Cash Forecasting: How much money do you really need?

Berna LowensteinOracle Corporation

Introduction

You may have the best sales staff in the world. You may be receiving orders and shipping out products left andright. But, if your customers are not paying their bills on time, you may not have enough cash on hand to pay yoursuppliers or your employees. If you don’t manage your cash flow, you’ll go out of business, and you know it.Oracle Cash Forecasting can help you determine how much cash you need to run your business effectively.

Oracle Cash Forecasting is a NEW tool that helps you figure out how much money you need to run your business. Itis part of Oracle Cash Management. This paper provides an overview of the Cash Forecasting process, and basicinstructions on how to set up templates and run the forecasts. There is also a troubleshooting guide that helpsanswer some basic questions.

Scope

I. What is Cash Forecasting?II. Setting up Cash ForecastingIII. Generating Cash ForecastsIV. Printing Cash ForecastsV. Exporting a Cash Forecast to Microsoft ExcelVI. Troubleshooting guide

Please note that this paper does not replace your Cash Management User’s Guide. This paper is intended to giveyou a quick overview of the application, and some instructions to help you get started.

References

For detailed information on all the Cash Forecasting features, please read the following references.

Oracle Cash Management Release 11 User’s Guide, Chapter 5 and pages 6-15 & 6-16.

Oracle Cash Management Release 11 Student Guide, Lesson 9, Cash Forecast. Many of the step by step instructionsin this paper come from the Student Guide.

I. WHAT IS CASH FORECASTING?

Cash Forecasting is part of the Oracle Cash Management application. It is a tool that allows you to anticipate theflow of cash in and out of your organizations.

The biggest benefit to using Cash Forecasting is that it collects data from several Oracle applications and externaldatabases and enters all of it into a single cash forecast. You can work with the forecast just like a spreadsheet. Youcan change the numbers to do “what if” scenarios. You can print the forecast. You can even export it to a MicrosoftExcel spreadsheet to manipulate the data and produce graphical representations of the data.

Cash inflow information comes from Oracle Receivables, Oracle Order Entry, and Oracle General Ledger. Cashoutflow information comes from Oracle Payables, Oracle Purchasing, Oracle Payroll, and Oracle General Ledger.You can use the Forecasting Open Interface to include cash inflows and outflows from external systems. You canalso enter information into the forecast by hand.

Before creating your forecast, you must create a template that has columns (periods or date ranges) and rows(sources for your cash inflow or cash outflow). Your resulting forecast looks just like a spreadsheet.

You can specify several accounting periods or date ranges, and your forecast will let you know how much cash youwill have or need in each of these periods. You can specify several sources of information, such as AP Invoices orAR Receipts. You can specify multiple organizations in the same template. You can also use any currency todetermine your degree of currency exposure.

Most of your effort will go into creating your Cash Forecasting templates. The template defines what you want yourforecast to look like. Once your template is set up, it is a simple matter to generate your forecast.

II. SETTING UP CASH FORECASTING

Associating External Forecast Source Types with Views

If you are using external sources (i.e. other than Oracle), you need to associate your external source types with anexternal source transaction view. If that view is on a remote database, you also need to specify the database link.This step is optional, and is only used for external sources of data.

To associate external forecast source types and views:

1. Navigate to:

Setup -> External Forecast Sources 2. In the Type field, select an external forecast source. The list of values is the context field of the Forecast

Selection Criteria Descriptive flexfield. 3. In the View field, enter an external forecast source view. This field is not validated until you submit a forecast

that uses the associated external forecast source type.

4. In the Database Link Name field, if the source type is on a remote database, enter a database link name. The listof values includes currently available links, but since this field is not validated until you submit a forecast thatuses the associated external forecast source type, you can enter any other name.

