FAISO

Oracle
Value Chain Execution

Cloud
Implementing Supply Chain
Financial Orchestration
Release 9
Oracle Value Chain Execution CloudImplementing Supply Chain Financial Orchestration

Part Number E55673-03
Copyright 2011-2014, Oracle and/or its affiliates. All rights reserved.
Authors: Carl Casey, Pallavi Ghosh
This software and related documentation are provided under a license agreement containing restrictions on use and disclosure and are protected by
intellectual property laws. Except as expressly permitted in your license agreement or allowed by law, you may not use, copy, reproduce, translate, broadcast,
modify, license, transmit, distribute, exhibit, perform, publish, or display any part, in any form, or by any means. Reverse engineering, disassembly, or
decompilation of this software, unless required by law for interoperability, is prohibited.
The information contained herein is subject to change without notice and is not warranted to be error-free. If you find any errors, please report them to
us in writing.
If this is software or related documentation that is delivered to the U.S. Government or anyone licensing it on behalf of the U.S. Government, the following
notice is applicable:
U.S. GOVERNMENT END USERS: Oracle programs, including any operating system, integrated software, any programs installed on the hardware, and/
or documentation, delivered to U.S. Government end users are "commercial computer software" pursuant to the applicable Federal Acquisition Regulation
and agency-specific supplemental regulations. As such, use, duplication, disclosure, modification, and adaptation of the programs, including any operating
system, integrated software, any programs installed on the hardware, and/or documentation, shall be subject to license terms and license restrictions
applicable to the programs. No other rights are granted to the U.S. Government.
This software or hardware is developed for general use in a variety of information management applications. It is not developed or intended for use in
any inherently dangerous applications, including applications that may create a risk of personal injury. If you use this software or hardware in dangerous
applications, then you shall be responsible to take all appropriate fail-safe, backup, redundancy, and other measures to ensure its safe use. Oracle
Corporation and its affiliates disclaim any liability for any damages caused by use of this software or hardware in dangerous applications.
Oracle and Java are registered trademarks of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.
Intel and Intel Xeon are trademarks or registered trademarks of Intel Corporation. All SPARC trademarks are used under license and are trademarks or
registered trademarks of SPARC International, Inc. AMD, Opteron, the AMD logo, and the AMD Opteron logo are trademarks or registered trademarks of
Advanced Micro Devices. UNIX is a registered trademark of The Open Group.
This software or hardware and documentation may provide access to or information on content, products and services from third parties. Oracle Corporation
and its affiliates are not responsible for and expressly disclaim all warranties of any kind with respect to third-party content, products, and services. Oracle
Corporation and its affiliates will not be responsible for any loss, costs, or damages incurred due to your access to or use of third-party content, products,
or services.
For information about Oracle's commitment to accessibility, visit the Oracle Accessibility Program website at http://www.oracle.com/pls/topic/lookup?
ctx=acc&id=docacc
Oracle customers have access to electronic support through My Oracle Support. For information, visit http://www.oracle.com/pls/topic/lookup?
ctx=acc&id=info or visit http://www.oracle.com/pls/topic/lookup?ctx=acc&id=trs if you are hearing impaired.
Oracle Value Chain Execution Cloud
Implementing Supply Chain Financial Orchestration
Contents
Preface
Overview
Supply Chain Financial Orchestration: Overview

Financial Orchestration Flow: How it Works
........................................................................................................ 1
.............................................................................................................. 4
Implementing
Implementing Oracle Fusion Financial Orchestration: Procedure
................................................................................ 6
Importing Business Unit, Customer, and Supplier Data: Procedure ........................................................................... 7
Manage Documentation and Accounting Rules

Documentation and Accounting Rules: Explained
..................................................................................................... 9
Accounting Rule Currency Options: Explained
.......................................................................................................... 9
Accounting Rule Conversion Types: Explained
.......................................................................................................... 9
Accounting Rule Trade Distributions: Explained
........................................................................................................ 9
Track Profits in Inventory: Explained
....................................................................................................................... 10
Intercompany Invoices in Financial Orchestration: Explained
................................................................................... 10
Specifying Events That Apply Documentation and Accounting Rules: Procedure ..................................................... 10
Manage Supply Chain Financial Orchestration Transfer Pricing Rules

Transfer Pricing Rules: Explained
............................................................................................................................ 12
Accounting Transfer Price: Explained
...................................................................................................................... 12
Transfer Pricing Markup Percentage: Explained
Incoterms: Explained
13
............................................................................................................................... 13
............................................................................................................................................... 13
Primary Financial Route: Explained
...................................................................................................... 12
Manage Supply Chain Financial Orchestration Buy and Sell Terms

Buy and Sell Terms: Explained
12
......................................................................................................................... 13
Manage Supply Chain Financial Orchestration System Options

Financial Orchestration System Options: Explained
14
................................................................................................. 14
Manage Profit Center Business Unit Party Relationships
15
Profit Center Business Units: Explained
.................................................................................................................. 15
Intercompany Buyer Profile: Explained
.................................................................................................................... 15
Intercompany Seller Profile Explained: Explained
..................................................................................................... 16
What happens if I modify the supplier or customer for the legal entity? ................................................................... 16
When can I delete an intercompany buyer or seller profile?
Manage Supply Chain Financial Orchestration Qualifiers

Financial Orchestration Qualifiers: Explained
.................................................................................... 16
............................................................................................................ 17
Manage Supply Chain Financial Orchestration Flows

Financial Orchestration Flows: Explained
18
................................................................................................................. 18
Setting Priorities for Financial Orchestration Flows: Explained
10
17
Creating Financial Orchestration Flows

Creating Financial Orchestration Flows: Worked Example
................................................................................. 18
20
....................................................................................... 20
Preface
Preface
This Preface introduces information sources available to help you use Oracle Applications.
Oracle Applications Help

Use the help icon to access Oracle Applications Help in the application.
Note
If you don't see any help icons on your page, click the Show Help button in the global area. Not all pages have
help icons.
You can also access Oracle Applications Help at https://fusionhelp.oracle.com/.
Oracle Applications Guides

To find other guides for Oracle Applications, go to:
Oracle Applications Help, and select Documentation Library from the Navigator menu.
Oracle Help Center at http://docs.oracle.com/
Other Information Sources

