Let's Explore LETZ!
In my previous blog titled 'Multiple Time Zones in Single Global Instance - A Business Perspective', I have discussed about the key business requirements and challenges in implementing multiple time zones in a single global instance from Finance and Accounting perspective. In this blog, we will discuss on How Oracle LETZ (Legal Entity Time Zone) Solution could address these challenges for Global companies that operate in multiple time zones in single global instance.
What is LETZ?
LETZ is a standard, but controlled Oracle feature introduced in 11.5.10. In LETZ, Oracle has identified certain transactional events and enabled conversion of legal date and period of those events from server time zone (Corporate Time Zone) to the time zone of the legal entity in which the event has occurred.
How to enable LETZ?
LETZ Oracle solution involves two configuration steps.
1. Turn on and Set the 'Enable Legal Entity Time Zone' profile option to 'Yes' at site level.
2. Set up the Time zone of the legal entity in HR Locations. Leave it blank for Non LETZ entities.
How does LETZ work?
The key changes with enabling LETZ solution are,
1. Inventory transactions are accounted and aligned with right GL periods based on local date/time (LETZ time).
2. The accounting cut-off for period close is based on month end local time midnight. This allows early close of inventory periods when China business is brought in to North America Oracle Instance.
3. The cost cut-off date feature works on LETZ time. This will help to hold costing activity and MAC update after local time midnight and enables accurate Inventory subledger reconciliation with GL.
4. All the period close related standard oracle pending transactions validations work in LETZ time.
5. AR invoice date and GL dates are based on local Date/time for auto invoice.
6. Pay-On-Receipt invoice GL date is based on the local receipt date and time.
These changes enable global corporates to record accounting transactions in legal entity time zone and have a rolling close in local date/time.In addition, LETZ supports both Receipt and Period end accrual accounting, Returns debit memo accounting and also movement statistics applicable for European countries.
What are the Key considerations for implementing LETZ?
1. Work with Finance and Accounting business teams and get their buy-in.
2. Work with Oracle engagement team for Oracle Development approval for supporting LETZ.
3. Explore if you need to implement 'User Preferred Time Zone' along with LETZ.
4. Finalize the approach for how users will enter dates in Oracle or how external (3PL WMS) systems will send the dates.
5. Test all the transactional events applicable for your business and validate if it addresses all your business requirements. Also validate the complex IR-ISO and Intercompany business scenarios as required.
6. LETZ does not support price list validity, BPA validity and Currency conversion rate.