. Reports for Accounts Receivable Umoja provides standard reports for A/R, such as: Line Item Report List of Customers Report Customer Ageing Report Due Date Analysis, Down Payment, Credit Blocked Report Credit Master Report Credit Limit Report Dunning Report Open Item Report 15

16 Key Changes and Benefits after the Umoja Implementation The key changes and benefits in A/R after the Umoja implementation are: Change Impact In Umoja, the functional areas will initiate transactions to generate invoices, for example, through Sales and Distribution module. Allocation of incoming payments to receivables will now be done automatically where there is a match. In Umoja, dunning is built in to remind the customers of amounts past due. A dunning report is generated to track, report and issue dunning notices from the Umoja system. Automated templatebased dunning notices from Umoja will be generated. In Umoja, there will be a functionality to 'Block' a customer in case of outstanding invoices. Umoja Solution Benefit The implementation of Umoja will result in reduction of manual effort for the Finance section as posting to accounts and invoice generation will be automated. Automated matching in the Umoja system will reduce errors. Automation of dunning in the Umoja system will improve the Collection process and make it more systematic. The Block functionality will lead to reduction in future bad debts. 16

17 High-level Accounts Receivable Process The Umoja A/R solution includes the following processes: Customer Invoice Processing Incoming Payment Processing Collections Write-Offs Note: An overview of each process is covered in the third module. 17

18 Touch Points The Umoja system is an integrated system and most of its modules integrate with each other to complete a process. Touch points refer to these integration points across Umoja modules, processes and activities. Sales and Distribution Assets Management Accounts Receivable General Ledger Project Systems Real Estate 18

19 Learning Checkpoint 1 The A/R process interacts with which of the following modules in Umoja Foundation? Select the correct option. A. Sales and Distribution B. Project Systems C. General Ledger D. Travel E. A,B and C F. All of the Above 19

20 Learning Checkpoint 1 The A/R process interacts with which of the following modules in Umoja Foundation? Select the correct option. A. Sales and Distribution B. Project Systems C. General Ledger D. Travel E. A,B and C F. All of the Above Option E is the correct answer. The A/R process interacts with Sales and Distribution, Project Systems and General Ledger. 20

21 Learning Checkpoint 2 The details of the A/R activity are maintained in the. Fill in the blank with the correct option. A. General-Ledger B. Sub-Ledger C. Sales-Ledger D. Purchase-Ledger 21

22 Learning Checkpoint 2 The details of the A/R activity are maintained in the. Fill in the blank with the correct option. A. General-Ledger B. Sub-Ledger C. Sales-Ledger D. Purchase-Ledger Option B is the correct answer. The details of the A/R activity are maintained in the Sub-Ledger. 22

23 Module 1 Summary The key points covered in this module are listed below: The Umoja solution for A/R involves the implementation of the A/R module to administer customer accounts and receivables The Enterprise roles involved in A/R are Financial Accounting User (A/R) and Financial Accounting Approver (A/R) The Umoja A/R solution includes Customer Invoice Processing, Incoming Payment Processing, Collections and Write-Offs processes The A/R process interacts with Sales and Distribution, General Ledger, Assets Management, Sales and Distribution, Real Estate and Project Systems 23

24 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 24

25 Module 2 Objectives After completing this module, you will be able to: Identify master data elements used within the Accounts Receivable process 25

26 Accounts Receivable Master Data Elements Accounts Receivable Master Data includes two elements as depicted below: Business Partners Account Group 26

27 Business Partner Business Partner Account Group Master Data Vendor Master Data Customer Master Data Recorded as Business Partners in Umoja A/R requires the creation of customer and vendor as master data elements to execute transactions and maintain source data. These are recorded as Business Partners in the Umoja solution. The following user roles can be assigned to a Business Partner: UN Customer FI Customer Customer (with SD view) Vendor Tenant Counterparty Treasury Counterparty Sponsor 27

28 Business Partner Business Partner Account Group Business Partner Entity (Legal or Person) that gives or owes money to UN The process of maintaining a Business Partner record is triggered by the request to: Create a new Business Partner Update the information on the existing Business Partner Change the status of the existing customer 28

