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"> Cash Management Overview [ID 96630.1] Modified 16-DEC-2008 Type FAQ Status PUBLISHED

Overview of Cash Management --------------------------Cash Management is designed to manage and control cash cycle. This allows you to enter bank statements and reconcile the statement transactions against payments in Accounts Payable (AP), receipts in Accounts Receivable (AR), and journal entries in General Ledger. Cash Management (CE) can also reconcile payments and receipts from external/legacy systems. CE can also create and reconcile misc. transactions to record bank transaction entries not entered in AP or AR. Integration with AR and AP --------------------------You use CE to reverse, clear, reconcile receipts,and create misc transactions for bank transactions not entered in AP or AR. All these functions are shared and integrated with AR. You can only use all the CE functions when AP and AR are fully installed. You must have AR fully installed if you want to record MISC payments. If you use CE with AP and AR, you must define the system parameters, such as banks, cash clearing, bank charges, and bank errors in AP. Then define system parameters, such as remittance and cash accounts for each bank, and create misc transactions in AR. When this is done all the functionality in CE can be utilised. Miscellaneous transactions are misc receipts and misc payments. Misc payments are handled as negative misc receipts in AR, rather than as payments in AP. The Allow Reconciliation Accounting option must be enabled if you want to use a cash clearing account and create accounting entries for bank charges, errors, gain/losses. If not enabled, you can still reconcile payments in CE, but accounting entries will not be created in GL. Cash Management System Parameters ---------------------------------Select Set of Books and enter a date for the begin date. Then check the following if required: Check Add Lines to Automatic Statements checkbox if you want to add lines to automatically loaded bank statements. Check Show Cleared Transactions checkbox if you want CE to display the cleared transactions that are available for reconciliation. Check Use Reconciliation Open Interface checkbox if you plan to use the open. The following steps show you how to set up CE system parameters using the system parameters setup function. This is an example of a typical setup and options available: Select Setup. Then the System Parameters option. In the Set of Books field, specify the Set of Books name for CE transactions. In the Begin Date field, specify the date of the first bank statement entered. Check Show Cleared Transactions checkbox to display cleared transactions available for reconciliation. Optional. Check Add Lines to Automatic Statements checkbox to add lines to automatically loaded bank statements. Optional. Check Use Reconciliation Open Interface checkbox to reconcile transactions in external systems. Optional . In the General region*, specify a tax code that applies to misc payments in the Liability field. Specify a tax code that applies to misc receipts in the Asset field.

The Receivable Activity field is the default for the Misc Receipts window and the default receivable activity to which Auto-Reconciliation charges differences between the amount cleared and the original amount for remittance batches. In the Float Handling field, select Ignore if you want to reconcile statement lines with the effective dates later than the current date. Access the Automatic Reconciliation* region from the drop down list.

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The Automatic Reconciliation region screen appears. You can accept the defaults if you wish. Then commit.. * The General parameters options are also used in the manual reconciliation windows and can be overridden. * The Automatic reconciliation region has no effect when doing manual reconciliation. Defining Bank Transaction Codes -------------------------------Auto-Reconciliation being used to load electronic bank statements. CE requires transaction codes to be defined that are used by the bank. This allows CE to identify the different transaction types on the statement, such as receipts, and payments. i.e: Misc Receipt Misc Payment NSF Payment Receipt Rejected Stopped If you use a transaction code for both misc transactions and correcting statement errors, you can specify the sequence of matching. Choose from the LOV to indicate how to use the bank transaction code. Misc Stmt Misc, Stmt Stmt, Misc The following shows you how to define bank account transaction codes : Select Setup. Then: Bank Transaction Codes. Select the bank you require. Click the OK button. The Bank Transaction Codes window appears. In Type field select a transaction type for the transaction code you are defining. In Code Field, specify the code used by the bank. I.e. 100. In the Description field, specify a description for the transaction code you are defining. i.e. payment. Enter start and end dates. In the Float Days field, enter the number of days that CE will add to the statement date to create an effective date for the transactions. Optional, select a transaction source for payments and receipts transactions. Use the Matching Against field to determine the order of matching and the type of transactions to match if the transaction Type is Misc Receipt or Misc Payment. In the Correction Method field, select the correction method your bank uses when correcting errors. Select the Create checkbox if you want to create misc transactions for any payments or receipts reported on the bank statement when no transaction code is provided. If you select the Create checkbox, specify the activity type and the payment method you want to assign to misc transactions. Commit. Defining Automatic Reconciliation Parameters -------------------------------------------The automatic reconciliation parameters controls several aspects of Auto-Reconciliation, this allows reconciliation of bank statements automatically. These options have no effect on manual reconciliations. The tolerances region includes a variance amount and a variance percent, they are used by Auto-Reconciliation to match bank statement lines from AR and AP. If a transaction amount falls within ranges defined in the tolerance region, plus or minus the reconciliation tolerance, a match is made. The Tolerance Differences - AP field controls whether the Auto-Reconciliation posts differences to bank charges or errors account. The Tolerance Differences - Foreign field controls how Auto-Reconciliation handles bank errors or differences that are caused by exchange rates from foreign currency transactions in a multi-currency bank account. There are 3 ways to treat the tolerances: Gain/Loss: which takes the difference as exchange rate gain or loss; Charges/Errors: which handles differences as bank charges or a bank errors, and No Action: in this case no reconciliation will occur and the statement line will

