This document outlines a proposal to automate the computation and payment of third-party royalties using Oracle Incentive Compensation. It describes the scope, proposed process and accounting flows, required system configurations and custom code, testing plan, production cutover plan, and anticipated challenges. Key aspects include leveraging OIC to calculate commissions on eligible SKUs, generate payables, and automate the accounting entries while addressing limitations such as inability to reverse collected data and handle partially received invoices.
2. Agenda
• Scope of Project
• Proposed Process Flow
• Proposed Accounting Flow
• System Changes
• Test Issue Log
• Deliverable Inventory
• Production Cutover Plan
• Challenges
3. Scope and Problem Description
• Automate Computation of Commission Calculation and Payment Processing for ISV Royalty
SKUs
• Expense Accounting, Calculation Processing, Payables Approval, Reporting Requirements to
be included in scope
• Solution based on Oracle Incentive Compensation module framework
• All transactions apply to US Operating Unit only
4.
5. Proposed Accounting Flow
#
Accounting
Event
Event
Date
Mechanism Amt
DR Account
CR Account
1 Create AR Invoice 01-01-20XX Oracle Autoinvoice 100
TRADE AR 01.0000.12101.0000
DEF_REV 01.0000.40401.0000
2
Recognize ISV
Liability
01-01-20XX Manual JV 70
CONTRA REV 01.0000.40402.0000
EXP 01.0000.25126.0000
3
Receive/ Apply
Cash
02-15-20XX
Oracle Lockbox/
Manual
100
CASH 01.0000.10007.0000
TRADE AR 01.0000.12101.0000
4 Generate AP Invoice 04-01-20XX Oracle OIC 70
COGS 01.0000.53101.0000
TRADE AP 01.0000.22207.0000
5 Reclass 04-01-20XX Manual JV 70
ISV Liability 01.0000.25126.0000
COGS 01.0000.53101.0000
6 Make Payment 04-10-20XX Oracle Payments 70
TRADE AP 01.0000.22207.0000
CASH 01.0000.10909.0000
6. Business Rules
SKU Processing Commission Calculation
Payable/ Payments
Processing
All eligible ISV Royalty SKUs have the below
attributes populated:
- Floor Price, upto 6 decimals precision
- Floor Price Currency
- Commissionable Flag
- Royalty Salesrep
Commission is calculated for AR
Invoices (net Credit Memos) which
were “Fully Closed” within a given
Quarter, to be paid off in the following
Quarter
AP Invoices will be grouped by
SalesRep and Computation Type
(FLOOR or STANDARD)
Above SKU information needs to reflect
signed Contract Agreement
All Invoices and Credit Memos have to
be posted to GL, prior to getting
consumed for OIC
AP Invoices will start aging
IMMEDIATEly
All SKUs for a specific Product Line have the
same Royalty Salesrep
For foreign-currency Invoices, the
Exchange Rate of the Invoice will
dictate the Translation
Taxation is suppressed to zero
Partially Paid Invoices will be excluded
from Calculation basis
Approvals mechanism leverages
existing AME design
Unapplications and adjustments on a
Fully-Closed Invoice will be reconciled
offline, by a custom report
7. Scope, Limitations and Mitigation
Product/ Design Limitation Mitigation Action
Collected data in OIC cannot be reversed
or purged
Test Collections and Computation in SUP
on static data sets, before production
consumption
Partially received AR Invoices cannot be
collected in OIC
By design and requirement
Floor Price does not have Effectivity Dates Process control to maintain static prices for
a given Quarter
All SKUs for a given Product Line should
belong to a single Royalty Supplier
SKU QA Report to identify Data
discrepancies
ISV Liability has to be recognized manually
at AR Invoice creation point
Automation to be examined in a later
phase
$0.00 AP Invoices get created if there is no
qualifying FLOOR or STANDARD type
Cancel the $0.00 AP Invoices, as a manual
step
8. System Changes (Configurations)
Inventory OIC Payables
Item Master DFF Role/ Groups Payment Terms
Floor Price Details Compensation Plan Supplier Contact
Royalty Association Compensation Elements
Expression and Formulas
Collections Source and Parameters
Transactions Report (Summary/ Detail)
View Mapping
Application Controls
Pay Group
Liability/Expense Accounts
Rate Table
9. System Changes (Custom Code)
Custom
Object Type
Custom Object Name Purpose
Oracle DB
View
XXABC_RETRO_PAYMENTS_V Custom Logic to Collect
Invoices data
Oracle DB
Trigger
XXABC_AP_INV_LINES_INT_T1 Custom Logic to derive
Payment Requestor
10. Testing Highlights
Examples of High Severity Issues
#1 Duplicate Invoices inflates calculation basis
#4 Floor Price Missing for some eligible SKUs
#13 Receipts get picked up incorrect Quarter
#17-22 Various AR scenarios
#35 AP Invoice Approval fails
#36 Self-assessed Tax gets computed
#37 Incorrect Expense Accounting
12. Production Support FAQs
# Question/Symptom Severity Response/Suggested Resolution
1 Can I run Collection task
again?
Medium You can only collect the same transactions for the Quarter once
2 How do I know that Collections
actually collected data?
Medium View the log file and it will show the number of records collected for the quarter
3 When loading transactions, it
shows this error: There is no
transaction in the Transaction
Interface Table to load based
on the parameters provided
High Possible causes:
1. The collected date has already been loaded and the interface is empty
2. Check the date parameters
3. Collection task has not been performed yet.
4. Cash Receipts are not posted
4 Maintain Transactions Report
shows Failed Rollup for some
invoices
High Failed Rollup means that a resource is not in the hierarchy in a compensation
group or has not been assigned Sales Compensation group usage, hence, the
rollup fails.
Check if new resources are assigned properly in a compensation group as a
supplier contact.
5 Transactions Register shows
Failed Population for some
invoices.
Low Population during Calculation fails if a transaction does not match any plan
element in the compensation plan for the credited resource. Transactions and
plan elements are matched using products and the effective product hierarchy.
Check the Plan setups, related to product, product hierarchy, product
classification rule, sales role assignment to the plan.
6 Why are there zero amount
invoices?
Low A compensation plan has two components – one for standard royalty and one for
floor royalty. OIC calculates for both plans, so if some ISVs do not have floor
royalty payments, OIC will still create a separate zero invoice. There is no option
to drop this from OIC. Instead, you can cancel the zero invoices in AP
7 What to do if in the payment
batch, paysheets are showing
zero amounts?
Medium Delete the paysheets
8 What happens if the floor price High OIC will take the floor price at the time of royalty calculation. This is a limitation as
13. Challenges
• Lack of experienced SME in OIC
• Lack of Detailed Requirements Document
• No dedicated environment for Development / Testing (~45 hrs cost)
• Cross-functional dependencies
• Platform/Product -specific Limitations and Constraints