My Oracle Support
Oracle customers have access to electronic support through My Oracle Support. For information, visit http://
www.oracle.com/pls/topic/lookup?ctx=acc&id=info or visit http://www.oracle.com/pls/topic/lookup?ctx=acc&id=trs if you
are hearing impaired.
Oracle Enterprise Repository for Oracle Fusion Applications

Oracle Enterprise Repository for Oracle Fusion Applications (http://fusionappsoer.oracle.com) provides details on assets (such
as services, integration tables, and composites) to help you manage the lifecycle of your software.
Documentation Accessibility
For information about Oracle's commitment to accessibility, visit the Oracle Accessibility Program website at http://
www.oracle.com/pls/topic/lookup?ctx=acc&id=docacc.
Comments and Suggestions

Please give us feedback about Oracle Applications Help and guides! - Send e-mail to:
oracle_fusion_applications_help_ww_grp@oracle.com. - Click your user name in the global area of Oracle Applications Help,
and select Send Feedback to Oracle.
Chapter 1
Overview
Overview
Supply Chain Financial Orchestration: Overview

Oracle Fusion Supply Chain Financial Orchestration is a configurable application that you can use to manage an intercompany
transaction, which is a type of transaction that occurs between a seller and a buyer, where the seller provides a product or
service to the buyer, and this buyer resides in the same enterprise as the seller but in a different legal entity or business unit.
Financial Orchestration can also support an intracompany flow where a financial orchestration exists between two different
profit center business units that belong to the same legal entity. You can use Financial Orchestration to separate the physical
part of this transaction from the financial part of the transaction. The following diagram illustrates an example of this internal
Chapter 1
Overview
buyer and seller relationship. It includes an intercompany transaction that occurs in Vision Corporation, which is a fictitious
company that makes and sells computer products.
In this example, a financial orchestration flow exists between the Vision Distribution Center, located in Singapore, and Vision
Operations, located in North America. The Vision Distribution Center sends the physical product that is involved in the
transaction to retailers. It also sends the financial information and transfers ownership of the product in the financial books
for the transaction to Vision Operations in North America. Each of these organizations constitutes a separate legal entity that
resides in Vision Corporation. However, they reside in different countries, and they each require separate accounting and tax
reporting. You can use Oracle Fusion Supply Chain Financial Orchestration to capture, process, and perform an accounting
of the events that occur during an intercompany transaction in an enterprise that is similar to Vision Corporation. For example,
you can use it to do the following work:
Create documentation and accounting rules that specify the type of accounting documentation to create.
For example, whether or not to create an intercompany invoice, to track profits in inventory, or to track trade
distributions.
Chapter 1
Overview
Create transfer pricing rules that specify whether to use the transaction cost, a purchase order price, or the sales
order price as the basis to calculate the intercompany transfer price between the seller and the buyer. You can
create transfer pricing rules that apply a markup or markdown percentage on the internal sale.
Create buy and sell terms that specify the selling and buying legal entities, the business units within these entities
that constitute the buyer and seller, the documentation rules, accounting rules, and transfer pricing rules to use, the
payment terms to use, incoterms and incoterm locations, and tax determinants.
Create intercompany buyer profiles and intercompany seller profiles that Financial Orchestration uses to create the
intercompany invoice. You can specify the business units that provide the procurement and payables invoicing for
the profit center business unit, the business unit that provides receipt accounting information, the bill-to business unit
and bill-to locations, and the procurement business unit.
Create financial orchestration qualifiers that specify when and under what conditions to run a financial orchestration
flow. For example, you can create a rule that specifies to run an orchestration flow only if a particular supplier is
involved in the transaction, and only if the flow is a procurement flow.
Create financial orchestration flows. You can specify the legal entities and business units that are involved in a flow,
the financial orchestration qualifiers that control when to use the flow, the financial routes to use for the flow, the
buy and sell terms to use with the flow, and the date when the flow goes into effect. You can also specify a priority
among different flows.
In summary, Oracle Fusion Financial Orchestration helps your company to meet the following business objectives:
Support complex, global structures without compromising supply chain efficiency.
Model your corporate tax structures in a global environment efficiently without impacting the physical movement of
goods. This capability helps to make sure you can get goods and services to your customers as quickly as possible,
and lower your total supply chain costs at the same time.
Optimize operational efficiency by centralizing sourcing and order management functions.
Run financial orchestration flows without impacting the physical movement of goods.
Define business rules for financial orchestration flows that support a variety of physical movements in your supply
chain. This capability can reduce implementation costs and cycle time, and it allows you to react effectively to
corporate reorganizations or acquisitions.
In general, this implementation guide uses the phrase Financial Orchestration to describe the Financial Orchestration work
area and the work that it does. This work area is part of the Oracle Fusion Financial Orchestration product offering.
Chapter 1
Overview
Financial Orchestration Flow: How it Works

The following diagram illustrates a typical financial orchestration flow that Financial Orchestration manages.
Explanation of Callouts
A financial orchestration flow includes the following steps:
1. A Fusion Supply Chain application, such as Inventory and Receiving, sends a notification that a supply chain event
occurred, such as a shipment transaction.
2. Financial Orchestration receives the supply chain event. For more information, see Specifying Events That Trigger
Documentation and Accounting Rules: Procedure.
Chapter 1
Overview
3. Financial Orchestration identifies the financial orchestration flow that it must use in reply to the event. It uses the
configuration that you specify on the following pages to identify this flow:

