The document describes two approaches for issuing refunds to customers in Oracle Financials: the conventional approach and a novel work-around solution. The conventional approach involves creating the customer as a supplier in Accounts Payable and manually processing invoices and payments. The novel solution uses a concurrent program to automatically transfer customer refund details from Accounts Receivable to Accounts Payable, generating an invoice to pay the customer without manual steps.

1. Refunds to Customer
Functional :
Business organizations invoice the customers for the goods or services
delivered, for which customer pays. Organizations also create some
adjustment entries in the customer account through debit or credit
memo for varied reasons. In some cases, the customers may have to
be paid back, as a result of these adjustments.
Oracle financials suite manages all payments through Account
Payables. By functionality it is not possible to make refunds to
customers through AR module.
As a work-around-solution a concurrent program has been developed
that transfer the details of the customer & refund amount to AP from
AR, by a click of button.
The distinction between conventional approach & novel approach
(work-around solution) is penned below:

2. Conventional Approach:
1. Create a customer as a supplier in AP
2. Create a manual invoice by selecting supplier as created above &
debit the AP/AR clearing account
Dr AP/AR Clearing a/c
Cr AP Liability a/c
3. Approve the invoice & make a payment.
Dr AP Liability a/c
Cr Bank a/c
4. Create a debit memo, in AR, with the refund amount by crediting
AP/AR clearing account.
Dr S drs control a/c
Cr AP/AR Clearing a/c
5. Apply the unapplied receipt to the debit memo, to make it nil.
Dr Unapplied Receipts a/c
Cr S drs control a/c
6. Run the transfer to GL process from AR & AP
7. AP/AR clearing account becomes nil, by a debit from AP & credit
from AR with the refund amount

3. Novel Approach (Work-around-solution):
1. Create a debit memo in AR, with the refund amount.
Dr Sundry debtors control a/c
Cr AP/AR Clearing a/c
2. Apply the unapplied receipt to the debit memo, to make it nil.
Dr Unapplied Receipts a/c
Cr Sundry debtors control a/c
3. Select “Refunds Transfer to AP” option from the “Actions” menu.
A concurrent program will run automatically at the back-end &
transfers the refund details from the debit memo in AP
4. Customer name, customer bank account number & the refund
amount is transferred to AP, by the concurrent program above
5. An invoice batch is automatically created in the AP module of the
corresponding OU, which contains a “Standard Invoice” that is

4. created in the name of generic customer “Refunds Supplier”,
with the refund amount i.e, debit memo amount of AR
DFF is enabled at the AP invoice header level, with two attributes
or segments to capture the customer name and customer bank
account number. Customer name is table validated, to prevent
any misuse.
6. Distribution line is created automatically by a debit to “AP/AR
Clearing a/c”
Dr AP/AR Clearing a/c
Cr AP Liability a/c
7. Approve the invoice & make a payment.
Dr AP Liability a/c
Cr Bank a/c
8. Run the transfer to GL process from AR & AP
9. AP/AR clearing account becomes nil, by a debit from AP & credit
from AR with the refund amount.

5. Setups:
AR Setups
1. Transaction type “Refunds” Debit memo to be created, with the
revenue account point to “AP/AR Clearing a/c”

6. 2. Create Transaction source “Manual Refund” and attach “Refunds”
transaction type.

7. 3. Create a memo line “Refund to Customer”

8. AP Setups:
1. Setup a DFF to capture “Customer Name” & “Customer Account
Number” (Application: “Payables” Title “Invoice” )