Overview of Cash Management in Oracle Fusion Applications

What is Oracle Cash Management?

Cash Management is a module that handles statements from Banks and integrates with multiple Oracle Cloud applications such as Payables, Receivables and Payroll.

How does Oracle Cash Management integrate with other Modules?

Cash Management mainly deals with loading of Bank statements and the system will initiate a matching process (automatic or can be manual) that matches the lines in that bank statement versus transactions in the Payables, Receivables and Payroll modules.

For the Payroll module, those transactions are payments made to the employees of your organization.

For Receivables, it will be looking at customer payments, money that has been deposited in the bank account. You sold services or products to your customer, sent a bill, the customer paid the bill, and then you deposited the money. You want to ensure that those customer payments or customer payment batches in Receivables against bank statement lines are reconciled.

For the Payables module, you're going to be reconciling against payments you have made to your suppliers. Of course, those payment transactions are found in the Payables module.

There's also the ability there to load External entry transactions such as bank charges, bank account transfers, interest, fees, etc. These External entry transactions will need to be accounted and that is going to flow into the General Ledger. You would have to run the 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 that gives the ability to automatically reconcile against a GL journal. In prior releases, you could only reconcile to AP, AR, and payroll. But in certain situations, you might be loading information straight into GL and you want to reconcile that information against a bank statement.

An example of this would be your organization 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 transactions directly 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 configurations for Cash Management is you have to define banks, branches, and the actual bank accounts. The Bank and the Branch information are stored in the Trading Community Model (TCM) tables where, whereas the account is stored in Cash Management 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 disbursements, and payroll electronically with Banks as the entity that receives and 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 you receive 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 in the subledger before being transferred over to the General Ledger using the SubledgerAccounting process.

Parsing Rules and Parsing Rule Sets

Parsing Rules are the instructions tell the system how to extract data out of a bank statement for reconciliation purposes, and then creating rules so that you can account for interest and bank fees, etc. Parsing Rule Sets include:

• Sequence - determines the order in which to process the rules
• Transaction Code - determine the statement line type
• Source and Target Field - indicates which field to parse
• Rule - contain specific syntax you need to use in the creation and generation of the rule
• Overwrite - used to control whether to overwrite existing data in a target field or to keep parsing the data

What formats does Cash Management support?

Oracle has available seeded formats such as BAI2 (Bank Administration Institute), EDIFACT, ISO20022, Swift MT940, etc. If somehow the bank statement format does not conform to those standards that cash management supports, then we have an FBDI template that 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 Subledger transactions that have been accounted in GL but are not reconciled in Cash Management.
• Bank Statement Report- displays bank account balances and transaction information.
• Cash in Transit Report - gives you information for transactions that have been deposited or remitted to the bank but have not been cleared. Therefore, the terminology “In Transit”, meaning they haven't settled or reconciled yet.
• Bank Statement Analysis Report - displays bank statements that 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 some key information about the Cash Management module. For more information on Infolets, 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 that are missing a bank statement.
• At-Risk - shows bank account which failed to meet their target balance.
• Unreconciled Infolet - shows your system transactions and bank statement lines that are not reconciled. We can see information here about cash balances.
• Cash Balance – provides visibility into cash balances across all the accounts. 

Cash Positioning and Forecasting

The Cash Positioning page shows you cash positions for your bank accounts. You can also view bank accounts that are not up to date from a statement perspective. You can use this data to make projections. Each column represent the 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 the information here to assess how things are going for your legal entities from a treasury perspective.

Remember that liquidity is an important aspect from a treasury perspective. You want to make sure that if your organization need funds, that the assets that you own can be converted into cash quickly, rather than a situation where it would take months or quarters to convert assets into cash. That's what this Five-Day Forecast is talking about. Making sure that from a treasury perspective you have liquid assets.

Integration between Cash Management and the Transactions Cube

There is a multi-dimensional database that we call the Transactions Cube is specifically for Cash Management. This Transactions Cube store stores information from the Cash Management module that you can use for forecasting.

Some pre-defined dimensions of this cube are Business unit, currency, the source of the transaction, reconciliation status, etc. There is flexibility to add dimensions to the cube if needed. Some things that you may want to analyze using this cube are bank account balances, bank statement lines, and transactions impacting your cash position. 

Smart View is the tool that we use to access the data in the Transactions Cube.

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