For more information, see Creating Financial Orchestration Qualifiers: Procedure and Financial Orchestration
Flows: Explained.
4. Financial Orchestration creates an instance of the financial orchestration flow that it identified in step 3.
5. Financial Orchestration creates the tasks that it uses to run the instance.
6. Financial Orchestration interacts with one or more Fusion applications. It can interact with the following Fusion
applications while the instance runs. It can exchange information about the instance with these applications
automatically, so you are not required to do any configuration to enable these interactions:
Distributed Order Orchestration. Provides the Orchestration Order information for shipment flows.
Procurement. Provides the Purchase Order information for procurement flows, and confirms whether or not a
financial orchestration flow that does validation is available when it creates or updates a global procurement
purchase order.
Product Information Manager. Provides information about the products that Financial Orchestration uses for
each supply chain transaction.
Financials. Provides information about the supplier and customer that Financial Orchestration associates with
each legal entity. To get this information, Financials uses the advanced global intercompany that you specify
when you set up Financials. Financial Orchestration interfaces the intercompany receivables and payables
invoices to Financials.
Materials Management and Logistics. Sends a notification to Financial Orchestration that indicates that a
transaction occurred in the physical supply chain, such as a shipment or a receipt. It also sends other details
about each transaction.
Managerial Accounting. Tracks cost elements. For more information, see Cost Components, Cost Elements,
and Analysis Groups: Explained.
7. Financial Orchestration uses various Web services to interact with other Fusion applications that provide and store
costing, receivables, and payables data.
8. After you complete the setup, you can use the Monitor Financial Orchestration Execution page to monitor and
correct problems that might occur during the financial orchestration flow.
Chapter 2
Implementing
Implementing
Implementing Oracle Fusion Financial Orchestration:

Procedure
This topic describes how to implement Oracle Fusion Supply Chain Financial Orchestration. For more information about this
offering, see Supply Chain Financial Orchestration: Overview.
1. Import the data that Financial Orchestration uses to create relationships between each business unit, customer, and
supplier for intercompany invoices.
For more information, see Importing Business Unit, Customer, and Supplier Data: Procedure.
2. Log into Fusion.
Make sure you use a login that allows you to add a new implementation project that includes the Supply Chain
Financial Orchestration product offering. Consult with your system administrator to determine the login that you
must use.
3. In the Navigator, click Setup and Maintenance.
4. On the Setup and Maintenance page, click Configure Offerings.
5. On the Configure Offerings page, do the following work:
Make sure the Implementation Status for the Supply Chain Financial Orchestration offering is Implemented. If
it is not implemented, then implement it now.
Make sure the Implementation Status for the Materials Management and Logistics offering is Implemented. If
it is not implemented, then implement it now.
If these offerings do not exist, or if you cannot implement them, then consult with your system administrator to
determine how to implement them, implement them, and then resume this procedure.
6. Create an implementation project:
On the Setup and Maintenance page, click Manage Implementation Projects.
On the Manage Implementation Projects page, click Actions, and then click Create.
In the Name field, enter a value that describes your project, and then click Next.
For example, enter My Financial Orchestration Project.
On the Create Implementation Project: Select Offerings to Implement page, include the Supply Chain
Financial Orchestration offering, and then click Save and Open Project.
The application creates an implementation project that you can use to customize Financial Orchestration.
7. In the Task list, expand the Supply Chain Financial Orchestration folder.
Chapter 2
Implementing
This folder includes the following folders:
Define Common Applications Configuration for Supply Chain Financial Orchestration. Includes all the
tasks that Financial Orchestration requires for common applications. You do not need to modify any of these
tasks.
Define Supply Chain Financial Orchestration. Allows you to customize Supply Chain Financial
Orchestration. You can expand this folder to view the tasks that you must perform to set up Financial
Orchestration.
8. Use the Define Supply Chain Financial Orchestration folder and the tasks that it contains to set up Financial
Orchestration.
It is recommended that you complete these tasks in the following sequence:
Manage Supply Chain Financial Orchestration Transfer Pricing Rules
Manage Supply Chain Financial Orchestration Manage Buy and Sell Terms

It is recommended that you use this sequence because the configuration that you do in some tasks depends
on the work that you do in prior tasks. For example, you specify buy and sell terms when you create a financial
orchestration flow, so you must create the buy and sell terms before you create the financial orchestration flow.
For most configurations, you must complete each of these tasks. Whether or not you complete the following
task depends on your deployment requirements:
Importing Business Unit, Customer, and Supplier

Data: Procedure
For Oracle 11g Release 9 (11.1.9) and Release 10 (11.1.10), you must import the data that Financial Orchestration uses to
create relationships between each business unit, customer, and supplier for intercompany invoices.
1. Export the Financials product offering:
Log into an environment that includes the Financials offerings.
In the Navigator, click Setup and Maintenance.
Click Manage Offerings and Functional Areas.
In the Search Results list, choose the Financials product offering, and then click Export.
Chapter 2
Implementing
In the Export Offering dialog box, specify a file to export, and then click Export.
You must export your customizations so Financial Orchestration can use them when it processes order
information. For more information, see Exporting and Moving Customizations: Points to Consider.
2. Repeat step 1 for the Materials Management and Logistics product offering.
3. Repeat step 1 for the Supply Chain Financial Orchestration product offering.
4. Import the Financials product offering:
Log into the environment where you are setting up Financial Orchestration.
In the Navigator, click Setup and Maintenance.
Click Manage Offerings and Functional Areas.
In the Search Results list, click Import.
In the Import Offering dialog box, locate the file that you exported in step 1, and then click Import.
In the Search Results list, click Import.
5. Import the other product offerings:
Repeat step 4 for the Materials Management and Logistics product offering.
Repeat step 4 for the Supply Chain Financial Orchestration product offering.
6. Import each supplier and customer:
Create a file that includes information about your suppliers and customers.
Fusion Applications do not define suppliers and customers in the Functional Setup Manager, so you must
import them. You must create and upload a file that includes information about each supplier and customer.
This file must use a comma-separated value (CSV) format.
Import the file. For more information, see Importing Data from a File: Getting Started.
Chapter 3
Documentation and Accounting Rules: Explained

You can create documentation and accounting rules that do the following work:
Specify whether or not an intercompany invoice is required.
Specify the type of currency and the conversion type to use during intercompany invoicing.
Specify whether or not to track profits as a separate cost in the inventory that the customer controls.
Specify the event that runs the rule. For example, you can specify to use the shipment transaction or the receipt
transaction to start the tasks that Financial Orchestration uses during an internal transfer of goods.
Accounting Rule Currency Options: Explained

You can use the Currency Option on the Manage Documentation and Accounting Rules page to specify the currency
that Financial Orchestration uses during an intercompany transaction. You can pick of the following values:
Selling Node. Use the same currency that the seller uses. For example, if the seller uses the US Dollar, and if the
buyer uses the Euro, then Financial Orchestration will use the US Dollar throughout the entire transaction, including in
the invoice data that it creates.
Buying Node. Use the same currency that the legal entity uses in their primary ledger. This legal entity resides in the
business unit.
Source document. Use the currency that the source document uses.
Accounting Rule Conversion Types: Explained

