Cash Management

White Paper on Bank Account Transfer

Author: Sanjay Prasad

Creation Date: November 15, 2010 Last Updated: Version: Status: December 28, 2010 1.0 FINAL

Copyright 2010 Oracle Corporation All Rights Reserved

Table of Contents
1. Objective .........................................................................................3
1.1 1.2 1.3 Scope of the Document .............................................................................. 3 Background ................................................................................................ 3 Terms ......................................................................................................... 4

2.

Overview of the Bank Account Transfer Feature.......................5

2.1 2.2 2.3 2.4 Normal Business Cycle of Bank Account Transfer ................................... 5 Steps to be Performed in Oracle Applications ........................................... 5 Configuration Needed in Oracle Applications ........................................... 6 Business Scenario ...................................................................................... 6

3.

Step by Step Guide to Completing a Bank Account Transfer ...7

3.1 Define Payment Template ......................................................................... 7 3.1.1 Functional Details ...................................................................................... 7 3.1.2 Technical Details ....................................................................................... 8

4.

Create a Bank Account Transfer..................................................9

4.1 4.2 Functional Details ...................................................................................... 9 Technical Details ..................................................................................... 11

5.

Settlement of a Bank Account Transfer.....................................13

5.1 Payment Creation..................................................................................... 13 5.1.1 Functional Details .................................................................................... 13 5.1.2 Technical Details ..................................................................................... 15 5.2 Payment Instructions Generation ............................................................. 17

5.2.1 Functional Details .................................................................................... 17 5.2.2 Technical Details ..................................................................................... 19

6.

Reconciliation and Accounting ...................................................22

6.1 Reconciliation and Accounting for the Source Bank Account ................ 22 6.1.1 Sample of a Subledger Accounting Report .............................................. 25 6.2 Reconciliation and Accounting for the Destination Bank Account ......... 26

6.2.1 Sample of a Subledger Accounting Report .............................................. 29

7.

References .....................................................................................30

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1.

Objective
To provide: 1. 2. An overview of the Bank Account Transfer feature. A step by step guide to completing bank account transfer transactions. A brief overview of the table level data at different stages of the bank account transfer business transaction.

3.

1.1

Scope of the Document

This paper will cover: 1. The Cash Management setup specific to Bank Account Transfer. The step by step guide to creating bank account transfer transactions. The step by step guide to processing bank account transfers through Oracle Payments. The accounting for Bank Account Transfer.

2.

3.

4.

This paper will not cover: 1. The configuration necessary to settle bank account transfers through Oracle Payments. The intercompany/intracompany accounting setup for bank account transfers between banks belonging to different legal entities and/or ledgers. The steps to be performed to enable Bank Account Transfer for a specific Cash Management responsibility.

2.

3.

1.2

Background
Bank Account Transfer is a new feature introduced in R12. This feature fulfills the business requirement of transferring funds between internal bank accounts.

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1.3

Terms
Payment Template: A payment template is used if a specific bank account transfer is performed frequently. The payment template provides default values to the bank account transfer. This is an optional configuration. Source Bank Account: Bank account from which funds are disbursed. Destination Bank Account: Bank account that receives the funds.

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2.

Overview of the Bank Account Transfer Feature

The transfer of funds between internal bank accounts is a common business practice. This type of transfer allows funds to be available to the proper internal bank accounts, which ensures business operations can run smoothly.

2.1

Normal Business Cycle of Bank Account Transfer

The normal business cycle of Bank Account Transfer includes the following steps: 1. Initiate a funds transfer between internal bank accounts to fulfill business requirements. 2. 3. Generate the payment instructions. Send the payment instructions to the corresponding bank for further processing. Receive the bank statement for the source bank account. Reconcile the bank statement to ensure funds transfer activity is complete for the source bank account. Receive the bank statement for the destination bank account. Reconcile the bank statement to ensure funds transfer activity is complete for the destination bank account. Generate the corresponding accounting entries.

4.

5.

6.

