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R 12 CASH MANAGEMENT
R 12 CASH MANAGEMENT
Introduction Oracle Cash Management is an enterprise wide solution for managing liquidity and controlling cash. Cash Management gives you direct access to expected cash flows from your operational systems. You can quickly analyze enterprise wide cash management cash requirements and currency exposures, ensuring liquidity and optimal use of cash resources.
Benefits of Cash Management Forecast cash flows in any currency and in multiple time periods Streamline the reconciliation process Monitor for exceptions and fraud Forecast based on historical or future transactions Manage the cash cycle efficiently and with control
Cash Management Integration Cash Management is integrated with Payables, Receivables and General Ledger. Payables: Payments information automatically transfers to CM without any process. Receivables: to transfer Receipts information to CM remittance process is required. From AR only remitted eligibility transactions will transfer to CM. GL: If we have entered any journal in GL with cash account, that data will flow to CM.
Cash Management is used mainly for 2 purposes1. Reconciliation2. Forecasting
Forecasting is used to identify the future cash inflows and outflows of an Organization.
Reconciliation: Normally at the end of every period, the entries in the cash book are compared with entries in the pass book. The exact causes of differences are scrutinized and then bank reconciliation statement is prepared. Necessary suitable entries will passed in the cash book.Reconciliation process is 3 types:1. Manual Clearing Process2. Manual Reconciliation3. Automatic Reconciliation
Manual Clearing Process:In this process we will manually clear the transactions without entering the bank statement into Oracle.
Manual Reconciliation:In this process we will manually enter the bank statement into Oracle. We will take the transactions one by one and search for the bank transactions manually and mark the transactions as reconciled.
Automatic Reconciliation ProcessAutomatic Reconciliation process can be done in 2 ways: We will enter bank statement into Oracle and run a program, so that system will search the transactions and will reconcile automatically. In another way, in the case where bank statement transactions are more and not possible to enter manually into oracle, in that case, we will upload the bank statement into Oracle through specific formats:BAI 2 & SWIFT 940 These formats are used to upload bank statements into Oracle. Once we received bank statements in the above formats from the bank, we will place these files in a directory where cash management application is stored. We have to run Bank statement load program. We have to define Bank codes for transaction identification purpose.
Define Cash Management Responsibility
Navigation:System AdministratorSecurity Responsibility Define
Application:Cash ManagementMenu:CE _ Super UserRequest group:All Reports Cash Management
Assign Profile Options to Cash Management ResponsibilityNavigation:System AdministratorProfile SystemProfile Options:1. GL Ledger Name2. HR Business Group3. HR Security Profile4. HR User type5. MO operating unit
Assign Cash Management Responsibility to User
Navigation:System AdministratorSecurity User Define
Assign Balancing Segment Values to Legal Entity
Navigation:General LedgerSetup Financials Accounting Setup Manager Accounting Setup
Query your ledgerClick on update accounting optionsGo to legal Entity tabClick on Update Balancing Segment ValuesClick on Add balancing Segment valuesChoose the Balancing Segment values to assign to Legal EntityApply.
System ParametersSystem parameters are controlling features at Legal Entity Level.Navigation:Cash ManagementSetup System System Parameters
Choose Legal Entity Choose Ledger Enter Begin date
Go to System Controls tab:Enable the check boxes Show cleared transactions Show void Payments Allow adding lines to imported statement Archive / PurgeEnter lines per commitChoose Signing authority approval.
Go to Cash Management Transactions tab
Choose Exchange rate type Bank Statement Cash flow Rate Date: Cleared date Bank Transfer Rate Date: Cleared Date Bank Account TransfersAuthorization: Not Required.
Enter Bank statements
Bank statements will be received from bank and entered in the Oracle cash management. It contains 2 levels of information.1. Bank statement header2. Lines Bank statements can be created in 2 ways.1. Manual2. Import bank statements
I. Enter Manual Bank Statement
Navigation:Bank Statements Bank Statements and Reconciliation
Say New
Choose Internal Account Number Choose Statement date Enter Opening Balance, Receipts and Payments detailsClick on Lines button
Enter receipts and payments informationSave and close this window.II. Import Bank statement
We will import bank statement into Oracle application through the program Bank statement import.This program will support 2 types of bank statement file formats.1. BAI 22. Swift 940
Navigation: View Request
Say OK.
ReconciliationReconciliation means: matching either payment or receipt with the bank statement is called reconciliation.Reconciliation can be done in 2 ways.1. Manual Reconciliation2. Auto Reconciliation
I. Manual Reconciliation
Payment Reconciliation:Step: 1Query the payment document which you want to reconcile to view the StatusNavigation:Cash ManagementView Payments
Step: 2Reconcile the Payment DocumentNavigation:Bank Statements Bank Statements and Reconciliation
Query your account numberQuery statement numberSay Find
Place the cursor on statement number line Say review
Click on Lines
Place cursor on the payment line Click on Available
Choose DetailEnable AP Payment check boxSay Find
Select the transaction typeSay Reconcile
Now the Status is ReconciledFor receipt reconciliation:Choose receipt class and Payment method
Say Find and MarkTransaction will be automatically selected by system.Status will be changed to Reconciled from Remitted.
II. Auto Reconciliation
Auto Reconciliation is used to reconcile payments or receipts automatically by running a program.