You can use Conversion Type on the Manage Documentation and Accounting Rules page to specify the exchange rate
that Financial Orchestration uses for calculations. For example, when it calculates the intercompany transfer price. For
more information about the conversion types that you can use, see Using Rate Types: Examples and What's the difference
between spot, corporate, user, and fixed rate types?
Accounting Rule Trade Distributions: Explained

You can use the Trade Distributions option on the Manage Documentation and Accounting Rules page to include a
trade distribution. Fusion Cost Management uses trade distributions when it does the cost accounting distributions for the
transactions that Financial Orchestration sends. These are the accounting distributions that Fusion Cost Management uses
for intercompany accrual, intercompany cost of goods sold, and so on. For more information, see Record Cost Accounting
FAQs.
Chapter 3
Track Profits in Inventory: Explained

Financial Orchestration comes predefined to track profits according to the items that your physical inventory contains.
For example, assume your physical inventory includes 1,000 pieces of product A, and that you realize a profit of $1.00 on
each of these pieces. In this example, Financial Orchestration calculates a profit of $1,000 for product A. To override this
behavior, you can remove the check mark from the Track profits in inventory option on the Create Documentation and
Accounting Rule page.
Intercompany Invoices in Financial Orchestration:

Explained
If you use the Intercompany invoice option on the Manage Documentation and Accounting Rules page to include
intercompany invoices, then Financial Orchestration creates the following intercompany invoices during the transaction:
Accounts payable invoice. A transaction that records the payable accounting when one business unit buys goods or
services from another business unit.
Accounts receivable invoice. A transaction that records the receivable accounting for the shipping business unit in an
intercompany flow. It records journal entries in accounts receivables for the seller, it records revenue, and it records
tax and freight charges. It adds journal entries to the inventory asset account and the cost of goods sold account for
the shipping warehouse.
If you specify to not include intercompany invoices, then Financial Orchestration does not create any intercompany
invoices during the transaction. An intercompany invoice is not mandatory. For example, an intracompany trade that
occurs between business units that belong to the same legal entity might not require an intercompany invoice. In this
situation, a trade distribution in cost accounting handles the accounting for the receivables and payable balances.
For more information, see Cost Accounting Process Flow: Explained.
Specifying Events That Apply Documentation and

Accounting Rules: Procedure
If you use the Create Documentation and Accounting Rule page, then Financial Orchestration automatically adds the
tasks that it uses to process the transaction for your rule, and then displays them in the View Tasks column of the Forward
Flow and Return Flow tabs on the Create Documentation and Accounting Rule page. You cannot modify these tasks,
but you can specify the event that applies them.
1. On the Create Documentation and Accounting Rule page, click one of the following tabs:
Forward Flow. Specifies the trigger to use when the seller sells a good or service to the buyer.
Return Flow. Specifies the trigger to use when the buyer returns a good or service to the seller.
2. In the Task Generating Event section, choose a task-generating event.

For example, to apply this rule when Financial Orchestration receives a purchase order from the buyer, you do the
following:
Click the Forward Flow tab.
10
Chapter 3
In the Procurement dropdown list, choose PO Receipt.
For Release 9, Financial Orchestration does not support returns for an interorganization transfer.
You can specify multiple events for a single rule. For example, to apply this rule when Financial Orchestration receives a
purchase order from the buyer, or when it creates a shipment order, you do the following:
1. Click the Forward Flow tab.
2. In the Procurement dropdown list, choose PO Receipt.
3. In the Shipment dropdown list, choose SO Receipt.
11
Chapter 4
Manage Supply Chain Financial Orchestration Transfer Pricing

Rules
Manage Supply Chain Financial Orchestration

Transfer Pricing Rules
Transfer Pricing Rules: Explained
A transfer pricing rule calculates the intercompany transfer price according to the information that is associated with an
intercompany transactionThe transfer pricing rules determine how to price an international transaction that occurs in a
multinational company so that each country receives the correct share of taxation. You can use a transfer pricing rule with
buy and sell terms. For more information, see Buy and Sell Terms: Explained.
Accounting Transfer Price: Explained

You can use the Accounting Transfer Price on the Manage Supply Chain Financial Orchestration Transfer Pricing
Rules page to specify the intercompany transfer price that Financial Orchestration uses for the transactions and documents
that it creates in a financial orchestration flow. You can choose one of the following options:
Transaction Cost Basis. Use the production cost that the seller incurs to produce the product.
Source Document Price Basis. Use the purchase cost that the seller incurs when it buys the product from an
external supplier. This price basis varies depending on the following Business Process Type that you set in the
Manage Supply Chain Financial Orchestration Flows task:
Procurement. Use the value that the line item of the purchase order contains.
Shipment. Use the selling price from the fulfillment line that Oracle Fusion Distributed Order Orchestration
specifies.
Internal Transfer. Not supported.
Transfer Pricing Markup Percentage: Explained

You can use the Markup Percentage on the Manage Supply Chain Financial Orchestration Transfer Pricing Rules
page to allow the seller to earn a profit or to incur a loss on an intercompany transaction. To determine the intercompany
transfer price, Financial Orchestration multiples the Markup Percentage with the value of the Accounting Transfer Price. For
example, if an item costs $1.00, and if you set Markup Percentage to 15, then Financial Orchestration sets the transaction
price for this item to $1.15.
You can also enter a negative value to incur a loss. For example, assume the Singapore Distribution Center must mark down
the items that it sells to retailers by 15%. So, if an item costs $1.00, and if you set Markup Percentage to -15, then Financial
Orchestration sets the intercompany transfer price for this item to $0.85.
12
Chapter 5
Manage Supply Chain Financial Orchestration Buy and Sell