2.2

Steps to be Performed in Oracle Applications

To successfully complete the bank account transfer, the following steps must be completed in Oracle Applications: 1. Create a bank account transfer in the Cash Management module. Bank Account Transfer provides the option of initiating the settlement process through Oracle Payments. In this case, the payment instructions will be generated and, if necessary, transmitted to an external entity for further processing. Receive bank statements for the source and/or destination bank account. Use Cash Management to reconcile the bank statements. After the bank statement is reconciled, use the Cash Management module to create accounting for the reconciled Bank Account Transfer transactions.
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2.

3.

4.

2.3

Configuration Needed in Oracle Applications

The following configuration is necessary before starting a bank account transfer: 1. Configure the Cash Management module. Refer to the Cash Management Setup Checklist section of the Oracle Cash Management User Guide. 2. Define the internal bank accounts. Refer to the Oracle Cash Management User Guide. Run the security wizard under the User Management responsibility, using the login sysadmin. Assign the Cash Management responsibility so you can perform bank account transfers. Refer to Document ID 414705.1, steps 5 through 8. Complete the intercompany/intracompany account configuration if the bank account transfer is between banks, which belong to different legal entities and/or ledgers. Configure Oracle Payments for funds disbursement. This is a mandatory configuration only if you wish to settle the bank account transfer through Oracle Payments. Settling the bank account transfer through Oracle Payments enables the user to process funds disbursement through Oracle Payments, such as generating and transmitting the payment instructions. Refer to the Configuring Oracle Payments section of the Oracle Payments Implementation Guide. An optional configuration is to define a payment template. A payment template can be used if a specific bank account transfer is performed frequently. The payment template provides default values to the bank account transfer. This configuration is specific to the Bank Account Transfer feature.

3.

4.

5.

6.

2.4

Business Scenario
To demonstrate the Bank Account Transfer feature, the following example of a fund transfer is provided: 1. Transfer USD 1000 from bank account number 123321 to bank account number 1234321. 2. 3. 4. Generate the payment instructions. Receive the bank statements and reconcile the fund transfers. Create journal entries for the fund transfers.

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3.
3.1

Step by Step Guide to Completing a Bank Account Transfer

Define Payment Template
In this scenario, transferring of funds from bank account number 123321 to bank account number 1234321 is a frequent activity. Begin by defining a payment templateThis is an optional step.

3.1.1

Functional Details
Navigation: Cash Management Responsibility > Setup > System > Payment Template

General Details tab Template Code: Identifies a specific template. The template code entered for the bank account transfer from bank account number 123321 to 1234321 is BAT-TR. Authorize Transaction: Indicates whether this specific funds transfer requires approval in Oracle Applications. This value can be overridden when you create the actual bank account transfer. In this example, the value is No. Settle Transaction: Indicates if you want to settle the transaction using Oracle Payments. In this example, you want to generate the payment instructions using Oracle Applications. Therefore, the value of this field is set to Yes. Source Bank Account: Details of the bank account from which funds are disbursed. Destination Bank Account: Details of the bank account to which funds are transferred.
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Payment Details tab Payment Method: This value indicates the payment method by which the funds will be disbursed. Any valid payment method for funds disbursement can be selected. Before selecting a specific payment method, you should ensure that the funds disbursement is properly configured. This includes creating a valid Payment Process Profile (PPP). Payment Method is a mandatory field only if the value of Settle Transaction is set to Yes in the General Details tab. In this example, we will select an electronic payment method.

3.1.2

Technical Details
Details of the defined payment template are stored in the ce_payment_templates table. Run the following query to list the columns in the ce_payment_templates table: select * from ce_payment_templates where payment_template_code = BAT-TR

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4.

Create a Bank Account Transfer

Navigation: Cash Management Responsibility > Bank Account Transfer

4.1

Functional Details

The bank account transfer transaction can be created using one of the following two methods: 1. Entering all of the required details, such as the bank account number, for the bank account transfer. Obtaining the field values from a defined payment template. In this example, you have defined a payment template for the transfer from bank account number 123321 to bank account number 1234321; therefore, the field values will default to the values listed in the payment template, BAT-TR. a. Select the payment template from the list of values.

2.

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b.

When the payment template is selected, the field values will default to the values in the template.

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c.

Enter the values for the remaining fields, such as the Transfer Date field. Edit the default values, if necessary. Click on the Apply and Validate button.

d.

e. f.