Defining Forecast Templates

The first step for generating a cash forecast is to define a forecast template. A template contains cash forecastspecifications. The template determines the presentation of sources (rows) and forecast periods (columns) for yourcash forecast. When you create your rows, not all the fields will be required. The required fields will depend on thesource you choose. The fields that are not applicable will be greyed out.

To define a Forecast Template:

1. Navigate to:

Cash Forecast -> Forecast Templates

2. Click the New button. The Forecast Templates window is displayed. 3. In the Name field, enter a unique name for the template. 4. In the Forecast By field, select Days or GL Periods as the forecast period type. 5. In the Description field, enter a description for the template. 6. In the Overdue Transactions field, select Include or Exclude to determine whether to include or exclude open

transactions that have a cash activity date before the forecast start date. Overdue transactions are collected intoone forecast period, displayed in the Overdue column of the Cash Forecast Amounts window and the CashForecast report.

The Overdue Transactions field does not apply to all transaction source types. Your forecast will show a zeroamount in the Overdue column for the following source types: AP Payments with the "Historical" forecast method AR Receipts with the "Historical" forecast method GL Budgets GL Encumbrances Payroll Expense

7. If you chose to include overdue transactions, you must enter a value in the Cutoff Period field. The cutoffperiod determines how far back to include overdue transactions.

8. In the Business Calendar field, select a transaction calendar. If you do not select a calendar in this field, the

cash activity dates used in forecasting can be non-business days. 9. Save your work. 10. Click the Columns button to open the Forecast Template Columns window.

To define Forecast Template Columns:

1. In the Column Number field, enter a number to specify the sequence of the columns in the forecast. You candefine up to 80 columns in a forecast template.

2. Depending on how you defined the forecast template, enter the “from” and “to” specifications as periods or

days. The “from” value must be less than or equal to the “to” value. These numbers define the forecast periods

by indicating the specific date or period ranges for each column. For example, if your template is defined byGL periods, you would specify “from” and “to” periods such as 1 to 1, or 2 to 2. If your template is defined bydays, you would specify “from” and “to” days such as 1 to 15, and 16 to 30. When you submit the forecast, youwill specify a start period or a start date.

3. Close the Forecast Template Columns window. 4. In the Forecast Templates window, click the Rows button to open the Forecast Template Rows window.

To define Forecast Template Rows:

1. In the Row Number field, enter a number to specify the sequence of the row in the forecast. 2. In the Source field, select the source of cash inflow or outflow. The source you select will determine which of

the following fields are required. The fields that are not applicable to your chosen source type will be greyedout.

Sources of cash inflow are: AR Invoices Unpaid invoices. AR Receipts (Historical) Cleared cash receipts, excluding reversed receipts. AR Receipts (Future) Uncleared cash receipts, excluding reversed receipts. Sales Orders Uninvoiced sales orders that are projected to be paid by the customer,

excluding commitments. GL Cash Position Cash balance to be used as the starting point of the projection. GL Budgets Revenue account budget amounts. Open Interface Inflow External forecast source inflow transactions. User-defined Inflow Manually entered forecast amounts after the forecast is generated. Sources of cash outflow are: AP Invoices Unpaid invoices, excluding prepayments. AP Payments (Historical) Cleared disbursements, excluding void payments. AP Payments (Future) Uncleared disbursements, excluding void payments. Payroll (Historical) Paid payroll. Purchase Orders Uninvoiced purchase orders. Purchase Requisitions Unordered requisitions. GL Encumbrances Unused portion of encumbered amounts for expenses and assets. GL Budgets Expense account budget amounts. Open Interface Outflow External forecast source outflow transactions. User-defined Outflow Manually entered forecast amounts after the forecast is generated.

Important Note:

The same information will never appear twice in a forecast. For example, if you have both AP Invoices and APPayments on your forecast, an invoice will show up in the AP Invoices source if it is not yet paid. It will showup in the AP Payments source if it is paid, but it will never show up in both sources at the same time.

3. In the Description field, enter a description for the source type. The information you enter here will be usefulwhen you have multiple rows with the same source type, but different criteria.