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have a status of error. Automatic document sequence numbers. CE creates the document number for the statement automatically. You cant change an automatically assigned document number. Loading Bank Statement Info --------------------------To load bank statement information, including header information and line information, into CE select the Bank Statement Interface window and the Bank Statement Lines Interface window to load the information. The table used is called :- CE_STATEMENT_HEADERS_INT_ALL Validating payment information. The information loaded, including the bank statement header validation, control total validation, statement line validation, and multi-currency validation, go into the bank statement open interface tables. If the data does not pass the validations and cannot be imported into the main tables the totals can modified, and then reconciled successfully. The data can be imported and automatically reconciled at the same time. It is just a case of navigating to the SRS window and submit a request for the Bank Statements Import and Auto-Reconciliation program. The system generates the result and prints an Auto-Reconciliation Execution Report. The following steps show you how to import a bank statement without Auto-Reconciliation in CE. Click the Bank Statement Import* option to request the report in SRS. Click the OK button. The Parameters window appears. Specify the bank account number for the statement you want to import in the Bank Account Number field. Specify the range of statement numbers in the Statement Number From and To fields. Enter dates for the Statement Date From and Statement Date To fields. In the GL Date field, enter the GL date. Click the OK button. * If Auto Reconciliation is required then select the Bank Statements Import and Auto-Reconciliation program Interface errors occur for various reasons. There are 3 common causes of bank statement interface errors: Erroneous information in setup of CE, errors in bank transmission file, and more commonly problems with the SQL* Loader file. Reviewing Bank Statement Errors -------------------------------The following steps show you how to review bank statement interface errors. Select Bank Reconciliation. Click the Bank Statement Interface option. Query the bank statement with the interface errors you want to review. The applicable fields populate according to the account number you have specified. Click the Lines button to see the statement line detail. The Bank Statement Interface Lines window appears. Select the line with the error(s) review. Click the Errors button. The Bank Statement Interface Line Errors window appears, displaying the error message for the line selected. When finished reviewing the error messages, click the Done button. Modifying the Statement Interface Table ---------------------------------------The following explains how to modify the bank statement interface tables. Select Bank Statement. Click Bank Statement Interface. Query the bank statement that requires modification. Edit the bank statement and header transaction information as necessary, including the control balances, in the Opening field. Edit the receipts in the Receipts field. Edit the payments in the Payments field. Edit the closing number in the Closing field. Click the Lines button. Bank Statement Interface Lines window appears. Edit the bank statement transaction information. CE allows the editing of the line number, transaction code, transaction number, and date. In the Amounts region, CE allows the editing of the transaction amount, bank charges, and original amount. In the Exchange region, CE allows the editing of the exchange rate information, including currency code, exchange rate type, date, and exchange rate. In the Reference region, CE allows the editing of the agent (customer or supplier), invoice number, and the agent bank account

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associated with each line. In the Description region, CE allows the editing of the effective date and description for each line. Commit.

