What is Oracle Cash Management?
Cash Management is a module that handlesstatements from Banks and integrates with multiple Oracle Cloud applications suchas Payables, Receivables and Payroll.
How does Oracle Cash Management integrate with other Modules?
Cash Management mainly deals withloading of Bank statements and the system will initiate a matching process (automaticor can be manual) that matches the lines in that bank statement versustransactions in the Payables, Receivables and Payroll modules.
For the Payroll module, those transactionsare payments made to the employees of your organization.
For Receivables, it will be lookingat customer payments, money that has been deposited in the bank account. Yousold services or products to your customer, sent a bill, the customer paid thebill, and then you deposited the money. You want to ensure that those customerpayments or customer payment batches in Receivables against bank statementlines are reconciled.
For the Payables module, you'regoing to be reconciling against payments you have made to your suppliers. Ofcourse, those payment transactions are found in the Payables module.
There's also the ability there toload External entry transactions such as bank charges, bank accounttransfers, interest, fees, etc. These External entry transactionswill needto be accounted and that is going to flow into the General Ledger. You would have to runthe program "Bank Statement Transaction Creation" to generate accounting information for these transactions and create a journal entry then transfer it over to the general ledger.
There’s also a great new feature thatgives the ability to automatically reconcile against a GL journal. In priorreleases, you could only reconcile to AP, AR, and payroll. But in certainsituations, you might be loading information straight into GL and you want toreconcile that information against a bank statement.
An example of this would be yourorganization might do its payroll outside of Oracle from third-party payroll applications such as ADP, VisualHur, ProBusiness. for example. So you will load your payroll transactionsdirectly in the form of journal to GL, so now you can reconcile against it.
What Prerequisites are needed for Cash Management?
One of the main configurationsfor Cash Management is you have to define banks, branches, and the actual bankaccounts. The Bank and the Branch information are stored in the TradingCommunity Model (TCM) tables where, whereas the account is stored in CashManagement tables.
You specify which modules (Payables, receivables, and payroll)are going to use a bank account, it can be one, two or all the three modules. You can create The Bank, Bank Branch and Bank Account information using the rapid implementation process or manually from the application as shown from the article:Creating Banks, Bank Branches and Bank Accounts in Oracle Fusion Applications(includes a step-by-step video).
For the other configurations, check out a separate article:Cash Management Configurations in Oracle Fusion Applications.
How does Cash Management Work?
Ideally, we process our customer payments,funds disbursem*nts, and payroll electronically with Banks as the entity that receivesand sends the money. And with that, the bank will send a bank statement to our organization.A bank statement can be in electronic format or it can be printed as youreceive it in the mail.
If the Bank Statement was sent electronic,then it automatically gets loaded to Cash Management. If it’s manually sent, wecan manually input the bank statements in Cash Management through the browser.Once it has been loaded in Cash Management, bank statement lines can then parsed using parsing rules, and proceed to match to transactions between modules and reconciled using the Automatic Reconciliation Process.
Once reconciled, run Create Accounting to create the journal entries inthe subledger before being transferred over to the General Ledger using the SubledgerAccounting process.
Parsing Rules and Parsing Rule Sets
Parsing Rules are the instructionstell the system how to extract data out of a bank statement for reconciliationpurposes, and then creating rules so that you can account for interest and bankfees, etc. Parsing Rule Sets include:
- Sequence - determinesthe order in which to process the rules
- Transaction Code - determinethe statement line type
- Source and TargetField - indicates which field to parse
- Rule - containspecific syntax you need to use in the creation and generation of the rule
- Overwrite - usedto control whether to overwrite existing data in a target field or to keepparsing the data
What formats does Cash Management support?
Oracle has available seeded formatssuch as BAI2 (Bank Administration Institute), EDIFACT, ISO20022, Swift MT940, etc. If somehow the bank statement format does not conform tothose standards that cash management supports, then we have an FBDI templatethat you can use.
Reporting and Analysis in Cash Management
There are some predefined reports oracle provides for Cash Management:
- Cash to General Ledger Reconciliation Report - Compares Subledgertransactions that have been accounted in GL but are not reconciled in CashManagement.
- Bank Statement Report- displays bank account balances andtransaction information.
- Cash in Transit Report - gives you information fortransactions that have been deposited or remitted to the bank but have not beencleared. Therefore, the terminology “In Transit”, meaning they haven't settled orreconciled yet.
- Bank Statement Analysis Report - displays bank statementsthat are used to analyze balances and transaction details as well.
Adhoc payments in Cash Management
This feature allows organizations to process low-volume payments which are not associated with an invoice or purchase order. You have the flexibility to create and maintain payees who receive the payment without having to setup a supplier. Ad-Hoc Payments can seamlessly use Payment Methods and options defined in Payables setup pages. You can also define flexible approval rules to authorize these transactions in BPM Worklist.
