ORACLE CASH MANAGEMENT

/* ORACLE CASH MANAGEMENT Oracle Cash Management : We use the Oracle Cash Management for the main purposes of reconciliation. Basically Reconciliation is process of matching and clearing the transactions that happened for ex; in Payables,Receivables, Payroll and Treasury. This is how it works. Let us say we have made a payment using Payables for a particular invoice. Then typically this payment goes thru the standard process of Build, Formatted and confirmed and then finally to GL. It is important to understand that this payment is always associated with a bank account#. Now when the Bank periodically sends the statements detailing all the payments and receipts, we enter this information into the Oracle Cash Management using the Bank stmt workbench. Now we can reconcile these bank statements against our regular payments and receipts transactions. This is what is called Reconciliation. There are two major steps involved in reconciliation and they are -- Matching and -- Clearing. The Bank Statement transferred will consist of the following types of transactions, AP Payments AR Receipts GL Journal Entries Bank Charges (Bank Orginated) Interest (Bank Orginated) Payroll entries (Bank Orginated) Treasury Settlements (Bank Orginated) /*Lockbox vs Bank Statement Upload : The lockbox process in Receivables, is where the bank gives us the statement periodically consisting of complete receipts and we try to apply to the debit items/on account using the autocash rules.(i.e whether the oldest invoice or the highest invoice etc). However if use the reconciliation process, the bank gives all the activity completely until that point, which includes the payments and receipts. And if you try to start the AutoReconciliation process, it will apply it against the invoices and receipts in the receivables and payables systems(???????). */ Matching is the process by which Case 1 : Go the Accounts payable system and do the following. Create an invoice batch, an invoice and then distributions, and go thru the process of validating,accounting, approving etc. Create a payment batch,a payment in it and build the payments. (Remember for simplicity purposes enter exactly the same amount for payments as for the invoice) Run the conc program "Payables Transfer to GL' and post the transactions.

Come to the Oracle Cash Management application using the OCM responsibility. Enter a bank statement, for say 'Comerica bank' with the amount exactly same as payment created above. (A bank stmt typically has header and line and line amt should be same as payment amount). While entering the line information, enter in the TRANSACTION NUMBER SAME AS THE PAYMENT BATCH NUMBER (this is very important Matching criteria for reconciling the txns for the payable txns) Call the AutoReconciliation program from the tools menu. (look for the errors and reconciliations). Case 2 : We can do the same process for the Receivables transactions as well. The important thing is that, we need to give the TRANSACTION NUMBER AS THE RECEIPT BATCH NAME. select * from ce_statement_headers_int select * from ce_statement_lines_int You can reconcile the bank statements in Cash Management either automatically or Manually. The Automatic Reconciliation process can be setup to create miscellaneous transactions automatically. You cannot clear payroll entries, GL Journal entries, or treasury settlements. why is that so?? what is the package CE_999_PKG ?? each line corresponds to a transaction code and each transaction code corresponds to a transaction type like payment, receipt,misc payment,misc receipt. WRITE more about this. ------------------------------SWEEP IN/SWEEP OUT SWEEP functionality is available with banks. Bank uses the balance in the customers accounts for investment overnight and returns the balance to the customer account by the start of next business day. For the overnight use of the funds bank will provide interest to the customer. This is a standard facility provided by the bank. The SWEEP transactions (investments and sale of investments) and the interest earned figure in Bank Statement sent by the Bank. Another explanation of Sweep Account is below. Sweep Account : A sweep account is one where if the balance reaches above a certain level, maximum or minimum level then the additional funds are moved out/in to/from another account. As an ex; say we want to have a bank account whose balance should not go below $3,000 and should not go above $10,000. Then we can have arrangement that if the balance goes above the $10,000 limit, by say $500 then that $500 will be moved to another account, say, some savings account so that it can be useful there. Similarly if the account balance goes below the $3,000 by ,say $1,000 then that