Auto-Reconciliation and Manual Reconciliation ---------------------------------------------The Auto Reconciliation program fully matches AP AR GL and MISC transactions against bank statement lines if the transactions meet the following criteria: AR Remittance batches such as direct debit batches, the remittance batch deposit number or receipt batch name matches statement line transaction number, and the amount is within the tolerance. MISC Reversal corrections, the statement line has the same transaction number, same amount, and opposite transaction type (for example, misc receipt and misc payment) MISC Adjustment corrections, the statement line has the same transaction number, and has a transaction type of payment, receipt, misc payment, or misc receipt, and the net amount is within tolerance. AR Detail remittance transactions, NSF, and rejected transactions, the matching sequence is the same; match is against the invoice number and customer bank account, and then just the invoice number, and finally the receipt number; the amount is within the tolerance. AR NSF or rejected transactions, the receipt must first be reversed in AR MISC Receipt number matches the statement line transaction number AR GL AP MISC Transaction currency is the same as the bank statement line currency AP Payment batches, such as EFT batches, the reference or payment batch name matches the statement line transaction number, and the amount is within tolerance. AP Detail payment transactions and stopped transactions, the matching sequence is the same; the program tries to match against the invoice number and supplier bank account, then just the invoice number, and finally the payment number; the amount is within the tolerance AP For stopped transactions, the payment must first be stopped or voided. GL Journal line is posted GL Journal line accounting flexfield matches the bank account Asset Accounting flexfield GL Journal line description matches the statement line transaction number *Bank statements can be entered Manually see the CE manuals. *Bank statements can also be updated even if they are reconciled by using the review button The Auto-Reconciliation program does four validations, bank statement header validation, control total validation, statement line validation, and multicurrency validation. The program requires the imported bank statement header information has the bank account defined as an internal bank account. If a currency code is in the header, it must be the same as the currency code defined for the bank account in AP or AR. There is an Auto-Reconciliation execution report. It is printed automatically when the Auto-Reconciliation program is ran, and can be reviewed for all import validation errors for a statement or a specific statement line. *After reconciling a payment, CE will generate journal entries as debit cash clearing accounts and credit cash accounts. Bank statement lines must include an exchange rate when the transaction currency is foreign. Depending on the bank account currency, the Auto Reconciliation program handles statement line matching to transactions differently. If the bank account currency is foreign, the bank statement line amount must match the transaction line amount within the tolerance limit for automatic validation to be successful. If the difference exceeds the tolerance amount, CE displays an error message and manual reconciliation must take place. The tolerance validation is done in two stages, firstly it converts the tolerance into the bank account currency using the bank statement exchange rate, and it verifies the difference between the statement line amount and the transaction amount is within the tolerance. The second stage uses the original tolerance amount to compare the bank statement line amount with the transaction amount (functional currency), verifying again that the difference is within the tolerance.