This will create the bank account transfer transaction. Observe the following attributes of the bank account transfer transaction:

Transfer number: This is the bank account transfer number. In this example, the transfer number is 106. Transfer Date: This is the date of the bank account transfer transaction. Status: This is the status of the bank account transfer. Refer to the Cash Management User Guide for a list of status codes. Search words: bank account transfer status.

4.2

Technical Details
Bank account transfer transaction details are stored in the ce_payment_transactions table. 1. Run the following query to view the values in the ce_payment_transactions table for this bank account transfer transaction: select * from ce_payment_transactions where trxn_reference_number = 106 The value of PAYMENT_REQUEST_NUMBER is 107. This is the payment request number submitted to Oracle Payments for settlement. The value of TRXN_STATUS_CODE is IN_PROCESS.
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It is necessary to settle the bank account transfer using Oracle Payments. Upon successful creation of the bank account transfer, the system will submit a Payment Process Request (PPR) to Oracle Payments for further processing. Details of the payment request are stored in the iby_pay_service_requests table. Details of the related payable documents are stored in the iby_docs_payable_all table. 2. Run the following query to view data from the iby_pay_service_requests table: select * from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id = 260 The value of PAYMENT_SERVICE_REQUEST_STATUS is INFORMATION_REQUIRED. This indicates that the payment request has been submitted, but more information is needed to progress further. 3. Run the following query to view data from the iby_docs_payable_all table: select * from iby_docs_payable_all where calling_app_doc_ref_number = '106' and calling_app_id = 260 The value of DOCUMENT_STATUS is MISSING_PROFILE. This indicates that the system could not find the PPP for the payable document. Therefore, the payment request will wait for the necessary information to be provided in order to continue processing. As you are using Oracle Payments to settle the bank account transfer, the next step is to generate the payment instructions in Oracle Payments. Refer to Section 5 of this document, Settlement of a Bank Account Transfer. If Oracle Payments is not used to settle the bank account transfer, then refer to Section 6, Reconciliation and Accounting.

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5.
5.1

Settlement of a Bank Account Transfer

Payment Creation
Navigation: Fund Disbursement Process Manager Responsibility > Home

5.1.1

Functional Details

a.

Click on the Take Action icon for the corresponding payment request. In this example, this is PPR 107.

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Internal Bank Account: This is the account from which funds are disbursed. The value defaults to the source bank account designated in the bank account transfer transaction. Payment Process Profile (PPP): PPP is used by Oracle Payments to process the payment request. In this example, the submitted PPR is awaiting user input from the PPP.

b. c.

Provide a value for the PPP. Click on the Go button to run the PPR. Check the status of the PPR. Status: This field displays the status of the PPR.

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5.1.2

Technical Details
1. Run the following query to view data from the ce_payment_transactions table: select * from ce_payment_transactions where trxn_reference_number = 106 The value of TRXN_STATUS_CODE is IN_PROCESS. 2. Run the following query to view data from the iby_pay_service_requests table: select * from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id = 260 The value of PAYMENT_SERVICE_REQUEST_STATUS is PAYMENTS_CREATED. 3. Run the following query to view data from the iby_docs_payable_all table: select * from iby_docs_payable_all where calling_app_doc_ref_number = '106' and calling_app_id = 260 The following results are obtained: 1. The value of DOCUMENT_STATUS is PAYMENT_CREATED. The value of PAYMENT_PROFILE_ID is populated after the PPP for the PPR is selected. The value of PAYMENT_ID is determined after the payment is initiated. It provides the payment a unique identifier. During the initiation process, details of the payment are stored in the iby_payments_all table.

2.

3.

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4.

Run the following query to view data from the iby_payments_all table: select * from iby_payments_all where payment_service_request_id in ( select payment_service_request_id from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id = 260 ) The value of PAYMENT_STATUS is CREATED. The status of the PPR is Payment Initiated.

5.

The next step is to create the payment instructions. In this example, the selected PPP was not Printed. To create the payment instructions, you must submit a Create Electronic Payment Instructions request. If the PPP type is Printed, then you must submit a Create Printed Payment Instructions request.