4. In the Organization field, select an organization that you want to forecast on for the source type. You can have

multiple instances of a source type in your forecast, each for a different organization, or one instance torepresent all organizations. Leave this field blank to collect source data for all organizations.

The Organization field is applicable when multiple organizations are implemented, and for the following sourcetransactions: AP Invoices, AP Payments, AR Invoices, AR Receipts, Purchase Orders, Purchase Requisitions,and Sales Orders. Oracle Cash Management automatically displays the corresponding organization’s set ofbooks name for these source types. The Organization field is also applicable when the source type is PayrollName. In this case, the organization is actually the business group, and the list of values displays appropriatebusiness groups for Oracle Payroll.

5. In the Set of Books field, Oracle Cash Management automatically displays the corresponding organization’s set

of books name. The name of the set of books is required for the GL Budgets, GL Cash Position, and GLEncumbrances source types. All GL source types for a forecast must use sets of books with the sameaccounting calendar. If you are creating a forecast across multiple organizations, all organizations’ set of booksmust use the same accounting calendar.

6. In the Payroll Name field, select the name of the payroll to include in the cash forecast. You can leave this field

blank to collect source data for all payrolls. 7. In the Discount field, indicate whether to include discounts, and how to calculate a transaction date for the AP

Invoices source type.

You can select:

Maximum: Always take the maximum discount available, subtract the discount from the gross invoice amount,and use the discount deadline as the expected cash activity date. Minimum: Always take the minimum discount available, subtract the discount from the gross invoice amount,and use the discount deadline as the expected cash activity date. None: Pay the entire invoice amount by the due date, and use the due date as the expected cash activity date.

8. In the Pay Group field, you can limit AP invoices and purchase orders to a certain pay group. 9. In the Payment Priority field, enter a number between 1 (high) and 99 (low) that represents the lowest priority

of payment for AP invoices and purchase orders. For example, if you enter 15, your forecast will include allinvoices or purchase orders with a payment priority between 1 and 15.

10. In the Supplier Type field, you can limit AP invoices and purchase orders to a certain supplier type. 11. In the Payment Method field, you can limit AP payments and payroll expenses to a certain type of payment.

For AP payments, payment methods are predefined in Oracle Payables. You can choose Check, Electronic,Wire, Clearing, Future Date, and Manual Future Dated. For payroll expenses, in addition to user-defined methods, there are pre-defined payment methods in OraclePayroll. Predefined choices are Cash, Check, and NACHA (National Automated Clearing House Association).

12. In the Bank Account field, you can limit AP payments, AR receipts, and payroll expenses by bank account. 13. In the Method field, specify cash-flow transactions as forward looking or backward looking for AP payments,

AR receipts, and payroll expenses. You can select: Future: You want to include unreconciled or uncleared transactions. If you select Future, skip the next twofields.

Historical: You want to include reconciled or cleared transactions.

For the Payroll Expenses source type, since forecasts can only be based on historical payments, this fielddefaults to Historical.

14. In the Roll Forward Type field, select the time period type by which transactions should be rolled forward to

calculate the expected cash activity date for AP payments, AR receipts, or payroll expenses when you selectHistorical in the Method field. You can choose a type of Day, Month, or Period.

15. In the Roll Forward Period field, select the length of time to roll forward to calculate the expected cash activity

date, for AP payments, AR receipts, or payroll expenses when you select Historical in the Method field. See theTroubleshooting guide at the end of this paper for an example of how the Historical forecast method works.

