Payment Methods in Payables

A disbursement payment method is a method of payment that your company uses to pay a supplier, customer, or employee. The payment method can be electronic, such as "EFT", "bill payable", or wire, or printed, such as a check. You can use a payment method to pay one or multiple third-party "payees" such as a suppliers. Oracle Payments supports several payment methods for funds disbursement, including the following:

• Check
• Electronic
• wire
• Clearing

Check:

It is the payment through the regular bank check. You can pay with a manual payment, a Quick payment, or in a payment batch.

Electronic:

Electronic An electronic funds transfer to the bank of a supplier. You create electronic payments either through the payment Gateway, or by delivering a payment batch file to your bank. For both methods, Payables creates a file during PPR creation. If you are using the e-Commerce Gateway to create the file of payments, an payment system setup is required to delivering it to your bank.

To understand, in daily life electronic Payment methods used in India are credit card payment using Master/Visa/Rupay payment systems or IMPS for instant fund transfer up to 10,000 rupees or NEFT up to one lac and RTGS for amount more than 1 lac are used.

Wire:

Wire Funds transfer initiated be contacting the bank and requesting wire payment to the bank of a supplier. A payment method where you pay invoices outside of Payables by notifying your bank that you want to debit your account and credit your supplier’s account with appropriate funds. You provide your bank with your supplier’s bank information, and your bank sends you confirmation of your transaction. Your supplier’s bank sends your supplier confirmation of the payment. You then record the transaction manually.

To Understand, in daily life visiting bank branch and filling a form to transfer a bigger amount say more than 5 lac rupees in single transaction is an example of Wire payment method. Here instead of giving electronic instructions, individual is filling a form and bank transfers amount in beneficiary amount electronically.

Clearing:

Clearing Payment for invoices transferred from another entity within the company without creating a payment document. Payment method you use to account for intercompany expenses when you do not actually disburse funds through banks. You do not generate a payment document with the Clearing payment method. When you enter the invoice, you enter Clearing for the payment method. You can record a Clearing payment using a Manual type payment only.

The purpose of creating disbursement payment methods is to:

·       Define the disbursement payment methods you want to use to make payments

·       Define usage rules to limit the use of disbursement payment methods to specific business units, legal entities, and other attributes.

·       Assign "validations" to disbursement payment methods for running on documents payable, payments, and payment files

Creating very granular payment methods lead to more payment methods, it's important to also set up payment method defaulting rules. Payment method defaulting rules eliminate the burden during invoice entry of manually selecting one appropriate payment method from the many available. You can also use supplier-specific defaults, an option which is enabled on the Payment Method Default Basis section on the Manage Disbursement System Options page.

Creating a disbursement payment method in Payments is composed of the following major tasks:

·       Creating "usage rules"

·       Creating or assigning validations

 

Creating Usage Rules

Usage rules specify when a disbursement payment method is available for use by source products for documents payable. By creating usage rules, you enable or disable payment methods for each source product integrated with Oracle Fusion Payments. You can provide different usage rules for different source products and change whether and when the payment method is available.

In the Usage Rules tab on the Create Payment Method page, you decide whether to assign the payment method to one of the following:

·       All payees

·       Specific business units, legal entities, and payment process transaction types for Oracle Fusion Payables

·       Specific business units, legal entities, and payment process transaction types for Oracle Fusion Receivables

·       Specific payment process transaction types for Oracle Fusion Cash Management

Common Types of Electronic & Wire Payment Methods in Use across world:

Clearing/Direct Debit:

A Direct Debit or direct withdrawal is a financial transaction in which one person (or company) withdraws funds from another person's bank account. ... Before the payer's banker will allow the transaction to take place, the payer must have advised the bank that he or she has authorized the payee to directly draw the funds.

ACH EFT:

ACH stands for the Automated Clearing House and is basically the process of moving funds electronically between bank accounts. ACH processing can also be called EFT (electronic funds transfer).

let’s say, your shop online. you open up your laptop and log on to amazon or flipcart website. You get to the payment area, and what are you prompted to do? Enter your routing and account number.

Anytime you’re asked to enter these numbers for an electronic payment, you’re about to make an ACH or eCheck payment.

Common examples of ACH payments include:

• Salary payment to employees in their bank account
• Automatic monthly bill payments to utilities, lenders, and other service providers
• Moving money between your accounts at different banks
• Automatic contributions to retirement accounts or electronic provident fund

Faster Payments:

These are electronic payments that can be made online, over the phone, in a branch or using our self-service machines.
As long as the receiving bank or building society uses Faster Payments too, the payment will arrive almost immediately (though sometimes, it can take up to 2 hours). In most cases a Faster Payments transfer is processed in a matter of seconds.

 
CHAPS payment:

The Clearing House Automated Payment System - CHAPS - has been in operation since 1984. CHAPS payments are usually worth over £10,000, and can be settled immediately, making them perfect for large, and critical transfers which have to be received right away - like paying a deposit on a house. 

BACS payment:

BACS stands for Banker’s Automated Clearing Services - and the BACS payment system has been in existence for 50 years already.

BACS payments are used for bank transfers within the UK, including direct debits. Most people receive their salary from their employer via a BACS payment of some type. Usually it takes a couple of days to receive a BACS payment. 

SWIFT payment:

The Society for Worldwide Interbank Financial Telecommunication - understandably shortened to SWIFT - is a network that allows banks to communicate financial information securely. SWIFT payments are used to make international bank transfers.

SEPA: SEPA stands for Single Euro Payments Area, The idea of SEPA is to make it easier to transfer money and electronic payments between the countries within the SEPA area. SEPA, for its part, promotes freedom of movement and trade of EU citizens and European companies. Euro-denominated payments within the SEPA do not differ from domestic payments.