If you enable Automatic Offsets, Payables automatically balances invoice and payment lines that cross balancing segments by creating offsetting entries for each balancing segment.
Automatic Offsets is a powerful feature that greatly affects processing throughout Payables. For a full account of its impact, see: Automatic Offsets.
In the Accounting region of the Payables Options window, choose Account or Balancing as your Automatic Offset Method. See: Accounting Payables Options.
Attention: Carefully consider this option before setting it. Changing your automatic offset setting after the system records accounting information can result in slow performance of the Payables Accounting Process. Further, changing this option can result in serious accounting irregularities in the following circumstance: If you make a partial payment and then adjust the invoice (for example, add a distribution), and if you change the setting of this option between the time the original invoice is accounted and the final payment.
Account. Payables retains all segments but the distribution's account segment when it builds an offsetting account. Use this option if you want all of your accounts to preserve the same level of distribution detail.
Balancing. Payables retains only the distribution's balancing segment when it builds an offsetting account. Companies typically find this level of detail sufficient.
Also in the Accounting region, set your value for the Prevent Prepayment Application Across Balancing Segments Payables option.
In the Payment region of the Payables Options window, choose System Account as your Discount Distribution Method if you want Payables to prorate discounts across your invoice distributions when you pay an invoice that crosses multiple balancing segments. The balancing segment from the offsetting invoice distribution replaces the balancing segment of your system Discount Taken account when Payables builds the accounts for these entries. See: Payment Payables Options; Accounting Financials Options.
When you set up your bank accounts, check the Pooled Account box in the Payables Options region of the Bank Accounts window if you want to create a pooled account. See: Defining Banks, Oracle Cash Management User Guide.
The cash in a pooled bank account is shared by multiple balancing segments; the cash in a non-pooled bank account is associated with a single balancing segment.
When you create a payment from a pooled bank account using Automatic Offsets, Payables automatically builds the cash account for each payment line on the basis of the bank account's associated cash account using your chosen Automatic Offset method.
Attention: When you make a payment using a non-pooled bank account, Payables generates only a single cash offset even if Automatic Offsets is enabled. For payment lines that cross balancing segments, you can either enter balancing entries manually, or set General Ledger up to create them automatically on posting. For details, see: Intercompany Accounting.