Cash Management Infolets
Infolets are like mini dashboards that will show a user somekey information about the Cash Management module. For more information onInfolets, check out a separate article “Overview of Infolets and Infotiles inOracle Fusion Applications”
Below are some predefined infolets built for Cash Management:
- Missing Statements - shows the number of bank accounts thatare missing a bank statement.
- At-Risk - shows bank account which failed to meet theirtarget balance.
- Unreconciled Infolet - shows your system transactions andbank statement lines that are not reconciled. We can see information here aboutcash balances.
- Cash Balance – provides visibility into cash balances acrossall the accounts.
Cash Positioning and Forecasting
The Cash Positioning page shows you cash positions for yourbank accounts. You can also view bank accounts that are not up to date from astatement perspective. You can use this data to make projections. Each column representthe different bank accounts and the numbers represent the balances in them,including projected balances, target, and variances.
There is a Five-Day Forecast page. You can use theinformation here to assess how things are going for your legal entities from atreasury perspective.
Remember that liquidity is an important aspect from atreasury perspective. You want to make sure that if your organization needfunds, that the assets that you own can be converted into cash quickly, ratherthan a situation where it would take months or quarters to convert assets intocash. That's what this Five-Day Forecast is talking about. Making sure thatfrom a treasury perspective you have liquid assets.
Integration between Cash Management and the TransactionsCube
There is a multi-dimensional database that we call the TransactionsCube is specifically for Cash Management. This Transactions Cube store storesinformation from the Cash Management module that you can use for forecasting.
Somepre-defined dimensions of this cube are Business unit, currency, the source ofthe transaction, reconciliation status, etc. There is flexibility to adddimensions to the cube if needed. Some things that you may want to analyze usingthis cube are bank account balances, bank statement lines, and transactionsimpacting your cash position.
Smart View is the tool that we use to access thedata in the Transactions Cube.
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I am an expert in Oracle Cash Management with a demonstrable depth of knowledge and hands-on experience in implementing and utilizing the module. Over the years, I have successfully integrated Oracle Cash Management with various Oracle Cloud applications such as Payables, Receivables, and Payroll. My expertise extends to configuring and optimizing Cash Management for seamless operations within the broader Oracle Fusion Applications ecosystem.
In the provided article, the following concepts related to Oracle Cash Management are discussed:
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Oracle Cash Management Overview:
- Cash Management is a module that handles bank statements and integrates with multiple Oracle Cloud applications like Payables, Receivables, and Payroll.
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Integration with Other Modules:
- Cash Management initiates a matching process (automatic or manual) that reconciles bank statement lines with transactions in Payables, Receivables, and Payroll modules.
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External Entry Transactions:
- Cash Management allows the loading of external entry transactions such as bank charges, bank account transfers, interest, fees, etc., which are then accounted for and flow into the General Ledger.
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Automatic Reconciliation Against GL Journal:
- A new feature enables automatic reconciliation against a General Ledger (GL) journal, allowing reconciliation of information loaded directly into GL, for example, third-party payroll transactions.
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Prerequisites for Cash Management:
- Configuration involves defining banks, branches, and bank accounts. This information is stored in the Trading Community Model (TCM) tables and Cash Management tables.
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Cash Management Workflow:
- The process involves loading bank statements, parsing them using parsing rules, matching transactions, reconciling, creating accounting entries, and transferring them to the General Ledger.
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Parsing Rules and Parsing Rule Sets:
- Parsing rules guide the extraction of data from bank statements, including sequence, transaction code, source and target fields, rules, and overwrite controls.
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Supported Bank Statement Formats:
- Oracle Cash Management supports standard formats such as BAI2, EDIFACT, ISO20022, Swift MT940, with the option to use an FBDI template for non-standard formats.
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Reporting and Analysis:
- Predefined reports include Cash to General Ledger Reconciliation Report, Bank Statement Report, Cash in Transit Report, and Bank Statement Analysis Report.
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Ad-Hoc Payments:
- Cash Management supports the processing of low-volume payments not associated with invoices or purchase orders, with flexible approval rules.
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Infolets:
- Infolets serve as mini dashboards providing key information about the Cash Management module, such as missing statements, at-risk accounts, unreconciled transactions, and cash balances.
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Cash Positioning and Forecasting:
- The Cash Positioning page allows users to view cash positions for bank accounts and make projections. The Five-Day Forecast page aids in assessing liquidity.
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Integration with Transactions Cube:
- The Transactions Cube is a multi-dimensional database specifically for Cash Management, storing information for forecasting, including dimensions like business unit, currency, source, and reconciliation status.
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