Cash Management Competency

Rohit Daswani
Contents
1. Bank Statement Mapping
2. Bank Statement Cashflow Mappings
3. Bank Account Signing Authorities
4. Cash Pooling
5. Cash Flows
6. Cash Positioning
7. Cash Forecasting
8. Interest Rate Calculation
Bank statement Mappings
Problem Statement: Creating bank statements in oracle automatically from a data file received
by the bank

Functionality: Bank Statement Mapping is a functionality that helps to map information from
different bank statement file formats to the Cash management open interface tables.

Before you can reconcile transactions against a bank statement, you need to enter the bank
statement information into Oracle Cash Management. You can accomplish this task by doing
one of the following:
– Using the Bank Statement Loader program
– Using a custom loader program
– Manually entering the information

For the 1st two options above, you need to have define bank statement mappings. Bank
Statement Mappings are used to map the structure of the bank statement file to the Bank
Statement Open Interface tables. It is needed to define the mapping for each unique file
structure.

The seeded Bank Statement Mapping Formats of BAI2 or SWIFT940 or EDIFACT cannot be
updated. To meet the Bank Data requirements mapping you need to create a new mapping
templates which defaults the current seeded template. Once the new template is created with
defaults setups you can update the setups to your requirement.

Bank Statement Loader program uses this Bank Statement mappings template to map the Bank
statement fields. For Example, the first lines in below image means, the 5th position on second
records represents the Statement Number.

Functional Configuration:

1. Navigate to Cash Management Super User->Setup>Bank>Bank Statement Mapping

Open the Bank Statement Mappings form.

2. If you want to review a mapping template, choose one from the list of values. Otherwise,
cancel the list of values.

3. Create a new record for the new mapping template. 

4. In the Name field, enter the name of the new mapping template.

5. In the Description field, enter the description for the new mapping template.

6. Enter the name for the appropriate Control File.

7. Enter the date format.

8. Enter the Bank File Format Type.

9. Precision to be defined if required only. If you want bank currency precision to be used than
leave the precision null.

10 Timestamp formats should be entered only if required.

If the Bank File format is a BAI940 or SWIFT940 or EDIFACT, then click on populate.
In the headers tab, make any changes if required. Do the same for the Lines tab.

Review the above mapping and save the same.

Bank Statement Cashflows Mappings
Problem Statement: Bank Statement lines cannot be reconciled because there are cash flows
transaction associated with them for which there is no corresponding record in Oracle. Example
of this is Bank Interest etc.

Functionality: Cash Management module provides a functionality to generate the cash flow
transactions from the bank statement and generate the journal entries in the system. This can be
done by mapping bank statement cashflows to appropriate cashflow sources and then defining
unique account code combinations for these cash flows. Once done the user has to run the
“Bank Statement Cashflow Creation” program which creates the journal entries according to
the defined mapping.

This feature is mainly used when there is no payment/receipt/journal to reconcile against a

bank statement line. Instead of creating a manual journal entry, you can use this feature to
create cashflow transactions you can reconcile with bank statement lines and subsequently the
journal entries get created.

Functional Configuration

As a prerequisite, there should be transaction codes already existing in the system, for which
the GL accounts are assigned in cash flow mappings. The journal entries will get created by
using this account.

Navigation - Cash Management Super User > Setup > Banks > Bank Transaction Codes
In the example above there is a BTC for Credit interest capitalized by the bank. Instead of
creating a manual journal entry for the above, the user can reconcile the above using cashflows
mapping.

1. Navigate to Cash Management Superuser > Setup > Banks > Bank Statement Cashflow
Mappings

2. Enter the transaction code in the new form and the corresponding GL account number for the
corresponding account number.

3. Once the transaction codes and cashflow mappings present in the system, users need to run
Bank Statement Cashflow Creation program to generate the cash flows for a particular bank
account for which the statement lines exist with Cash Flow transaction codes.
Bank Account Signing Authorities
Problem Statement: Users need authorization to sign bank account documents related to
payments and receipt of funds

Signature Authority means that although the account is not in your name, and the money on it
is not your money - you have the right to access that account and perform operations on it. This
usually happens when people are employees of a company and have signature authority over
the company's accounts.

Functionality: The oracle Bank Account Signing Authority feature enables users to enter,
maintain and report in their organizations with bank account signing authority. Users can
indicate single and joint signing limits for each bank account as well as signer bank group
categories, effective dates, status and other relevant information.

It is also possible to attach electronic copies of documents like passport photo copy, signature
files or bank documents directly to the signing authority records

Functional configuration

Prerequisite for setting up bank account signing authorities is that the said people need to be
defined in oracle HRMS.