29 Business Partner Business Partner Account Group After the request to create a Business Partner is received, it is forwarded to the Master Data Maintenance Team, which will process it and send a notification on completion to the requestor. Request to Create Business Partner Notify on Completion Requestor Master Data Maintenance Team Note: Business Partners in Umoja are split by Account groups. 29

30 Account Group Business Partner Account Group Account groups are created to distinguish the types of customers at the UN. Each account group is assigned to different number ranges within Umoja. All parties dealing with the UN are first created as Business Partners and then assigned one or more account groups. 30

31 Learning Checkpoint 1 Each entity (legal or person), which gives or owes the UN money, is recorded as a in Umoja. Fill in the blank with the correct option. A. Sponsor B. Cashier C. Financial Accounting Approver D. Business Partner 31

32 Learning Checkpoint 1 Each entity (legal or person), which gives or owes the UN money, is recorded as a in Umoja. Fill in the blank with the correct option. A. Sponsor B. Cashier C. Financial Accounting Approver D. Business Partner Option D is the correct answer. Each entity (legal or person), which gives or owes the UN money, is recorded as a Business Partner in Umoja. 32

33 Learning Checkpoint 2 True/False: Account groups are created to distinguish the types of customers at the UN. Select the correct option. A. True B. False 33

34 Learning Checkpoint 2 True/False: Account groups are created to distinguish the types of customers at the UN. Select the correct option. A. True B. False Option A is the correct answer. Account groups are created to distinguish the types of customers at the UN. 34

35 Module 2 Summary The key points covered in this module are listed below: A/R requires the creation of customer and vendor as master data elements to execute transactions and maintain source data. These are recorded as Business Partners in the Umoja system Business Partners in Umoja are split by Account groups 35

36 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 36

37 Module 3 Objectives After completing this module, you will be able to: Explain the Customer Invoice Processing (A/R) process Explain the Incoming Payment Processing process Explain the Collections process Explain the Write-Offs process 37

38 Customer Invoice Processing (A/R) The Customer Invoicing process outlines the requirements to create invoices from different business areas and is initiated by multiple triggers corresponding to those business areas. 38

39 Creation of Customer Invoice The Customer Invoicing process covers the creation of automatic and manual customer invoices such as: Assessments from member states will be calculated outside Umoja and interfaced into Umoja (Cluster 3 onwards) Lease Administration Grants Management Travel Management (Travel Advances) Other manual customer invoice creation initiated by Finance Transactions from revenue bearing work or service order management processed in Sales & Distribution (SD) 39

40 Customer Invoice (A/R) Process Description The Accounts Receivable Customer Invoice (A/R) Process generates, prints, and transmits sales invoices to the customer. A/R invoices can be created in the A/R module, Real estate or in Sales & Distribution (SD) module. The SD module is integrated with the A/R and General Ledger modules. A high-level view of the Customer Invoice process is given below: Generate system invoice Print invoice Transmit invoice to customer 40

41 Incoming Payment Processing Description Umoja will automatically clear incoming bank payments when certain criteria are met. Remaining items that were not matched will be manually cleared. A high-level view of the Incoming Payment process is given below: Check if invoice exists in Umoja Check if payments equals invoice Check payment difference Clear invoice Post difference as partial payment Follow up with customer Note: The steps followed to execute the Incoming Payment process are covered in the FI332: Accounts Receivable Process course. 41

42 Options for Payment Clearance The incoming payments from customers can be received via EFT (Electronic Fund Transfer), bank deposits and cheques. Umoja has the capability to process complete or partial payments. If the payment received is less than the invoice amount, the payment can be cleared manually against the invoice using one of the following two options: Write-off the Difference Make a Partial Payment Expense the difference if it is within tolerance limits. (Write-offs outside the tolerance limit is a different process). Record a partial payment, which means that the difference between the invoiced amount and the incoming payment will remain as outstanding with the same terms of payment. 42

43 Collections Description The Collections process is a preventive measure to reduce the amount of outstanding payments, which could be classified as bad debt at the later stage, by informing the UN customers of their open items status. In Umoja, there is only one dunning level, which consists of issuing Reminder letters. The format of the Reminder letter will vary based on the customer type. A high-level view of the Collections process is given below: Execute Customer A/R Open Items Report Run Dunning Proposal Review Dunning Proposal Approve Dunning Proposal Create Dunning Notice to send to Customer 43