16. In the Receipt Method field, you can limit AR receipts to certain receipts by selecting a method. 17. In the Profile Class field, you can limit AR invoices to certain customers by selecting a profile class. 18. Select the Include Dispute? Check box to indicate inclusion of disputed amounts for AR invoices. 19. In the Budget Name field, enter the name of a budget for the GL Budgets source type. 20. In the GL Account field, enter the appropriate general ledger account for GL Budgets, GL Cash Positions, and

GL Encumbrances source types. 21. In the Encumbrance Type field, enter an encumbrance category for the GL Encumbrances source type. 22. In the Lead Time field, enter the number of days that need to be added to the transaction date to calculate the

projected cash transaction date for Purchase Orders, Purchase Requisitions, and Sales Orders source types. Thevalue must be a positive whole number, or zero.

23. In the Authorization Status field, select the status type of the purchase orders and purchase requisitions. 24. In the Sales Order Status field, select the status of sales orders from the list of values. 25. In the Sales Order Date Type field, select the date type to calculate expected cash activity date for the Sales

Orders source type. 26. In the External Source Type field, if the source is Open Interface Inflow or Open Interface Outflow, indicate the

external forecast source type. 27. In the Forecast Selection Criteria field, select the criteria for the External Source Type you entered in the

previous field for Open Interface Inflow or Open Interface Outflow sources. 28. Save your work. Cash Management validates required fields at this time.

Important Note:

You can add or delete rows and columns in a template, but your action will affect all cash forecasts previouslygenerated using that template. Adding rows and columns to a previously defined template generates forecastamounts of zero for the new cells in the existing forecasts. Deleting rows and columns eliminates forecastamounts for the deleted cells.

III. GENERATING CASH FORECASTS

There are three ways to generate a Cash Forecast. You can use the Submit Forecast Window, the Submit RequestsWindow, or create a forecast right from the template.

The first two methods collect data and populate the cells of the forecast with cash amounts. They both create thesame forecast, so it doesn’t matter which method you choose. However, the third method creates a “manuallyentered forecast” which has zeros in all the cells. You are expected to enter the amounts manually.

Important Note:

The forecast is NOT a report. It is a spreadsheet. If you want to print your forecast as a report, then you mustrun the Cash Forecast Report after you generate your forecast.

When you generate your forecast, you will also get a Cash Forecast Execution Report. If this report says “Nodata found” then your forecast worked. If your forecast did not generate correctly, then this report will list thereasons why.

Generate a Cash Forecast Using the Submit Forecast Window

This method produces a forecast with amounts in the cells.

1. Navigate to one of the following forms:

Cash Forecasting -> Forecast TemplatesCash Forecasting -> Forecasts

Query up your template.

2. Click on the Special drop down menu at the top of the form, and select Submit Forecast.

3. In the Forecast By region, select GL Periods or Days to indicate the forecast period type to run the cashforecast.

4. In the Template Name field, select the forecast template name. 5. In the Forecast Name field, enter a unique forecast name for the cash forecast. If you do not enter a forecast

name, Oracle Cash Management automatically generates a name by attaching the system date and time to thetemplate name.

6. In the Calendar Name field, if the forecast is by GL periods, select the name of the GL accounting calendar. 7. In the Start Period field, if the forecast is by GL periods, select the beginning accounting period for the forecast.

The Start Period should be as of today or in the future, since the forecast will only include transactions as oftoday. If you enter a period in the past, or a period in progress the forecast only includes transactions as oftoday.

8. In the Start Date field, if the forecast is by days, enter the date to begin the forecast. The Start Date should be as

of today or in the future, since the forecast will only include transactions as of today. If you enter a date in thepast, the forecast only includes transactions as of today.

9. In the Forecast Currency field, select the currency for generating the cash forecast. 10. In the Source Currency Type field, select the currency type for the sources in the cash forecast.

You can select:

All: Include all source transactions, regardless of currency, and translate them to the forecast currency Entered: Include only source transactions with the same source currency as the transaction currency. Functional: Include only source transactions with the source currency as the functional currency. This choiceis useful for multiple sets of books environments.

11. In the Source Currency field, select the currency for the source transactions. The transactions included in yourforecast calculations are determined by the combination of your entries for this field and the Source CurrencyType field. If the source currency type is All, you do not enter a source currency.