Step: 1Define Bank transaction codesNavigation:Setup Banks Bank Transaction Codes
Query your Bank accountSay OK
Choose Type Payment & ReceiptEnter code for each type Save your workStep: 2Create Bank StatementsNavigation:Bank Statements Bank Statements and Reconciliation
Say New
Choose: Bank account number Enter statement number Enter Receipts and Payment DetailsClick on Lines
Enter Line detailsSave your work.Now the status is Un reconciled
Step: 3Run auto reconciliation programNavigation:View Request
Submit a new request Single requestSay OKProgram Name:Auto ReconciliationParameters: Choose Bank branch Name Bank account number Statement number
Say OKSay SubmitEnsure program completed normal
Step: 4Query the bank statement to check the reconciliation status in the bank statement linesNavigation:Bank Statements Bank statements and reconciliation
Choose account number & statement numberSay Find
Place cursor on the Account number and say Review
Click on Lines button
Now you can see the status as Reconciled
Step: 5check the reconciliation status in AP PaymentsNavigation:Accounts PayablesPayments Inquiry Payments
Enter payment document numberSay Find
Now the status is Reconciled Un accountedAccounting: PartialGo to Payments Enter windowQuery the payment document numberGo to Actions say Create accountingRe query the payment document
Now the status is Reconciled
Bank Account Transfer Transfer of Funds within 2 bank accounts
This concept is used to transfer the balances from one bank account to another bank account.
Step: 1Complete Intra Company / Inter Company setup in the GLNavigation: Setup Financials Accounting Setup manager Accounting Setup
Step: 2create new bank accountNavigation:setup Banks Bank Accounts
Click on Create button
Choose Country Choose Bank Name Choose Branch NameSay Continue
Choose: Legal Entity as Bank Account Owner Account Use:Payables & ReceivablesSay Next
Enter Account Name Enter Account Number Choose Currency: INR Enable check box of Multiple Currencies Allowed Account type: OtherSave and NextGo to General Controls fieldsChoose: Cash Account Cash Clearing Account
Save and next
Click on Add Organization Access
Choose: Account use:Payables & receivables Organization; Choose Operating unitSay ContinueSay Apply
Say FinishStep: 3Create Bank Account TransferNavigation:Cash management Bank Account Transfers
Say CreateGo to General Information tab
Choose: Settle transactions through Oracle Payments: No Transfer date Currency Enter transfer amount Enter CommentsEnter Source Bank Account and Destination bank accountSay Apply
Now the status is: NEWClick on Validate button
Now the status is: SettledStep: 4clear the transaction in the payment bank accountNavigation:Cash ManagementBank statements Manual Clearing Clear Transactions
Choose: Detail Cash Management Cash flow
Go to Bank tabChoose payment account numberSay Find
Select the transaction typeSay Clear Transaction
Step: 5clear the transaction in the Receiving bank accountNavigation:Cash ManagementBank statements Manual Clearing Clear Transactions
Choose: Detail Cash Management Cash flowGo to Bank tabChoose payment account number
Say Find
Select receipt: transaction typeSay Clear transactionStep: 6Run Create Accounting program and Transfer to GLNavigation:View Request Submit a new request Select single requestSay OK
Name: Create Accounting
Parameters: Choose your Ledger Enter End Date Mode: Final Errors only: No Report: Detail Transfer to GL: Yes Post in GL: No Include user transactions identifier: No
Say OKSay Submit
Ensue the below programs completed Normal1. Create Accounting2. Accounting Program3. Journal Import4. Sub ledger Accounting balances
Step: 7Query the journals in GL and postNavigation: Journal EnterChoose: Ledger Name Source as Cash Management
Say Find
Place cursor on un posted journalSay Review Journal
Say Post
Ensure Concurrent ID request completed normal
Step: 8View Bank BalancesNavigation:Cash Management Bank Balances
UN Reconciliation
Step: 1Query the bank statement line which you want to un reconciledNavigation:Bank Statements Bank Statements and Reconciliation
Say Find
Place cursor on the Account number and say Review
Click on Lines button
Now you can see the status as ReconciledChoose the line and say Reconciled
Select the payment line and say un reconcile button
Now the status is un reconciledSave your work.
Step: 2Query the payment document to check the statusNavigation:CM View Payments
Query payment document number
Now the status is Negotiable
Causes of Differences:1. Checks deposited into bank but not yet collected and credited2. Checks issued but not presented for payment3. Bank charges4. Amount collected or credited by bank on standing instructions5. Amount paid or debited by bank on standing instructions6. Interest credited by the bank7. Interest debited by the bank on over draft8. Direct payment by customers into the bank account9. Dishonor of checks or bills10. Errors
Format of Bank Reconciliation StatementBank Reconciliation statement as on 03/31/2011.-------------------------------------------------------------------------------------ParticularsRs.Rs.-------------------------------------------------------------------------------------Balance as per cash bookAdd:1. Checks issued but not yet presented for payment2. Interest allowed by bank3. Direct payments by a customer into bankLess:1. Checks deposited into bank but not yet collected2. Bank charges3. Dishonored checks or bills Balance as per Pass Book
IMPORTANT REPORTS IN CASH MANAGEMENT
1. Auto Reconciliation2. Bank Statement detailed report3. Bank statement summary report4. Batches available for reconciliation5. Cash in Transit report6. Cleared Transactions report7. General Ledger reconciliation report8. Unreconciled bank statement9. Transactions available for reconciliation report10. Auto reconciliation execution report11. Bank statement by document number report12. Bank transactions code listing
Cash Management period closing procedures Ensure the following before closing the Payables & Receivables. Any reconciliation transactions created by Cash Management are properly entered. Account balances are updated. Reports include accurate information. Specifically the following steps are recommended. 1. Reconcile all your bank statements. 2. Transfer all transactions from Payables to your General Ledger interface tables. 3. Run Journal Import in General Ledger. 4. Post journals in General Ledger. 5. Run the GL Reconciliation Report from Cash Management for each bank account. This report compares the statement balance you specify to the General Ledger ending balances. 6. Review the report for errors. 7. If there are errors in the report, correct them in Cash Management, as needed. Repeat the above steps until there are no more errors.
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