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5.2 5.2.1

Payment Instructions Generation Functional Details

This request will create the payment instructions for all of the PPRs with the following attributes: 1. 2. Status of Payment Initiated PPP value of SANPPP 111222333

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a.

Check the status of the PPR.

b.

Check the status of the bank account transfer.

Navigation: Cash Management Responsibility > Bank Account Transfer

c.

Check the details of the bank account transfer by clicking on the Transfer Number link.

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d.

Check the generated cash flows by clicking on the View Cashflows button.

Bank Account Transfer has created the following two cash flows: 1. The outgoing cash flow for the source bank account. In this example, this is Cashflow Number 63. The incoming cash flow for the destination bank account. In this example, this is Cashflow Number 64.

2.

3.

5.2.2

Technical Details
When the payment instructions are generated, the status of the bank account transfer becomes SETTLED. 1. Run the following query to view data from the ce_payment_transactions table: select * from ce_payment_transactions where trxn_reference_number = 106 The value of TRXN_STATUS_CODE is SETTLED.

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2.

Run the following query to view data from the iby_pay_service_requests table: select * from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id = 260 The value of PAYMENT_SERVICE_REQUEST_STATUS is COMPLETED.

3.

Run the following query to view data from the iby_docs_payable_all table: select * from iby_docs_payable_all where calling_app_doc_ref_number = '106' and calling_app_id = 260 The value of DOCUMENT_STATUS is PAYMENT_CREATED.

4.

Run the following query to view data from the iby_payments_all table: select * from iby_payments_all where payment_service_request_id in ( select payment_service_request_id from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id = 260) The value of PAYMENT_STATUS is FORMATTED. The value of PAYMENT_INSTRUCTION_ID is populated in the iby_payments_all table when the payment instructions are created.

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5.

Run the following query to view data from the iby_pay_instructions_all table: select * from iby_pay_instructions_all where payment_instruction_id in ( select payment_instruction_id from iby_payments_all where payment_service_request_id in ( select payment_service_request_id from iby_pay_service_requests where call_app_pay_service_req_code in ( select payment_request_number from ce_payment_transactions where trxn_reference_number = 106 ) and calling_app_id= 260 ) )

This completes the creation and settlement of the bank account transfer. If the PPP type is Printed, then record the print status. However, if the PPP type is Electronic, continue to the next section.

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6.
6.1

Reconciliation and Accounting

Reconciliation and Accounting for the Source Bank Account
Navigation: Cash Management Responsibility > Bank Statement > Bank Statement and Reconciliation

The creation of the bank statement for the source bank account 123321 is displayed below.

The value of Status is Unreconciled. The value of Type is Payment. From the bank statement, you can see that the payment has been disbursed from the source bank account. a. Click on the Available button.

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b.

Reconcile the cashflow using Cashflow Number 63.

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The value of Status is Reconciled. c. Run the Create Accounting request to begin the accounting of the reconciled bank account transfer from the source bank account.

d.

Create an accounting output file. Refer to section 6.1.1 for a sample report.

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6.1.1

Sample of a Subledger Accounting Report

The following is a sample of a Create Accounting output file:

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6.2

Reconciliation and Accounting for the Destination Bank Account

Navigation: Cash Management Responsibility > Bank Statement > Bank Statement and Reconciliation

The value of Status is Unreconciled. The value of Type is Receipt. From the bank statement, you can see that the destination bank account shows that it has received the transfer.
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a.

Click on the Available button.

b.

Reconcile the cashflow using Cashflow Number 64.

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c. d.

Click on the Reconcile button. Run the Create Accounting request to begin the accounting of the reconciled bank account transfer from the destination bank account. Create an accounting output file. Refer to section 6.2.1 for a sample report.

e.

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6.2.1

Sample of a Subledger Accounting Report

The following is a sample of a Create Accounting output file:

This completes the accounting of the bank account transfer.

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7.

References
Refer to the following documentation for more information on the Bank Account Transfer feature: 1. 2. Oracle Cash Management User Guide Oracle Payments Implementation Guide

Oracle documentation can be found at:

http://www.oracle.com/technetwork/documentation/applications167706.html
3. Document ID 414705.1: R12: How to Create Bank Account Transfers in Cash Management

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