Oracle Cash Management

Oracle Cash Management is an enterprise cash management solution that helps youeffectively manage and control your cash cycle. It provides comprehensive bankreconciliation and flexible cash forecasting.

Oracle CM –Business Process

Bank ReconciliationThere are two major process steps you need to follow when reconciling bankstatements:

1. Load Bank Statements: Enter the detailed information from each bankstatement, including bank account information, deposits received by the bank, andpayments cleared.

i. Manual Entryii. Load electronic statements that you receive directly from your bank (via Bank Statement Open Interface)

2. Reconcile Bank Statements: Once you have entered detailed bank statementinformation into Cash Management, you must reconcile that information with yoursystem transactions. Cash Management provides two methods of reconciliation:

• Automatic - Bank statement details are automatically matched and reconciledwith system transactions by running AutoReconciliation program. This method is ideally suited for bank accounts that

have a high volume of transactions.

• Manual - Manually match bank statement details with system transactions. The method is ideally suited to reconciling bank accounts that have a small volume of monthly transactions. This method can be used to reconcile any bank statement details thatcould not be reconciled automatically.

Cash Management Setup Checklist

Currencies Exchange Rates Organizations Sets of Books Define your bank accounts, and assign GL accounts. Transaction calendar (for cash forecasting) Set the Payables Option: Account for Payment. (The options are When Payment is Issued, and When Payment Clears. Select

at least the When Payment Clears option) Define system parameters Define bank transaction codes. Set up the Bank Statement Open Interface. Set up the Reconciliation Open Interface. Other optional Interfaces, if required.

To set up Oracle Payables or Oracle Receivables for Cash Management Integration:1. In the Banks and Bank Accounts windows, define each bank account that you willbe reconciling. In the Account Use field, select Internal.2. In the GL Accounts tab of the Bank Accounts window, enter, for each bank account,the GL accounts you want to use to account for transactions that you reconcile.3. Cash4. Cash Clearing5. Bank Charges6. Bank Errors (Payables only)7. Confirmed Receipts (Receivables only)8. The accounts you defined for the bank account default to any Payables paymentdocuments and Receivables payment methods you define. You can override thesedefault accounts in the Payment Documents window when you define paymentdocuments for the bank account.9. For each remittance bank account, assign a remittance account.

To set Cash Management system parameters:

Cash Management Responsibility > Setup > System > System Parameters

System Controls TAB has Reconciliation Controls, Signing Authority Approval and Archive/Purge OptionsCash Management Transactions TAB has Exchange rate type options, Bank Account Transfer Authorisation type.

Following setups are done as a part of Bank Account setup:1) Receivable Activity2) Float Handling3) Matching Order option for Payables and Receivables4) Tolerances Details5) Interface Code and Interface Matching Criteria6) Check box for Using Reconciliation Open Interface

Bank Setup Overview

Create Bank – Information

This page allows you to search for existing banks, view and update them or create new banks.

Create Bank –AddressYou can maintain several addresses for the bank in case, for example, when the bankhas different mailing and physical locations. One of the addresses has to be marked as aprimary or identifying.

Create Bank –Contact

You can maintain multiple contacts at the bank.

Create Branch –Information

This page allows you to search for existing bank branches, view and update them or create new bank branches.

Create Branch –Address

Create Branch –Contact

Create Account –Owner & UseSelect the bank branch to which your bank account belongs and proceed to the bankaccount setup.

Create Account –Information

Create Account –Controls

Reconciliation Controls. The reconciliation parameters have been moved from

the system level to the bank account level. Now you can have unique reconciliationparameters for each bank account.

Create Account –Access

In this step you will define in which functional areas – Payables, Payroll, Receivables, and/or Treasury – this bank account can be used and by which organizations.

Create Account –Contact

Reconciling a Functional Currency PaymentYou install General Ledger and Payables, and define US dollars (USD) as the functionalcurrency for your ledger. You use Accrual Basis as your accounting method. You recordgains and losses both at payment issue and at payment clearing. You enter an invoicefor 100 USD, approve, pay, reconcile, and create accounting entries for the invoice andpayment. Payables records the accounting entries in the functional currency.The following table shows the accounting entries for the functional currency payment.This example assumes that you create accounting entries in Payables after each activity:

Activity Accounting EntriesEnter invoice for 100 :USD DR Expense 100 USDCR AP Liability 100 USD

Pay invoice, taking 5 USD discount DR AP Liability 100 USD:CR Discount 5 USDCR Cash Clearing 95 USD

Reconcile payment with bank statement, including bank charges of 2 USD:DR Cash Clearing 95 USDDR Bank Charges 2 USDCR Cash 97 USD

Reconciling a Functional Currency Receipt

You install Oracle General Ledger and Oracle Receivables, and define US Dollars as the

functional currency for your ledger. You enter Accrual Basis as your accountingmethod. You enter an invoice for 100 US Dollars (USD) and receive a payment fromyour customer for 100 USD. You create a receipt for that amount, with a Receipt Classthat has the following options:Creation Method: ManualRequire Confirmation: NoRemittance Method: No RemittanceClearance Method: By Matching

When you post the invoice and receipt, Oracle Receivables transfers the accountingentries to Oracle General Ledger, and the Journal Import function creates a journalentry in your functional currency.

