The ability to enter complex purchase orders and
retain portions of the purchase order until a particular milestone is met is a
new feature in R12.
Advance: Generally a one-time prepayment made before work on the contract begins while contract financing infuses money to the supplier as work progresses.
Retainage: The common practice of
withholding a fixed amount / percentage of payment until all work under a
contract is complete and accepted. The
retainage terms are agreed upon by the buyer and supplier and are intended to
make sure that the supplier finishes the work as per the contract. Retainage is also called “retention” or “contractual withholds”. At the end of the project or when agreed
events have occurred, the supplier will request the amount retained and payment
will be made to release it.
Complex payment terms and conditions for fixed
price contracts can be captured during the procurement contract flow. This includes options for progress payments,
advances and contract financing, and retainage.
These terms and conditions are supported in Oracle Payables when
recording invoices and managing payment execution during the lifetime of the
contract. Seamless and real time status
of the purchasing contract, progress, financing and advances balances,
retainage and retainage release is provided to both Oracle Payables and
Purchasing users.