Terms

Buy and Sell Terms
Buy and Sell Terms: Explained
Buy and Sell terms are terms that you can use to specify the conditions that determine the nature of an agreement to use
during an intercompany transaction, such as the documentation and accounting rule to use, the transfer pricing rule to
use, and so on. Financial Orchestration gets some of the values that it displays for the Receivable Invoice Type field, the
Receivables Credit Memo Type field, and in the Default Buy Side Tax Determinants section and the Default Sell Side
Tax Determinants section of this page from the values that you specify when you set up receivables. For more information
about setting up receivables, see Oracle Financials Cloud Using Receivables, Payments, Cash, and Collections.
Incoterms: Explained
As an option, you can specify the Incoterm (International Commercial Terms) and Default Incoterm Location on the Manage
Supply Chain Financial Orchestration Manage Buy and Sell Terms page. Financial Orchestration uses these items as
part of the matter of record for the intercompany transaction. The incoterm and incoterm location that you choose does not
affect how Financial Orchestration handles the transaction or does calculations, but it does provide audit trail information.
Primary Financial Route: Explained

You typically use the Manage Supply Chain Financial Orchestration Flows page to create the primary route. You can
also click Add Primary Route on the Create Buy and Sell Term page to specify the primary route, and then choose the
business process type to use with the buy and sell terms that you specify. Financial Orchestration uses the route that you
specify for all intercompany transactions. In Release 9, Financial Orchestration does not support the inclusion of internal
financial intermediaries on the financial route. These internal intermediaries are organizations that reside in the company, such
as an organization that resides in Vision Corporation. Also in Release 9, Financial Orchestration supports only the primary
financial route. You cannot specify a secondary financial route.
13
Chapter 6

System Options
Financial Orchestration System Options: Explained
You can specify the following financial orchestration system options on the Manage Supply Chain Financial
Orchestration System Options page. Financial Orchestration uses them when it processes a financial orchestration flow:
Item Validation Organization. Specify the organization that Financial Orchestration uses to validate each item
according to the qualifiers that you create. For more information, see Financial Orchestration Qualifiers: Explained.
Service Item. Specify the service item number that various Financial Orchestration tasks use when the supply chain
flow handles a service item. Trade Distributions and Intercompany AR Invoice are example tasks.
Maximum Number of Records per Batch. Specify the number of records that Financial Orchestration gets when it
processes supply chain events. You can use this field to tune the performance of your server environment.
14
Chapter 7
Manage Profit Center Business Unit Party

Relationships
Profit Center Business Units: Explained
A profit center business unit is a part of a company that you treat as a separate business. Your organization calculates the
profits and losses for this profit center separately from other parts of the organization.
Intercompany Buyer Profile: Explained

You can specify the intercompany buyer profile in the Profit Center BU Profiles section of the Create Profit Center
BU to Party Relationship page. You must specify it for a profit center business unit that acts as a buyer in a buy and sell
relationship. You can use the following sections:
Setup for Buyer's Payables Invoice and Purchase Order. You can use the following dropdown lists to specify
the business units that provide the procurement and payables invoicing for the profit center business unit. Financial
Orchestration uses these business units when it calculates trade distributions and costing transactions, so you must
specify them even if you do not require Financial Orchestration to create an intercompany invoice for the buy and sell
relationship:
Procurement Business Unit. Specify the business unit that provides procurement services and that stores
the supplier site data that Financial Orchestration uses to create the intercompany payables invoice.
Bill to Business Unit. Specify the business unit that Financial Orchestration must use to get the attributes that
it uses to create the receipt accounting in the Fusion Cost Management application.
Customer Locations for Seller's Receivables Invoice and Sales Order. You can use the following dropdown
lists:
Seller's Customer Address Set. Choose an address set. The address set that you choose includes the billto locations that you can specify for the buyer. If your organization does not require an intercompany invoice,
then you do not need to specify an address set or bill-to location.
Bill to Location. Choose a location that identifies the profit center business unit that Financial Orchestration
must use as the buyer. Financial Orchestration uses this bill-to location to create the intercompany receivables
invoice that it sends to the selling business unit. Note that the Manage Legal Entity Supplier Customer
Association task from Advance Global Intercompany System (AGIS) of the Financials product offering provides
the customer and supplier record for the legal entity.
If you modify any values for the intercompany buyer profile, then Financial Orchestration does not do any of the validations
for the buy and sell terms that you specify, or for the financial routing that you specify. For more information, see Buy and Sell
Terms: Explained and Primary Financial Routes: Explained.
15
Chapter 7
Intercompany Seller Profile Explained: Explained

You can specify the intercompany seller profile in the Profit Center BU Profiles section of the Create Profit Center
BU to Party Relationship page. You must specify it for a profit center business unit that acts as a seller in a buy and sell
relationship. You can use the following sections:
Business Unit for Seller's Receivables Invoice. In the Receivables Business Unit dropdown list, choose the
profit center business unit where Financial Orchestration sends the receivables invoice.
Supplier Site for Buyer's Payables Invoice and Purchase Order. You can use the following dropdown lists:
Buyer's Procurement Business Unit. Choose the profit center business unit that acts as the seller in the buy
and sell relationship.
Buyer's Bill to Business Unit. Choose the business unit where Financial Orchestration sends the bill.
Supplier Site. Choose the supplier site that Financial Orchestration uses to create the intercompany payables
invoice.
What happens if I modify the supplier or customer for

the legal entity?
If you define an intercompany seller profile , and then at some later point you modify this profile, then Financial Orchestration
displays an error message that describes that you updated the supplier profile and that you must also update the seller
profile with new supplier information. To fix this error, you must use the Profit Center BU Profiles section of the Edit Profit
Center BU to Party Relationship page to modify the seller profile. If you do this modification, then this page displays
the name of the supplier that you modified in the Supplier field. You must also do similar work if you modify the buyer. For
example, if you modify the intercompany buyer profile, then you must also modify this profile with the new buyer information.
When can I delete an intercompany buyer or seller

profile?
You can delete:
- The intercompany buyer profile only if the profit center business unit is not a buying business unit in any of the buy and sell
terms, or in any financial route.
- The intercompany seller profile only if the profit center business unit is not a selling business unit in any of the buy and sell
terms, or in any financial route.
16
Chapter 8

Qualifiers
Financial Orchestration Qualifiers: Explained
A financial orchestration qualifier is a rule that specifies when to run one of the financial orchestration flow that you create
in the Manage Supply Chain Financial Orchestration Flows task. If you do not create any qualifier, then Financial
Orchestration runs the financial flow for all the transactions that it receives.
17
Chapter 9