12. In the Exchange Date field, enter the date for the exchange rate. 13. In the Exchange Type field, select the exchange rate type, which is defined in Oracle General Ledger. The

Exchange Date and Exchange Type fields are required if the forecast currency and the source currency are notthe same.

14. In the Exchange Rate field, if the exchange rate type is User, enter the exchange rate. The User rate only

applies when the source currency type is Entered, as no one rate will apply to converting various currencies tothe forecast currency are not the same.

15. In the Amount Threshold field, enter the minimum value of individual transactions to be included in the forecast

to omit insignificant transaction amounts from the forecast calculations. Oracle Cash Management comparesthis amount to transaction amounts if the source currency type is Entered, and functional amounts of thetransaction if the source currency type is Functional, and then only selects transactions that are greater than thethreshold amount. This field is not applicable when the source currency type is All.

16. In the Row Number From and Row Number To fields, you can indicate to run partial forecasts by selecting

sequential rows of the forecast template. 17. Select the Request by Row check box to submit a separate concurrent request for each row, so that the rows for

the forecast are generated concurrently. This method is useful for testing or for very large forecasts. 18. Click the Submit button.

Generate a Cash Forecast Using the Submit Requests Window

This method also produces a forecast with amounts in the cells.

1. Navigate to:

Other -> Programs -> Run 2. In the Request Name field, depending on the template you want to use, select Cash Forecasting by GL Periods

or Cash Forecasting by Days. 3. In the Parameters window, enter the forecast parameters and click the OK button. See “How to Generate a

Cash Forecast Using the Submit Forecast Window” for more information. 4. Click the Submit button.

Generate a Manually Entered Cash Forecast

This method produces a forecast with zeros in all the cells. You are expected to fill in the amounts yourself.

1. Navigate to :

Cash Forecasting -> Forecasts

2. Click the New button to open the Cash Forecasts window. 3. In the Template Name field, select a template name. This template is used to create columns and rows for your

forecast.4. In the Forecast Name field, enter a unique forecast name for the cash forecast. 5. Depending on the template, enter a start date, or calendar name and start period. 6. Enter a forecast currency, exchange type, and exchange date, source currency type, and source currency. 7. In Calendar Name field, if the forecast is by GL periods, select the name of the GL accounting calendar. 8. In the Description field, enter a description for the cash forecast (optional). 9. Click the Review button to open the Cash Forecast Amounts window. 10. Enter the amounts manually. 11. Save your work.

Important Note:

When you add or delete columns and rows on a forecast template, the changes affect manually created forecastsbased on that template, as well as forecasts that were automatically generated.

IV. PRINTING CASH FORECASTS

The forecast is NOT a report. It is a spreadsheet. If you want to print your forecast as a report, then you must runthe Cash Forecast Report after you generate your forecast.

At the time you generate your forecast, you will get a Cash Forecast Execution Report. This is not the CashForecast Report. It is an exception report. If the Cash Forecast Execution Report says “No data found” then yourforecast worked! If your forecast did not generate correctly, then this report will list the reasons why.

Printing your forecast from the Concurrent Request form

You must have already generated your forecast.

1. Navigate to :

Other -> Concurrent -> Request 2. Select the Cash Forecast Report. 3. Enter the Template Name and Forecast Name. 4. Click the OK button.

V. EXPORTING A CASH FORECAST TO MICROSOFT EXCEL

Once a forecast is generated, you can change the amounts or add new rows by modifying the forecast within CashForecasting. This allows you to do “what if” scenarios or add information that could not be collected from Oracle orexternal databases.

However, you may find it useful to export your forecast to Microsoft Excel. You can take advantage of Excel’sability to manipulate the information and produce graphical representations of the data.

Important Note:

To use this feature you must be on a Windows platform and have Excel installed.

Exporting your forecast to Microsoft Excel

You must have already generated your forecast.

