Use this window to set control options and defaults used throughout Payables. You can set defaults in this window that will simplify supplier entry, invoice entry, and automatic payment processing. Although you need to define these options and defaults only once, you can update most of them at any time to change controls and defaults for future transactions.

 

Set up Payables to create accounting entries in compliance with one of the following accounting methods:

• Cash Basis Accounting You account only for cash transations. You account only for payments, and do not record liability information for invoices. The payment accounting entries typically debit your expense or asset account and credit your cash or cash clearing account. When you create accounting entries, Payables might also create entries for discount taken and foreign currency exchange gain or loss.
  Payables uses the payment date as the accounting date for your expense and cash journal entries.
• Accrual Basis Accounting You create accounting entries for invoices and payments. The invoice accounting entries generally debit your expense or asset account and credit your liability account. For prepayments, Payables creates accounting entries that debit your prepayment account and credit your liability account. For prepayment applications, Payables creates accounting entries that debit your liability account and credit your prepayment account.

• Combined Basis Accounting You maintain one set of books for cash accounting and one set of books for accrual accounting.
  You choose which will be your primary and your secondary set of books. Invoice accounting entries are recorded for your
  accrual set of books, and payment accounting entries are recorded in both your cash set of books and accrual set of books.
  Combined basis accounting allows you to produce financial reports for either your cash or accrual set of books. For example, you may want to manage your company on an accrual basis, but require cash basis accounting information for certain regulatory reporting on a periodic basis.
• 1. Primary Accounting Method Accounting method you use for your primary set of books. Although Primary Accounting Method is not a required field, you cannot create accounting entries until you have entered a primary accounting method. Payables creates accounting entries according to the accounting method you choose.

– Accrual
– Cash

• 2. Secondary Accounting Method If you want to use combined basis accounting, choose Accrual or Cash for the accounting method you use for your secondary set of books. If you do not want to use combined basis accounting, choose None.

– Accrual
– Cash
– None

• 3. Set of Books (Primary/Secondary) Payables displays the primary set of books you selected in the Choose Set of Bookswindow. If you use a secondary set of books, select its namefrom the list of values. Your secondary set of books must have the same currency, chart of accounts, and calendar as your primary set of books.
• 4. Automatic Offset Method Enable Automatic Offsets by selecting Balancing or Account as your Offset Method if you want Payables to automatically create balancing accounting entries for your invoice and payment transactions.

Attention: Carefully consider this option before setting it.  Changing your automatic offset setting after creating accounting entries can result in slower Payables Accounting Process performance. Also, under certain circumstances, changing this setting can result in accounting irregularities.
None : Do not use Automatic Offsets. For your invoice transactions, Payables creates one liability accounting entry, and for your payment transactions, Payables creates one cash type accounting entry.
Balancing :  Payables uses the supplier site’s default liability account and overwrites the balancing segment (usually the company code) with the balancing segment from the expense distribution GL Account.
Account :  When creating the offsetting liability account, Payables uses the expense GL Account from the invoice distribution and overwrites the account segment with the default liability account from the supplier site.

• 5. Prevent Prepayment Application Across Balancing Segments. If you use Automatic Offsets, you can enable this option to prevent the application of a prepayment amount to an invoice or expense report amount that is charged to a different balancing segment.