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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