1. Navigate to:

Cash Forecasting -> Forecasts Query up your forecast.

2. Choose the Review button. 3. Click on the Action drop down menu at the top of the form, and select Export... . 4. Select the To Microsoft Excel option. 5. Select the Autosize All Columns check box.

If you select this check box, then Excel will display all records in correctly sized columns. If you do not selectthis check box, then Excel will display “#####” when the information in a cell exceeds the default column size.However, if you do autosize all columns and your data contains very large entries, then the columns created inExcel may be very wide and difficult to read.

6. Choose the Export button.

Oracle Cash Management exports all selected records, excluding summary rows, and opens Excel. Exceldisplays your forecast.

7. You can modify your spreadsheet in Excel. Make sure to save it to a directory on your PC or network.

Important Note:

If you make changes to your Excel spreadsheet, it does not change your forecast in Oracle Cash Management.If you make changes to your forecast in Oracle Cash Management, it does not change your Excel spreadsheet.

VI. TROUBLESHOOTING GUIDE

I ran the forecast and didn’t get a report.

Generating the forecast does NOT produce a report. It creates a forecast, which is an interactive spreadsheet. To geta printed report of your forecast, you must run the Cash Forecast Report after generating the forecast. Asparameters, you give it the Template Name and the Forecast Name.

Version 11i will produce a report along with generating the forecast.

I ran the forecast and the report says, “No data found.”

Generating the forecast does NOT produce a report. It creates a forecast, which is an interactive spreadsheet. Whenyou generate the forecast, there are two concurrent requests submitted. One generates the forecast, and no report isproduced. The second is the Cash Forecast Execution Report. This is an exception report. If the Cash ForecastExecution Report says “No data found” then the forecast worked. If the Cash Forecast Execution Report has data onit, then the forecast did not work and the report lists the reasons why. To get a printed report of your forecast, youmust run the Cash Forecast Report after generating your forecast.

I ran the forecast, but it is all zeros.

There are several reasons why a forecast will produce zeros for all the cells.

You can create an empty forecast on purpose, just to get the spreadsheet. This is called generating a “manuallyentered cash forecast.” You can then enter the information in the cells yourself, just like 3rd party spreadsheets. Theadvantage is that your forecast will be in the same format as other forecasts you generate.

Check to make sure your template is set up correctly. If someone has made changes to your template, it may nolonger be retrieving the data you were expecting.

Check the Cash Forecasting views to make sure you have data in them for the dates or periods you have requested.If there are no records in these views for those dates or periods, then there is no data for your forecast. Cashforecasting retrieves data using the following views:

CE_AP_FC_DISC_INVOICES_VCE_AP_FC_DUE_INVOICES_VCE_AP_FC_PAYMENTS_VCE_AR_FC_INVOICES_VCE_AR_FC_RECEIPTS_VCE_PAY_FC_PAYROLL_VCE_PO_FC_ORDERS_VCE_PO_FC_REQUISITIONS_VCE_SO_FC_ORDERS_V

Please review Oracle Cash Management Technical Reference Manual, version 11, for detailed information on theseviews.

The Euro currency was not seeded correctly when Oracle added it to Cash Management's currencies. The CashForecast will not generate correctly, until you fix the Euro currency. The problem has been fixed for version 11i.However, if you have an earlier version of Cash Management, it is easy to fix this yourself.

Go into Cash Management, and navigate to:

Setup -> Currency -> Codes

And query up the code "EUR". Scroll to the right, and under Currency Derivation Type, make sure it says "EuroCurrency". If it's null, set it to "Euro Currency" and save. Then regenerate your Cash Forecast, and it shouldgenerate legitimate numbers in the cells.

I generated a forecast, and I can change the values in the cells. Is there any security to prevent changes?