additional $1000 should be brought from some other account to this account so that the minimum balance is maintained. So in the above ex, the sweep in $1,000, while the sweep out is $500. In the statement for this account, the lines will show as the sweep-in and sweep-out lines. Banks and Bank Accounts : -----------------------In 11i, the banks,bank accounts were owned by AP. However in R12, the banks are owned by Cash Management,however the banks forms can still be accessed from AP/AR. Also the functionality of bank account transfer was part of the Treasury Module, which is now available as part of the Cash Management. Bank Account transfer is a functionality in which we can initiate a balance transfer between two intra bank accounts i.e transfer between two accounts. So basically there is no direct interface from cash management to GL. All the entries that cash management creates are in either AP or AR. So to move the transaction you need to do a GL transfer from AP ,AR and then run the Journal Import,Posting etc. ------------Usually here is the flow for the bank statatement coming from the bank to the companys financial system,its upload and reconciliation process. Before we talk about the process it is important to understand that just like any interface,here too we will have the CM Temporary, tables,Interface tables and CM standard tables and a starndard import program exists to import that data into the Cash Management. Just like the lockbox file has a standard format(like BAI2 etc), the bank statement files also have a standard format like BAI,SWIFT etc. Basically there are 3 ways thru which the statement coming from the bank can be loaded into the system. -- Manually enter the data by looking at the statement into the system. -- We can write a custom program to load the data from the files into the interface tables,if the format is not a standar format. -- Use the Oracle Standard Program to load the data. Basically Oracle provides mainly two proram to load the data Bank Statement Loader Program Bank Statement Import Program. Regardless, we can see that there are load, import and Reconcile steps in Cash Management. The bank statement Loader program loads the data from the temporary tables to Interface table and runs in two phases, First phase, the sql loader program loads the standard file format data (using a standard control file) into the CM temporary tables. Second phase, ,using the mapping rules, the data from the temporary tables is loaded into the standard interface tables. We can automatically run the Import and Reconcile programs from the Bank Statement Loader program after the load is completed. The Bank Statement Import Program loads the data from the Interface table to Standard table. Similarly then we can start automatically the Reconcile program after the Import process is completed. Reconciliation can be done in two modes, Manual and Automatic.

Manual Reconciliation means manually matching up the payment, receipts etc with the banks statement lines and clearing them. Automatical Reconciliation means, using the standard program to reconcile. This is useful when we have a huge volume of transactions and details to reconcile. Reconciliation Process : Cash management provides a program called "AutoReconciliation" lets talk a bit about this program's parameters. Usually a bank statement is sent for each account, corresponding to what are all the transactions that have happened for that account. Hence when we reconcile we provide a particular bank , bank account, Payment Method, Receivable Activity,NSF Handling. There are a couple of things that we need to make sure before the Autoreconcilication program is run. Firstly, ensure that you have run your Autolockbox program so that all the receipts are created in your AR system, otherwise there will be nothing for Reconciliation program to match the lines against. Secondly, The bank statement typically consists of bank-initiated sweep lines. Cash Management provides for a standard program called "Sweep Transaction Generation" program, what this program does is, it searches for the bank account transfer transactions in the cash management and compares them with the sweep lines. If there is a match found,then there is nothing to do. If there is no match, then, it will create a transaction in Cash Management. Following this, the AutoReconciliation is ready to match and reconcile. Usually when the reconciliation program runs, if it finds the Matching records, then they are matched and there is nothing to create. However when they dont match, i.e say if a AR receipt does not match with the bank statement line with in the tolerance limit, then we can do various things like create misc trx, post to bank charges or errors accounts. see below for different options. While Reconcliing AP Payments, (transaction code "Payment") If the difference between the payment amount and the statement line amount is within defined tolerances, the AutoReconciliation program posts the difference to either Bank Charges Account or Bank Errors account depending on the setting. While Reconcliing AP Payment Batches, (transaction code "Payment") If the difference between the payment batch amount and the statement line amount is within defined tolerances, the AutoReconciliation program posts the difference to either Bank Charges Account or Bank Errors account depending on the setting. While Reconcliing AR Receipts, (transaction code "Receipt") If the difference between the receipt amount and the statement amount line is within defined tolerances,the AutoReconciliation program posts the difference to either Bank Charges Account or Bank Errors account depending on the setting. While Reconcliing AR Remittance Batches, (transaction code "Receipt") If the difference between the remittance batch amount and the statement amount line is within defined tolerances, you can choose to have the AutoReconciliation program create a miscellaneous transaction for the difference. This setting is done in the Cash Management Receivables Activity system parameter. Incidentally even for this we can have a bank errors or bank charges being set up so that no transaction is created. setup=> system => system parameters => General Tab(Main)

