Objective:

In this training article we will discuss a new feature in Oracle Fusion Payables - Third-Party Payments.

What is Third Party Payment?

A third Party payment is a payment that a company makes to a designated party on behalf of the supplier on the invoice. Payments are generally made to the original supplier providing the goods or services. However there can be specific arrangements made wherein suppliers can specify a different party to be paid on their behalf. Payments made to other parties on behalf of the suppliers are called Third-Party Payments. In some industries, it is a common practice for customers to make payments from their Payables application to a third party (other than the invoicing supplier). Following are a few instances where third-party payments are made:

- A supplier files for bankruptcy. Let’s say the supplier has some outstanding receivables from certain customers. The court or the collection agency then sends a notification to all the customers saying that any outstanding payments that are due should be paid to them instead of to the supplier.

- A supplier has a cash flow problem. Here, the supplier sells all of their receivables to a third party. The third party then notifies the customers about this change.

This is a new enhancement feature in Fusion Financials. Now let us discuss the terminology used in this enhanced feature.

Terminologies used for Third-Party Transfers:

We In order to easily relate to the actual terms provided in the application, we will be using the following terms quite frequently during this session:

• Supplier will be referred to as Invoicing Supplier.
• Supplier Site will be referred to as Invoicing Supplier Site.
• Third-Party Supplier is the party to whom the payment will be processed, and will be referred to as Remit-to Supplier.
• Supplier Site of the third party will be referred to as Remit-to Address or Third-Party Site.

Third-Party payments process:

Let us lookat how this works in the real world through below flow chart

* A third-party payment agreement is signed between the parties that is, the buying organizations’ supplier and a party.

* The buying organization receives a purchase invoice for the goods and services rendered by the supplier. The invoice may have remit-to information, which would be the third party.

* The buying organization makes an invoice payment to the third party.

In the next article we will see how we can configure this is set up in Oracle Fusion applications.

Anjan Mukerji

Add comment