The following shows the reconciling of a functional currency receipt:

Enter invoice for 100 USD: DR Accounts Receivable 100 USDCR Revenue 100 USD

Enter receipt for 100 USD:

DR Remittance account 100 USDCR Accounts Receivable 100 USD

Reconcile receipt with bank statement, including bank charges of 2 USD:DR Cash 98 USDDR Bank Charges 2 USDCR Remittance account 100 USD

Bank Statement Open Interface

You can load bank statement information into the Bank Statement Open Interface tablesusing the Bank Statement Loader program or a custom loader program.

Once you populate the open interface tables, you can run the Bank Statement Import program tovalidate and transfer the bank statement information into the Cash Management BankStatement tables.

Bank Statement MappingUse the Bank Statement Mappings window to map the structure of your bank statementfile to the Bank Statement Open Interface tables. You need to define the mapping foreach unique file structure. The default mapping templates for BAI2, SWIFT940, andFrench EDIFACT are provided by Cash Management and cannot be changed.

Reconciliation Open InterfaceUsing the Reconciliation Open Interface, you can reconcile settlements created in OracleTreasury with your bank statements. You can also clear and reconcile payments andreceipts that originate in applications other than Oracle Applications.

Entering Bank StatementsBefore you can reconcile transactions against a bank statement, you need to enter thebank statement information into Oracle Cash Management. You can accomplish thistask by doing one of the following:• Using the Bank Statement Loader program - If your bank provides account statements in a flat file using a defined format like BAI2 or SWIFT940, you can use the Bank Statement Open Interface• Using a custom loader program

• Using the automatic bank transmission feature• Using the XML Gateway• Manually entering the information

Reviewing Bank Statement Interface ErrorsYou can use the Bank Statement Interface window to review import validation errorsthat resulted when you imported bank statement information from the Bank StatementOpen Interface tables. In addition, you can review the AutoReconciliation ExecutionReport that is printed automatically by the Bank Statement Import program.

You can review all import and validation errors for a statement, or you can review onlythose errors that occurred for a specific statement line.

If you encounter import errors, you can correct the data one of three ways:

• Use the Bank Statement Interface and Bank Statement Interface Lines window.• Repair the Bank Statement Open Interface tables manually.• Repair, reload, and re-import the original bank statement file.

Updating Bank StatementsYou can update any bank statement, whether imported or entered manually in CashManagement.(In Find Bank Statements window)

Reconciling Bank Statements

Reconciling Bank Statements Automatically

You can use the AutoReconciliation program to automatically reconcile any bankstatement in Oracle Cash Management. There are three versions of the program:

• AutoReconciliation: Use this program to reconcile any bank statement that hasalready been entered in Cash Management.• Bank Statement Import: Use this program to import an electronic bank statementafter loading the bank statement file into the Bank Statement Open Interface tables.• Bank Statement Import and AutoReconciliation: Use this program to import andreconcile a bank statement in the same run.

You can run these programs from the Submit Request window, the Reconcile BankStatements window, or the Bank Statement Interface window.

You can also import and automatically reconcile a bank statement from the Bank Statement Loader program, by using the option of Load, Import and AutoReconciliation.

After you run the program, you can review the AutoReconciliation Execution Report toidentify any reconciliation errors that need to be corrected.

After you automatically reconcile a bank statement and correct any reconciliationerrors, you can run the Bank Statement Detail Report or use the View Bank Statementswindow to review reconciled and unreconciled statement lines. If lines remainedunreconciled, you can:• Update the bank statement and rerun the AutoReconciliation program.• Reconcile the statement lines manually.

Once you have reviewed your reconciliation results, you can transfer the accountingentries to your general ledger from Oracle Payables, Oracle Receivables, and OracleCash Management.

Reconciling Bank Statements Manually

You can use the manual method to reconcile any bank statement,whether imported or entered manually. In addition, you can create new bank statementlines as you reconcile transactions, as well as update the reconciliation information for apreviously manually-or automatically-reconciled statement.

When you use manual reconciliation, you reconcile each bank statement line withavailable transactions. You can search for Payroll payments, Receivables receipts,Payables payments, miscellaneous transactions, GL journal entries, open interfacetransactions, and statement lines that meet specific criteria, and reconcile the statementline against them.

As you reconcile a statement manually, you may need to create transactions to accountfor differences between the sum of the reconciled transaction and the line amount. Forexample, you can create a miscellaneous transaction to account for bank charges orinterest. You can also create Payables payments and Receivables receipts from CashManagement.

Transferring Bank Reconciliation Transactions to Your General LedgerYou need to transfer the accounting transactions you created during reconciliation forPayables and Receivables to your general ledger interface tables. You cannot transferthese transactions directly from Cash Management. Instead, transfer them fromPayables and/or Receivables, depending on the transaction type. For example, useReceivables to transfer any miscellaneous receipts entries generated during your CashManagement reconciliation. Then, follow your normal posting procedure.