OLFM Accounting Setup - Oracle Application Blogs

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OLFM Accounting Setup

Oct 27 Posted by Administrator in Lease Management This blog discusses the basic accounting setups in OLFM. Definition of Financial products, Accounting templates and Stream Generation templates form part of the basic financial setups. Financial products, Stream Generation Templates and Accounting templates are basic financial setups of OLFM. The order of definition of these setups is as follows:
Define Stream Types Define Stream Generation Templates Define Accounting Templates Define Products

Stream Types Stream type is an important concept used in Lease Management to manage cash flows. For example, a lessee will pay periodic charge to the lessor as rental for the leased equipment. This cash inflow is captured as RENT stream type. Similarly, there may be some charges like documentation fee which are charged from the lessee. This cash flow is modeled as DOCUMENTATION FEE stream type. OLFM comes with lot of pre-defined stream types. Customer can define their own stream types based on the requirements. A stream type has the following properties: Stream Type Name: Name of the stream type Stream Purpose: Stream purpose is what drives the logic in OLFM. Stream purposes are seeded value coming from a system lookup called OKL_STREAM_TYPE_PURPOSE. When a custom stream type is defined, one of the existing stream type purposes must be selected. Description: description of stream type Effective Dates: Effective from and Effective to dates Revenue Recognition Basis: Rule for revenue recognition in case this stream type is accrued. Billable Yes/No: Whether this stream type can be billed by the Billing program Capitalize Yes/No: Whether this stream type can be capitalized

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Stream Generation Template Stream types are grouped together in the form of a Stream Generation Template (SGT). SGT is linked with an Accounting Template Set (ATS), which in turn is linked to a Financial Product. A stream generation template consists of the following elements: Stream Generation Template Set Stream Generation Template Stream Generation Template Line

Stream Generation Template Set (SGT) defines the following parameters: Book Classification: Whether it is Operating Lease, Loan, Direct Finance Lease etc. Interest Calculation Method: Fixed, Float etc. Days in Year: 360, 365 or Actual Days in Month: 30 or Actual Booking Pricing Engine: Internal or External Product Type: Financial product or Investor Product Tax Owner: Lessee or Lessor

Under a stream generation template set, we define stream generation template. A stream generation template is a container of the stream types. When any change is desired (to delete or add new stream types), we create a new version of stream generation template. But at any time, only one stream generation template will be active (whose effective to-date is blank). Under stream generation template, there are stream types (Standard or Custom). There are two kinds of stream type: Primary Stream Type Dependant Steam Type

Dependant stream types are added under primary stream type. For example, under Rent stream type, we can add Advance Rent, Rent Accrual, Pass through Renewal Rent etc. For each stream type, we can also associate a pricing name. The pricing name is used for sending to external pricing engine like super-trump. There are some mandatory stream types which must necessarily be there in a stream generation

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template. Other stream types (like custom stream types) are optional.

Accounting Templates Accounting templates are used for deriving debit and credit line for a transaction. The structure of accounting template is as follows: Accounting Template Set Accounting Template Accounting Template Lines Accounting template set definition contains the following attributes:

Name Effective Dates

Accounting template set is associated to a product. That means, for a contract, which is associated to a product, all the associated accounting templates will be available for accounting.

Stream Generation Template Under accounting template set, we have accounting templates. Accounting template contains the following attributes Name: name of the accounting template Effective Dates: Effective Date of Accounting template Formula: A formula can be used to derive the accounting amount Stream Type: Stream type Transaction Type: Transaction Type Factoring/Syndication Flag: The possible values for this flag are Factoring, Syndication and Investor. Based on the value chosen here, the corresponding code fields are enabled. Factoring Code: Factoring code Syndication Code: Syndication code Investor Code: Investor Code Under accounting templates, we have accounting lines. There should be exactly two lines under an

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accounting template, one DR line and one CR line. You can either specify hard-coded account or you can give account generator rule. When account generator rule is specified, account code combination is generated dynamically during run-time based on the account generator rule setup.

How does accounting engine derive accounting combination and amount? When a transaction calls accounting engine, the following logic is used to derive accounts and amount: Get Financial Product from the given contract Get the associated accounting template set from the financial product Get accounting template(s) matching the transactions stream type and transaction type.

If formula is associated with template, execute the formula to derive the amount. Use this amount for accounting. From the accounting template, read the accounting template lines. If lines have hard-coded accounts, use them; if not then read the account generator rule and derive the account using the account generator rule setups.

Financial Product After we have defined stream generation template and accounting templates, we define financial product. A financial product defines book classification, depreciation owner and accrual streams. Example of financial product for an equipment finance leasing company could be Operating Lease Product, Direct Finance Product, Trac Lease Product, Loan Product, Investor Product etc. Product definition involves first defining a product template and then using the template to define product. During definition of product, we associate an accounting template set with it. Also, all the allowed stream types which are to be accrued for the product are also defined with the product. A financial product is associated with a contract during authoring process.

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