Flows
Financial Orchestration Flows: Explained
You can use a financial orchestration flow to do the following:
Manage the internal trade relationships that exist between two entities, where these entities might reside in the same
organization but in widely dispersed physical locations, including in different countries.
Define the trade relationship that exists between two entities, including business rules, internal controls, regulatory
compliances, and other terms and conditions. These controls allow you to run, monitor, and evaluate the
transactions that occur in the trade relationships that exist between two entities.
Orchestrate supply chain events that occur as the result of a transaction that is associated with a financial
orchestration flow, including events that this flow receives from an external source system.
Start tasks in an external system that is part of the financial orchestration flow.
Create a series of financial movements of goods that can provide equitable distribution of the product margin to the
countries and tax jurisdictions that are involved in a transaction.
Set a date that indicates when to start using a financial orchestration flow. This dating allows you to configure
Financial Orchestration so that it creates transactions that are associated with a source document that occur before
the date when the modified financial orchestration flow goes into effect. Financial Orchestration can also associate
transactions with this flow when your source system creates the source document after this date.
Setting Priorities for Financial Orchestration Flows:

Explained
You can set the Priority of a financial orchestration flow to specify which flow to use when more than one flow is available for
two primary trade partners. The lower the number you use, the higher the priority. For example, if you set the Priority to 1
for Flow A, and 2 for Flow B, then Financial Orchestration will use Flow A. In a more detailed example, assume the following
situation exists:
Financial
Orchestration
Flow
Priority
Shipping
Business Unit
Selling Business
Unit
Qualifier Rule
10
BU A
BU B
Category =
Category B
20
BU A
BU B
Category =
Category A
18
Chapter 9
Financial
Orchestration
Flow
Priority
Shipping
Business Unit
Selling Business
Unit
Qualifier Rule
30
BU A
BU B
None. Applicable
to all documents.
The following table summarizes how to set up the priority for each financial orchestration flow in this example.
Source Document
Financial
Orchestration Flow
Priority
Result
DOO fulfillment line 1
Flow 1
Priority for Flow 1 is 10.

assigns Flow 1 the
highest priority.
Flow 2

Priority for and Flow 3 is
30.
assigns Flow 2 the
highest priority.
Flow 3
Only Flow 3 is assigned.
does not use the Priority.
19
10
Chapter 10
Creating Financial Orchestration Flows: Worked

Example
This example demonstrates how to create a financial orchestration flow for Vision Corporation, which is a multinational
company that makes and sells computerized toys. It describes how to create this flow between Vision Operations, which
is the selling business unit located in the United States, the Vision Distribution Center, which is the shipping business unit
located in Singapore, and the Schatze Toy Company, which is a retailer with locations in Germany. The following diagram
20
Chapter 10
illustrates the financial orchestration flow for this example, and demonstrates how this flow separates the physical flow of
goods for this transaction from the financial flow for this transaction:
Note the following items for this example:

Item
Description
Flow type
Shipment
Selling business unit
Vision Operations
21
Chapter 10
Item
Description
Customer
Schatze Toy Company
Shipping business unit
Vision Distribution Center
Qualifier
All asset items
Sales order currency
USD (United States Dollar)
Sales order price
$100.00 USD
Intercompany transfer price
Equal to the sales order price
Intercompany trade currency
USD
Intercompany invoice
Required
Track profit in inventory
Yes
Summary of the Tasks

Create a financial orchestration flow:
1. Creating documentation and accounting rules
2. Creating transfer pricing rules
3. Creating buy and sell terms
4. Creating profit center business unit party relationships
5. Creating financial orchestration qualifiers
6. Creating financial orchestration flows
7. Testing your custom financial orchestration flow
8. Setting financial orchestration system options
9. Testing your custom financial orchestration flow
Creating Documentation and Accounting Rules

Vision Operations is the seller. It uses the same currency that Vision Corporation uses, and it uses the standard currency
rate that Vision Corporation uses. Vision Operations uses trade distributions, tracks profits in inventory, and requires an
intercompany invoice. It must capture this transaction only for a shipment event, and not for a procurement or intercompany
22
Chapter 10
transfer. It must handle returns in the same way that it handles shipments, so make sure you set the forward flow and the
return flow to use the same events. To create the documentation and accounting rules, do the following work:
1. In the Navigator, click Setup and Maintenance.
2. In the Task list, expand the Supply Chain Financial Orchestration folder, and then expand the Define Supply
Chain Financial Orchestration folder.
3. Click Go To Task next to Manage Supply Chain Financial Orchestration Documentation and Accounting
Rules.
4. On the Manage Documentation and Accounting Rules page, Click Actions, and then click Create.
5. On the Create Documentation and Accounting Rule page, set the following values.
Field
Value
Name
Vision Operations Documentation and Accounting

Rule
Currency Option
Source document
Conversion Type
Corporate
Trade Distributions
Contains a check mark
Track Profits In Inventory
Intercompany Invoices
Effective Start Date
Use today's date
6. In the Forward Flow tab, set Shipment to SO Shipment.

This is a shipment flow, so you do not set a value for Procurement or for Internal Transfer. Financial
Orchestration uses these fields for other types of flows. For more information, see Types of Financial Orchestration
Flows: Explained.
7. Click the Return Flow tab, and then set Shipment to SO Shipment.
8. Click Save and Close.
Creating Transfer Pricing Rules

Vision Operations must use the production cost that it incurs to produce computerized toys as the transfer pricing rule, and
it requires a 15% markup on this cost so that it can realize a profit when it sells products to internal buyers. To create the
intercompany transfer price, do the following work:
1. On the Implementation Project page, in the Task list, click Go To Task next to Manage Supply Chain
Financial Orchestration Transfer Pricing Rules.
2. On the Manage Transfer Pricing Rules page, click Actions, and then click Create.
3. On the Create Transfer Pricing Rule dialog box, set the following values.
23
Chapter 10
Field
Value
Name
Vision Operations Transfer Pricing Rule
Accounting Transfer Price
Source Document Price Basis. For more

information, see Transfer Pricing Cost Basis:
Explained.
Use today's date.
Markup Percentage
15
4. Click Save and Close, and then click Done.
Creating Buy and Sell Terms