No. The forecast is not a report you would present to your auditors. The forecast is a spreadsheet that collects datafor you from your Oracle database. You can then do “what if” scenarios by changing the data. Or, you can correctcells to reflect data that has not been entered into the Oracle applications. You can also add new rows withadditional data. Of course, you can choose not to change any of the cells.

I generated a forecast, but now when I query it up, some of the columns have disappeared.

Someone has changed the template on which this forecast is based. When columns are removed from a template,they are also removed on all existing forecasts based on that template. There is no way to retrieve the deleted data.However, you can change the template back to the way it was, and regenerate your forecast. But, it is possible thatthe amounts have changed since the original forecast was run. To prevent this from happening in the future, youshould copy an existing template, and remove columns from the new template.

I generated a forecast, but now when I query it up, some of the columns have zeros.

Someone has changed the template on which this forecast is based. When columns are added to a template, they arealso added to all forecasts based on that template. However, the new cells in existing forecasts will have zeroamounts in them. You must regenerate your forecast to populate the new cells.

I’m creating a template and some of my “source” fields are blank.

For a source to be available, that application must be fully installed. I.E., if the source is “AR Invoices” then OracleReceivables must be fully installed.

I created a template and saved it, but when I run my forecast I get the error, "Cannot submit a forecastrequest for a template with undefined rows or columns."

Cash Management allows you to save an incomplete template. This allows you to set up a large template in bits andpieces. You are not required to enter everything at one sitting. To prevent the error from occurring, you must finishsetting up the template.

I selected the Overdue Transactions field on my template, but my forecast shows zeros in the Overduecolumn.

The Overdue Transactions field does not apply to all transaction source types. Your forecast will show a zeroamount in the Overdue column for the following source types:

AP Payments with the “Historical” forecast methodAR Receipts with the “Historical” forecast methodGL BudgetsGL EncumbrancesPayroll Expense

How does the Historical forecast method work?

As an example, you select “AP Payments” as your source and a forecast method of “Historical.” You also select aRoll Forward Type of “Days” and a Roll Forward Period of 7. This means you want to roll forward any cleared APpayments by 7 days.

Your Forecast By is set to “Days” and you forecast columns are:

First column: December 1st to December 10th

Second column: December 11th to December 20th

Third column: December 21st to December 30th

If you have a check for $100 that was cleared on December 5th and the Roll Forward is set to 7 days, then 7 dayswill be added to the cleared date of the check (December 5th + 7 days = December 12th). Since December 12th is inthe second column, the $100 is included in the amount for the second column.

If the check is still negotiable, it will not be included in the forecast for the “Historical” method. It will be includedin the forecast for the “Future” method.

There are three ways to generate a forecast. Which one should I use?

You can generate a forecast using the first two methods listed below. They produce identical results, so it shouldnot matter which method you choose. However, the third method listed produces a “manually entered cashforecast.” It is a forecast with zeros in all the cells. You can then enter information in the cells yourself.

1. This method produces a forecast with amounts in the cells. Submit from the Concurrent Program form:

Other -> Programs -> Run

Select one of the following for the Request Name:

Cash Forecasting by DaysCash Forecasting by GL Period

2. This method also produces a forecast with amounts in the cells. Navigate to one of the following:

Cash Forecasting -> Forecast TemplateCash Forecasting -> Forecasts

You can generate a forecast by using the Special Menu.

Special -> Submit Forecast

3. To create an empty forecast, navigate to:

Cash Forecast -> Forecast Template

Choose New, select a Template Name and a Forecast Name, and any other required fields. Choose the Reviewbutton, and you get a forecast with all the rows and columns from the template you used, but with zeros in all thecells. This is called a “manually entered forecast.” You are expected to enter all amounts into the forecast yourself.

Can I create a forecast without creating a template?

No. There is no generic template available. You must specify at least one row and column in a template to be ableto generate a forecast.

What is “inflow” and “outflow?”

