Step 6
Invoicing
Define invoicing information, including payment terms, invoicing and accounting rules, Autoaccounting parameters, territories, and invoice sources.
This step is required if you plan on transferring invoicing information to Oracle Receivables. Several defaulting values are provided.

Payment terms
http://www.oracleug.com/user-guide/order-management/payment-terms

Entering Invoices with Rules
Invoicing rules let you determine when to recognize your receivable for invoices that span more than one accounting period. You can assign invoicing rules to invoices that you manually enter or import into Receivables through AutoInvoice.
Receivables provides the following invoicing rules:

• Bill in Advance: Use this rule to recognize your receivable immediately.
• Bill in Arrears: Use this rule to recognize the receivable at the end of the revenue recognition schedule.

Accounting rules determine the number of periods and percentage of total revenue to record in each accounting period.

You need to set the invoicing rule to either bill in advance or bills in arrears to setup the accounting rule. If you don’t select any value in the invoicing rule then system won’t allow you to enter the accounting rule and the accounting entries are created automatically once the transaction is completed (11i Only). You need to run revenue recognization program for generating account entries for transactions with invoicing rule and accounting rule.

Notes : Invoicing and Accounting Rules are not applicable if you are using the Cash Basis method of accounting. If you use the Cash Basis method, AutoInvoice will reject any transaction lines that are associated with invoice or accounting rules.
Accounting Rules
Define accounting rules to create revenue recognition schedules for your invoices. Accounting rules determine the number of periods and percentage of total revenue to record in each accounting period. You can use accounting rules with transactions that you import into Receivables using AutoInvoice and with invoices that you create manually in the transaction windows. You can define an unlimited number of accounting rules.
When you run the Revenue Recognition program for an invoice that is associated with one or more accounting rules, Receivables creates the invoice’s revenue distributions for the period or periods in which the rules fall.

Define an accounting rule:
1. Navigate to the Invoicing and Accounting Rules window. AR -> Set up -> Transactions -> Accounting rule.

Note: Revenue Recognition creates accounting distributions for all periods of status Open, Future, or Not Open. If any period has a status of Closed or Close Pending, then Revenue Recognition creates the distributions in the next Open, Future, or Not Open period.

• Depending on your business needs, you may require deferred accounting rules, which you can create by selecting the Deferred Revenue check box during rule definition. Deferred accounting rules let you defer revenue to an unearned revenue account until you are ready to specify the revenue recognition schedule.
• You can assign a default accounting rule to your items in the Master Item window (Invoicing tabbed region) and to your Standard Memo Lines in the Standard Memo Lines window.

2. Enter an accounting rule Type.
Enter ’Accounting, Fixed Duration’ to prorate revenue recognition evenly over a predefined period of time. The revenue recognition schedule is always the same every time you choose this accounting rule. For example, if you have four schedules for your rule with this type, you will recognize twenty–five percent of your revenue at the end of each schedule.

Enter ’Accounting, Variable Duration’ to be able to specify the number of periods over which you want to recognize revenue for invoices to which you assign this rule. You can assign this type of accounting rule to invoices that you manually enter in the Transaction window or import into Receivables using AutoInvoice. The revenue recognition schedule changes for invoices that are assigned this type of accounting rule depending upon the value that you either pass through AutoInvoice or specify when you manually enter an invoice.

3. Enter the Period to use for your accounting rule schedule. You can choose from any of the Period Types you defined, but you can only choose a period type that has overlapping dates if it is an adjusting period. In addition, you can only choose ’Specific Date’ as your period type for accounting rules to which you have assigned a type of ’Accounting, Fixed Duration.’ You can only update this field for the accounting rule ’IMMEDIATE.’

4. If this accounting rule type is ’Accounting, Fixed Duration,’ enter the Number of Periods to use for your accounting rule schedule. For example, if you entered a period of ’Weekly’ and you enter ’3’ here, Receivables creates a rule schedule for three weekly periods.

5. Define your revenue recognition schedule for this accounting rule. Enter the percentages of revenue to recognize within each period of your accounting rule.
If this accounting rule type is ’Accounting, Fixed Duration,’ Receivables displays a rule schedule according to the period and number of periods you entered. Receivables determines the schedule by evenly prorating all the revenue across all periods (you can change this information). The sum of all periods for this type must equal 100 percent.

If this accounting rule type is ’Accounting, Variable Duration,’ you do not need to enter any information. Receivables does not display the default rule schedule for an accounting rule of this type because the number of periods is unknown. However, if you want to recognize a specific revenue percentage in the first period, you can enter that percentage here. In this case, Receivables prorates the remaining revenue percentage across the remaining periods.
Receivables uses the number of periods that you either pass through AutoInvoice or enter manually in the Transaction window to determine the payment schedule of your accounting rule.

We can default invocing rule and accounting rule from OM transaction type.

Assign Invoicing and Accounting Rules
For invoices that you enter manually, you can assign an invoicing rule in the Transactions window. You can assign a default invoicing and accounting rule to your items in the Master Item window (Invoicing tabbed region) and to your Standard Lines in the Standard Memo Lines window.