44 Write-Offs Description This process involves identifying the bad debt which has to be written-off and depicts the process for the write-off approval. It includes requests for blocking customers and changing credit terms on the customer profile. The Write-off process starts when the Organization is not able to collect the receivable in spite of all the possible collection efforts. Approval for write-off is handled outside of Umoja. The Write-off process is triggered when the Write-off Process Requestor identifies a need for: Write-Off Blocking the Customer Changing Credit Terms 44

45 High-Level View of Write-Offs Process A high-level view of the Write-off process is given below: Write -Off Obtain Writeoff Approval Create Parked Document for Write-Off Approve Parked Document Post Parked Document for Write-Off Blocking the Customer Review customer open items for blocking customer Obtain Authorization to Block Customer Approve Forward to Business Partner Master Data Maintenance team Changing Credit Terms Review Customer Open Items for Credit Terms Obtain Authorization to Change Credit Terms Approve Forward to Business Partner Master Data Maintenance team 45

46 Reports A number of reports are used across the Umoja A/R Overview process. Some of these reports are: Customer Balance Reports Accounts Receivable Information System Customer Balances in original and Company Code Currency Account Balance Customer Item Reports Due Date Analysis for Open Items List of Customer Line Items Customer Payment History Aging Report 46

47 Learning Checkpoint 1 The process is a preventive measure to reduce the amount of bad debt. Fill in the blank with the correct option. A. Collections B. Write-Offs C. Customer Invoice Process D. Incoming Payment Process 47

48 Learning Checkpoint 1 The process is a preventive measure to reduce the amount of bad debt. Fill in the blank with the correct option. A. Collections B. Write-Offs C. Customer Invoice Process D. Incoming Payment Process Option A is the correct answer. The Collections process is a preventive measure to reduce the amount of bad debt. 48

49 Learning Checkpoint 2 A/R invoices can be created in which of the following modules? Select the correct option. A. Accounts Receivable B. Sales and Distribution C. Real Estate D. Supplier Relationship Management E. A,B and C F. All of the Above 49

50 Learning Checkpoint 2 A/R invoices can be created in which of the following modules? Select the correct option. A. Accounts Receivable B. Sales and Distribution C. Real Estate D. Supplier Relationship Management E. A,B and C F. All of the Above Option E is the correct answer. A/R invoices can be created in the Accounts Receivable, Sales and Distribution, and Real Estate modules. 50

51 Module 3 Summary The key points covered in this module are listed below: The Customer Invoicing Process (A/R) outlines the steps taken to create invoices Umoja will automatically clear incoming bank payments when certain criteria are met. Remaining items that were not matched will be manually cleared. The Collections process is a preventive measure to reduce the amount of outstanding payments, which could be classified as bad debt at a later stage, by informing UN customers of the status of their open items status The Write-off process involves identifying bad debt that has to be written-off and approving the write-off 51

52 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 52

53 Course Summary The key points covered in this course are listed below: The Umoja solution for A/R involves the implementation of the A/R module to administer customer accounts and receivables A/R requires the creation of customers and vendors as Business Partners (a master data element) to execute transactions and maintain centralized source data The Customer Invoicing (A/R) process outlines the requirements to create invoices Umoja will automatically clear incoming bank payments when certain criteria are met. Remaining items that were not matched will be manually cleared. The Collections process is a preventive measure to reduce the number of outstanding payments that could be classified as bad debt The Write-off process involves identifying bad debt that has to be written-off and approving the write-off 53

54 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 54

55 Course Assessment Now that you have completed all the modules in this course, you can test your knowledge by completing the Course Assessment. To receive credit for completing this course, you must pass this assessment with a minimum score of 90%. To complete the assessment you must return to the Learning Management System: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click on the Start link of the course assessment 5. Click the Submit button once you have completed the assessment 55

56 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Accounts Receivable Master Data Module 3: Accounts Receivable Processes Course Summary Course Assessment Course Survey 56

57 Course Survey Your feedback is important to the continuous improvement of our training program. Please complete the evaluation for this course using the following steps: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click on the Start link of the course survey 5. Click the Submit button once you have completed the course survey 57

58 Congratulations! You have successfully completed the Umoja Accounts Receivable Overview course. 58