Inflow is any data that brings cash into your company, such as Oracle Receivables, Oracle Order Entry, and OracleGeneral Ledger. Outflow is any data that takes cash out of your company, such as Oracle Payables, OraclePurchasing, Oracle Payroll and Oracle General Ledger.

What does “inflow” and “outflow” mean for the General Ledger source types?

GL Encumbrances are outflow, because the forecast shows unused encumbered amounts for expenses and assets.To use this source you must set up the Forecast By to “GL Period”.

GL Budgets can be inflow or outflow. The inflow comes from revenue account budget amounts, and the outflowcomes from expense account budget amounts. To use this source you must set up the Forecast By to “GL Period”.

GL Cash Position is inflow. The forecast shows a separate row along the bottom of the forecast along with inflow,outflow, and net amount totals.

How can I see my cash starting point on my forecast?

Use the “GL Cash Position” source when you set up your template. When your forecast is generated, you will seethe GL Cash Position at the bottom, grouped with the totals, not with the other rows.

Also, your initial cash position is calculated differently depending on how your Enable Average Balances option isset in Oracle General Ledger. The navigation path in General Ledger is Setup -> Financials -> Books -> Define.The Enable Average Balance option is a checkbox in the Standard Options alternate region.

When the Enable Average Balances option is on (checkbox is marked), the forecast calculates the initial cashposition from the End-of-Day balance, which is the actual balance of a general ledger account at the end of the day.The information comes from the GL_DAILY_BALANCES table.

When the Enable Average Balances options is off (checkbox is not marked), the forecast calculates the initial cashposition from General Ledger journal lines. The forecast starts with the beginning balance of the GL period for theforecast start date. Then the journal entry amounts are accumulated for each journal entry line whose effective dateis between the period’s begin date and the forecast start date. The initial cash position is the sum of the beginningbalance of the GL period and the journal entry amounts.

When I run a forecast by GL periods, I get a GL position (previous month's ending balance). But, if I run theforecast by days, I do not get the previous month's GL balance, but only current activity.

This is intended functionality. If you run the forecast by periods, the system knows previous month’s endingbalance. However, if you run the forecast by days, the date range could be anything, so the previous month’s endingbalance would not be appropriate. See the previous question for more details.

When I select GL Cash Position as a source, I have to enter a GL account. How can I get my cash forecast tolook at all my cash accounts?

For most other sources, if you leave a field on your template blank, you get everything. This is not true for GL CashPosition. You must select one GL cash account. However, you can select more than one GL Cash Position source.If you have 3 cash accounts, create 3 sources (rows) on your cash forecast that are each GL Cash Position. For eachGL Cash Position source, enter a different cash account. The cash forecast will combine all 3 cash accounts into asingle GL Cash Position at the bottom of your cash forecast.

I selected GL Budgets and GL Encumbrances as sources for my cash forecast. The amounts show upcorrectly in the body of the cash forecast, but the amounts for GL Budgets and GL Encumbrances do notshow up in the summary total section of the cash forecast. Why?

The budgets and encumbrances are both informational. Budgets are how much money you've approved for use for acertain GL account. It is not cash flow however, since the budget is not money coming into your company (likereceivables) or going out of your company (like payables). Encumbrances are money that has been set aside in thebudget for paying a requistion or a purchase order. The summary total information for encumbrances will onlyshow up in the summary totals if you select requisitions and purchase orders as sources.

Conclusion

Oracle Cash Forecasting is a great tool to help you get a handle on your company’s cash flow. It is my hope thatthis paper has helped you gain an understanding of Oracle Cash Forecasting. From these instructions you should beable to create templates and forecasts, and understand what each of the options does. By using Oracle CashForecasting you can make your business even more successful.

About the Author

Berna Lowenstein is a Gold Support Account Manager for Oracle Support Services. She has also worked as aSenior Technical Analyst on the Oracle Payables and Cash Management support team in Orlando, Florida.

Copyright © 2000 Berna Lowenstein