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The Auto Reconciliation program references the tolerances that have been defined for example. The tolerances defined are: amount = GBP 70 and percent = 10%. Run the Auto Reconciliation program, and it encounters a statement line with an amount of GBP 1,000. The program firstly calculates the tolerance percentage amount (10% of GBP 1,000 = GBP 100). The program selects the smallest of the amounts and the defined tolerance amount which is GBP 70. The program then matches the statement line against a payment or receipt transaction in the range GBP 930 to GBP 1,070, which is GBP 1,000 plus or minus GBP 70. Regardless of bank account and transaction currency, the tolerance amount in the system parameters is always in the functional currency. NOTE : Reconciled transactions can also be unreconciled as can statement lines. Control Total Validation -------------------------Some banks supply statements that have control totals in the statement or account header for error checking . The bank statement header interface table has 7 control total columns. If you enter values in any of these, the Auto-Reconciliation uses the values for validation, except for CONTROL_BEGIN_BALANCE, which is the statement opening balance. Other control total validations are: CONTROL_END_BALANCE the statement closing balance. CONTROL_TOTAL_DR the payment control total in the statement header this must match the total payment amount on the statement lines. CONTROL_TOTAL_CR the receipt control total in the statement header must match the total receipt amount on the statement lines. CONTROL_DR_LINE_COUNT the number of payment lines in the statement must match the payment line control total in the statement header. CONTROL_CR_LINE_COUNT the number of receipt lines in the statement must match the receipt line control total in the statement header CONTROL_LINE_COUNT the number of lines in the statement must match the line control total in the statement header Statement Line Validation ------------------------Auto-Reconciliation needs the imported bank statement line to pass these checks. The currency code on the statement line must be defined in the system. The bank transactions code must be defined. The exchange rate type must be of a valid type defined. The amount must be entered for the statement. Multi-Currency Validation ------------------------Auto-Reconciliation checks each statement line for valid currency, and exchange rate type. When a matching transaction is found during reconciliation several checks are made. For transactions, the bank statement line currency must be the same as the transaction currency (the bank statement currency can differ). For batches, all transactions in the batch must use the same currency and statement line currency as the batch currency. For both transactions and batches, if User exchange rates, each transaction must include the exchange rate, and the rate type must be User. If it is for predefined rates, such as Corporate or Spot, each transaction must include the rate type and exchange rate date. Incorrect CE setup information can include wrong transaction codes, currency, or bank account information. The solution is update CE setup information and then run the Auto-Reconciliation Import program again. For bank transmission errors, the solution is to obtain a correct transmission file from the bank or alternatively update the statement using the Bank Statement Interface window. For SQL Loader file problems, modify Loader file and then rerun the Auto-Reconciliation Import program. In CE you can also create AR transactions and AP transactions and you can also reverse these transactions. When NSF or rejected receipts appear you can handle them manually by reversing the receipt manually and then reconciling the reversed receipt.

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When a stopped or voided payment is done then void the payment in AP to mark the supplier invoice as unpaid then reconcile the stopped/voided payment statement line to the voided payment Automatic Clearing ------------------You can use CE or Automatic Clearing to clear receipts, as well as payments using the future-dated payment method. If you use Automatic Clearing within AR, you can choose to clear remitted receipts after they have matured. If you use Automatic Clearing to clear payments and receipts rather than using CE, the GL balance may not match CE reports. In AP, a future dated payment instructs the bank to disburse funds to the supplier's bank on specific dates. If you use the AP Automatic Clearing for Future Payments utility to clear future-dated payments made with the future-dated payment method, AP performs the accounting for cash clearing. You can match payments cleared in this manner with bank statement lines. CE and Multi-Org ---------------For each operating unit you must set up a CE responsibility very similar to what is setup in AP. Each responsibility is tied to a SOB and an operating unit.

FAQ ----Q. How do we treat a BACs payment that has been reconciled and then voided AP three payments: 10,20, 30 Bank statement1 60 It has been reconciled in full. Now need to void an amount of 10 therefore unreconcile 60 and reconcile 50 leaving 10 as unreconciled/available. Void payment of 10 ok. Bank statement states the -10 amount for the voided payment they have this as stopped and reconcile the voided amount in AP to the -10. Problem is cannot have the original unreconciled as stopped as it is part of the 60 how can this be reconciled ? There are lines on two statements so cannot contra each other? A. The correct way this should have been dealt with in this situation is: The voided element of -10 on the bank statement should in fact be treated as an misc receipt. Then create a no tax invoice for 10 in AR and match this to the receipt of 10. The distribution can go to e.g. pay on a/c or suspense. Then in AP create an invoice for 10 use the same distribution as used for the AR invoice so they nett off to each other. Pay the invoice in AP as you would normally. In this case as they voided the payment create a dummy statement. It can then be reconciled using the stopped functionality. Q Why are there no entries going to GL? A Check they are using reconcilition accounting . Accounting entries below

With Reconcilitaion Accounting enabled:One set of entries for the unreconciled transaction DR liability CR cash clearing One set of entries for the reconciled transactions DR cash clearing CR cash If Allow Reconciliation is not enabled, only one entry is created: DR Accounts Payable

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CR cash Q Unable to select available Journal Entries to reconcile a bank Statement.

A You must define a bank account with default GL account codes. One of which must be your cash account. CE will only look for journals with the GL account code that matches the cash account of the b

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Keywords AUTORECONCILIATION; RECONCILIATION

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