-- For GL we have to see , it is done is Cash Mgmt only. Miscellaneous transactions in Cash Mgmt : (transaction code "Misc Receipt", "Misc Payment") During the Reconciliation process, for the bank originated entries like the bank charges, interest etc (for which there is nothing to match in the AP, AR,GL system), you can create miscellaneous transactions. The AutoReconciliation progress can be setup to create miscellaneous transactions automatically like an AR receipt or AP payment. So the transactions such as AP Payments and AR Receipts created by Cash Management are called Miscellaneous transactions. For Banking activity like bank charges or interest, miscellaneous transactions are created. since bank charges are something we owe the bank, a miscellaneous payment is created. When you create a miscellaneous payment, it is actually recorded as a negative receipt, i .e a miscellaneous AR receipt with a negative amount. Now since this receipt should have a payment method and it is applied to a receivable activity, we need to specify the same as a parameter at the time of runningthe AuotReconcilaition progrom. Exceptions : (transaction codes Rejected, Stopped,NSF, A Bank statement may contain following exception information --NSF (Non Sufficient Funds) => what this means is that customer bank account is not having sufficient funds to make the payment to the invoice. --Rejected Receipts --Stopped Payments --Direct Deposits --Direct Debits --Transactions created outside Oracle Applications To Handle rejected receipt(or NSF), if you specify as Reverse, AutoReconciliation unmatches and unclears the receipt and reopens the invoice. To handle the stopped payment, atuorec will void the payment in AP, then reconcile the voided payment to the "stopped" payment statement line. To handle a direct debit that you have not entered, Autorec will create a payment in AP and match that payment with the statement line. To handle a direct deposit: This is a very interesting point. Actually we can use the same statement file to process for the autolockbox program as well. So to handle the direct deposit, first run the autolockbox process for the same statement file to create the receipts corresponding to the direct deposit, then runt he AutoReconciliation program to reconcile the direct deposit receipts to the statement lines. To handle a bank error: what this means is that the bank has made an error in the previous statement file and has provided a correction to that in this statement file. So in order to correct that , if we are doing manually, we can try to find the previous statement line, and then mark that line. There is no need to reconclie in this case. Handling corrections and Adjustments : Need to read this in more detail ???? Transferring Bank Reconciliation Transactions to Your General Ledgers : You need to transfer the accounting transactions you created during reconciliation for Payables and Receivables to your general ledger interface tables. You cannot transfer these transactions directly from Cash Management. Instead, transfer them from

Payables and/or Receivables, depending on the transaction type. Cash Transactions in Cash management -----------------------------------There are two types of cash Transactions in cash management -- Bank Acount Transfer -- Cashflow Transaction. Bank Account Transfer : In order for the banks to show up in the Creat bank account transfer, it is important to set the profile option "CE: Bank Account Transfers" to Cash management. By default it is begin set to "Treasury". And once the Reconciliation comples, we can run the following out-of-the-box reports, -- Cash In Transit Report -- GL Reconciliation Report -- Bank Statement Summary Report -- Transaction Available for Reconciliation Report