Vision Distribution Center is the seller and Vision Operations is the buyer. Vision Distribution Center requires an intercompany
invoice that is payable immediately. To create the buy and sell terms, do the following work:
Financial Orchestration Buy and Sell Terms.
2. On the Manage Buy and Sell Terms page, click Actions, and then click Create.
3. On the Create Buy and Sell Term page, set the following values. Leave all other fields at their default values. Do
not modify values in the tax determinants sections.
Field
Value
Name
Vision Buy and Sell Term
Selling Legal Entity
Selling Business Unit
Transfer Pricing Rule
Vision Operations Transfer Pricing Rule
Documentation and Account Rule
Vision Operations Documentation and Accounting

Rule
Receivables Invoice Type
Intercompany
Payment Terms
Immediate
24
Chapter 10
Field
Value
Incoterm
Leave empty
Buying Legal Entity
Vision Operations
Buying Business Unit
Vision Operations
Default Incoterm Location
Leave empty
4. Click Save and Close, and then click Done.
Creating Profit Center Business Unit Party Relationships

To create the party relationship for the profit center business unit, do the following work:
1. On the Implementation Project page, in the Task list, click Go To Task next to Manage Profit Center
Business Unit Party Relationships.
2. On the Manage Profit Center BU to Party Relationships page, click Actions, and then click Create.
3. On the Create Profit Center BU to Party Relationships page, set the following values. Leave all other fields at
their default value.
Field
Value
Profit Center Business Unit
Vision Operations
Default Trade Organization
V1
Ship-to Location
Leave empty
4. In the Profit Center BU Profiles section, edit the Intercompany seller profile. Set the following values. Leave all
other fields at their default value, and then click OK.
Field
Value
Customer Address Set
Vision Distribution Center SET
Receivables Business Unit
Buyer's Procurement Business Unit
Vision Operations
25
Chapter 10
Field
Value
Buyer's Bill to Business Unit
Vision Operations
5. In the Profit Center BU Profiles section, edit the Intercompany buyer profile:
Set the Business Unit to Vision Operations.
In the Customer Locations for Seller's Receivables Invoice and Sales Order section, add the following
locations, and then click OK.
Seller's Customer Address Set
Bill to Location
Vision Operations Set
9685
Vision Germany SET
CDRM_112
Vision Distribution Center SET
CDRM_116
Buyer's Bill to Business Unit
Vision Operations
6. On the Create Profit Center BU to Party Relationships page, click Save and Close.
Creating Financial Orchestration Qualifiers

You must create the financial orchestration qualifiers that configure Financial Orchestration to run the financial orchestration
flow for Vision Operations only when the Vision Distribution Center ships an asset item. To create these qualifiers, do the
following work:
Financial Orchestration Qualifiers.
2. On the Manage Financial Orchestration Qualifiers page, click Actions, and then click Create.
3. On the Create Financial Orchestration Qualifier page, set the following values. Leave all other fields at their
default value.
Field
Value
Name
Vision Operations Qualifiers
Description
Asset Item = "Yes" AND Ship from organization =

"D1"
Business Process Type
Procurement
26
Chapter 10
4. Click Actions, Add Before, and then set the following values.
Field
Value
Parameter
Asset Item
Operator
Equals
Value
Yes
5. Click Actions, Add Before, and then set the following values.
Field
Value
Parameter
Ship from Organization
Operator
Equals
Value
D1 D1 identifies the Vision Distribution Center.

You must create a financial orchestration flow. To create this flow, do the following work:
2. On the Create Financial Orchestration Qualifier page, set the following values. Leave all other fields at their
default value.
Field
Value
Name
Vision Operations Financial Orchestration Flow
Business Process Type
Shipment
Priority
27
Chapter 10
Field
Value
Use the default value.
Effective End Date
Choose a date that occurs sometime in the future.
3. On the Create Financial Orchestration Flow page, in the Primary Routes section, click Actions, click Add
Row, and then set the following values. Leave all other fields at their default value.
Field
Value
Shipping Business Unit
Shipping Legal Entity
Vision Operations
Vision Operations
4. On the Create Financial Orchestration Flow page, in the Primary Routes section, click Actions, click Add
Row, and then set the following values. Leave all other fields at their default value.
Field
Value
Vision Operations
Buying Legal Entity
Vision Operations
Buy and Sell Term
Selling Trade Organization
Leave empty.
Buying Trade Organization
Vision Operations
5. Click Save.
28
Chapter 10
Setting Financial Orchestration System Options

You must set the Financial Orchestration system options. To create these options, do the following work:
Field
Value
Item Validation Organization
V1
Service Item
RR_RP_Item24
Maximum Number of Records per Batch
100
Testing Your Custom Financial Orchestration Flow

Perform the following steps to make sure your custom financial orchestration flow works correctly:
Log into your order capture system, and then use it to create a sales order that will start the financial
orchestration flow that you configured in this example.
Make sure the order includes an asset that the Vision Distribution Center must ship to the Schatze Toy
Company. The following values are examples that will start this flow. Your order capture system might use
different fields:
Field
Value
Business Unit
Vision Operations
Ship to Customer
Schatze Toy Company
Warehouse
D1
Source Order ID
Vision12345
29
Chapter 10
Log into your Fusion application.
Notice the value that the Orchestration Order field displays, such as 181094.
Navigate to the Financial Orchestration work area, and then the Monitor Financial Orchestration
Execution page.
Issue a query that locates the order. For example, in the Sales Order field, enter the Orchestration Order
number that you noticed in step 2, such as 181094.
Verify that the Search Results section contains the following values.
Navigate to the Manage Fulfillment Lines page.

Query the Customer field for Schatze Toy Company and the Warehouse field for D1.
In the General tab, make sure a fulfillment line exists that includes a value of Vision12345 in the Source Order
field, and notice that the Status field displays a value of Awaiting Shipping.
Navigate to the Edit Shipment page, notice the value that the Shipment field displays, and then verify that the
value in the Shipment Status field is Closed.
3. Verify that the customer received the goods:
Field
Value
Source Order Type
Orchestration order
Source Order
Contains the Orchestration Order number that you

noticed in step 2, such as 181094.
From Primary Business Unit
To Primary Business Unit
Vision Operations
Sales Order
Vision12345
Verify that the first record in the Financial Route Details tab contains the following values.
Field
Value
Type
Financial Route
Buy and Sell Term
30
Chapter 10
Field
Value
Vision Operations
Buying Legal Entity
Vision Operations
Verify that the second record in the Financial Route Details tab contains the following values.
Field
Value
Type
Customer ownership change
Status
Contains a green checkmark.
31
Glossary
Glossary
buy and sell term
Term that you can use to specify the conditions that determine the nature of an agreement to use during an intercompany
transfer, such as the documentation and accounting rule to use, the transfer pricing rule to use, and so on.
documentation and accounting rule
A type of rule that determines how Financial Orchestration creates intercompany invoicing, uses financial routes, and uses
different routes in reply to the different supply chain events that might occur during a transaction.
financial orchestration flow
A flow of information that defines a trade relationship between two different entities. It tracks and stores data that involves
financial instruments, such as accounts receivables, accounts payable, billing, and so on. This flow is different from the
physical flow that goods and services travel because it can include intermediary steps that the physical route does not
include. Internal organizations might perform these intermediary steps, such as wholesalers, distributors, agents, or retailers.
financial orchestration qualifier
A rule that specifies when to run one of the financial orchestration flows that you create in the Manage Supply Chain Financial
Orchestration Flows task. If you do not create any qualifier, then Financial Orchestration runs the flow for all transactions that
it receives
financial orchestration system option
A type of option that affects all financial orchestration flows.
intercompany buyer profile
A type of profile that specifies information about the buyer that Financial Orchestration uses to create the intercompany
invoice.
intercompany invoice
A type of invoice that Financial Orchestration creates when a seller provides a product or service to a buyer, and this buyer
resides in the same organization as the seller but in a different legal entity. It captures accounting and tax information about
an intercompany transaction.
intercompany seller profile
A type of profile that specifies information about the seller that Financial Orchestration uses to create the intercompany
invoice.
intercompany transaction
A type of transaction that occurs between a seller and a buyer, where the seller provides a product or service to the buyer,
and the buyer resides in the same organization as the seller but in a different legal entity. For example, one division of a
business might sell goods to another division that resides in the same business, or a parent company might sell goods to a
foreign subsidiary. An intercompany transaction typically includes a transaction of financial information.
32
Glossary
intercompany transfer price

A type of price that Financial Orchestration uses during an intercompany transaction. The transfer price determines how
Financial Orchestration allocates profits and losses among different parts of an enterprise when these parts use different tax
systems. Financial Orchestration uses the transfer price for accounting and taxation purposes.
service item
A type of item that provides a service. A purchase order that does not include an inventory entry in any of the purchase order
line items is an example of a service item.
source document
The document that Financial Orchestration uses as the input to the transaction. A fulfillment line from an order in Distributed
Order Orchestration is an example of a source document. A line in a purchase order in Procurement is another example of a
source document.
task-generating event
A type of event that results in the title transfer from seller to buyer for goods, or for the fulfillment of services from seller
to buyer for services. This event creates tasks that Financial Orchestration uses to perform accounting activities, such as
updating the intercompany accounts receivable account, or to create financial documents, such as creating the accounts
payable invoice.
trade distribution
The path through which goods and services travel from the seller to the buyer, and the path that the payment for these goods
and services travel from the buyer to the seller. A trade distribution can be short, such as a transaction between the seller and
the buyer, or it can be long, such as a transaction that includes the seller and the buyer, and that also includes wholesalers,
distributors, agents, and retailers.
transfer pricing rule
A type of rule that calculates the intercompany transfer price according to the information that is associated with an
intercompany transaction. The transfer pricing rules determine how to price an international transaction that occurs in a
multinational company so that each country receives the correct share of taxation. You can use a transfer pricing rule with
buy and sell terms.
33

FAISO

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FAISO

Uploaded by

Copyright:

Available Formats

Oracle

Value Chain Execution

Oracle Value Chain Execution CloudImplementing Supply Chain Financial Orchestration

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Supply Chain Financial Orchestration: Overview

Implementing Oracle Fusion Financial Orchestration: Procedure

Importing Business Unit, Customer, and Supplier Data: Procedure ........................................................................... 7

Manage Documentation and Accounting Rules

Accounting Rule Currency Options: Explained

Accounting Rule Conversion Types: Explained

Accounting Rule Trade Distributions: Explained

Track Profits in Inventory: Explained

Intercompany Invoices in Financial Orchestration: Explained

Manage Supply Chain Financial Orchestration Transfer Pricing Rules

Accounting Transfer Price: Explained

Transfer Pricing Markup Percentage: Explained

Primary Financial Route: Explained

Manage Supply Chain Financial Orchestration Buy and Sell Terms

Manage Supply Chain Financial Orchestration System Options

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Manage Profit Center Business Unit Party Relationships

Profit Center Business Units: Explained

Intercompany Buyer Profile: Explained

Intercompany Seller Profile Explained: Explained

Manage Supply Chain Financial Orchestration Qualifiers

Manage Supply Chain Financial Orchestration Flows

Setting Priorities for Financial Orchestration Flows: Explained

Creating Financial Orchestration Flows

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Oracle Applications Help

Oracle Applications Guides

Other Information Sources

Oracle Enterprise Repository for Oracle Fusion Applications

Comments and Suggestions

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Supply Chain Financial Orchestration: Overview

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Financial Orchestration Flow: How it Works

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Manage Supply Chain Financial Orchestration Qualifiers

Manage Supply Chain Financial Orchestration Flows

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

Implementing Oracle Fusion Financial Orchestration:

6. Create an implementation project:

On the Setup and Maintenance page, click Manage Implementation Projects.

Oracle Value Chain Execution Cloud

Implementing Supply Chain Financial Orchestration

This folder includes the following folders:

Manage Documentation and Accounting Rules

Manage Supply Chain Financial Orchestration Transfer Pricing Rules

Manage Profit Center Business Unit Party Relationships

Manage Supply Chain Financial Orchestration Qualifiers

Manage Supply Chain Financial Orchestration Flows