1. Navigate to Cash management super user-> Setup-> Bank Account Signing Authority

2. In the find people form, query for the person. Select the person name for whom the signing
authority information is being entered.
3. The Person Type, HR Organization, Job, Location, and Email information default in, if
previously entered in Oracle HRMS.

4. Enter a single and/or joint signing limit. 

5. Enter the Effective Start Date for this signing authority.

6. Enter or update the Group, Other Limitations, and Effective End Date.

7. Add attachments to the new signing authority record.

Save your work.

Cash Pooling
Problem Statement: How can users create a cash pool in oracle to take advantage of cash
pooling techniques to optimize bank account balance management and also to minimize
interest costs and smoothen bank account transfers.

What is a cash pool?

A cash pool is a structure which allows the balances on different bank accounts to be treated as
one single balance. It allows a company to combine the balances, both positive and negative, of
all the accounts that are in the pool.

There are mainly two types of cash pools:

1) Physical pool:  type of pooling structure involves the physical movement of cash balances
into and out of one central bank account. This type of structure is also known as cash
concentration. Typically, a physical pool sets an end of day target balance for every account in
the structure. If the balance is below that figure, then the centre funds the account. Any surplus
is physically sent to the centre.
2) Notional pooling: Notional structures do not involve any physical movement of cash.
Notional pools operate by offsetting debit balances against credit balances for all the accounts
within the pool without any funds moving between accounts. In other words, the notional pool
works by treating all accounts as if they were part of a zero-balancing physical pool, although
there is no movement of cash between accounts. This type of structure is also sometimes
referred to as interest compensation.

Functional Configuration:

1. Navigate to Cash Management Responsibility-> Cash Pools

2. Select “Notional Cash Pool” and click on GO

3. Enter the name of the cash pool name as: TESTCashpool
4. Enter the concentration name as: BofA-204
5. Effective date from: 01-Jul-2017

6. Click on Sub Accounts to take us to the sub accounts OAF page.

7. Click on Add Sub Accounts to add the same to the Cash Pool.

8. In the next page you can other bank accounts although it is not mandatory. It is possible to
create a cash pool with just one bank account.
9. Add whatever accounts required. The user can only see those bank accounts which are not
already assigned to other cash pools.

10. Once Done click on Apply.

11. Click on Next. On the next page click on Finish. You get the below OAF page.

12. The above page confirms the creation of the cash pool.

Cash flows
Cash flows can be used to create accounting entries from Oracle Cash Management.
Cash flows (to create accounting entries) can be created from the following:
• Bank account transfers
• Sweep transactions
• Cash leveling
• Bank statement cash flows
These transactions are currently performed by many organizations, and are
performed manually. The basis is a bank statement or advice from the bank. Bank
statements can give you all the data related to transfers between accounts, sweeps,
and other bank charges. These line details can be used to create journal entries
directly from Oracle Cash Management.
You can also include cash flow as a source in cash positioning activity.

Cash Positioning
Problem Statement: Business needs an accurate picture of cash balances in the different bank
accounts to evaluate its liquidity position.
Functionality: Cash Positioning

Cash positioning is a planning tool that helps you view your daily cash position by currency or
bank account. Cash positioning allows you to project your cash needs and evaluate your
company's liquidity position. Cash position differs from cash forecast in that, it includes your
bank balance and statement information and the actual inflows and outflows on a particular
day, whereas cash forecasting primarily focusses on cash inflows and cash outflows in the
coming weeks.

Functional Configuration

Creating Cash Position Worksheets

A worksheet contains cash position specifications. Worksheets determine the presentation of

sources (rows) and bank accounts (columns) for your cash position. Worksheets also include the
following types of general information:

 Worksheet name
 Number of columns displayed

It is important to note that a cash position is better served if it is created for a cash pool instead
of a sigle account. This serves the purpose of giving a clear cut picture of the bank account
balances across all bank accounts in one single worksheet rather than creating a worksheet for
every bank account. The user can then drill down to each and every bank account in the
worksheet to know the specific information.

We have already created a cash pool. Now we create a cash position worksheet.

Now we create a cash position worksheet.

1. Navigate to Cash Management-> Cash Positioning

3. Click “Create Worksheet.” In the new OAF page enter the following details:

4. Worksheet Name: Worksheet Name

5. Number of Columns Displayed in Results: 20

6. Use Calculated Prior Day Cash Flow and Overdue Transactions Balances: “Yes”

Prior day cash flow refers to the gap between the last available bank statement date and the
date on which we are computing the cash position.

7. To select bank accounts, click on “Set Manually” uncheck the 1st entry since we are selecting
an entire cash pool. Select the cash pool created above, “TESTCashpool” and click on “Include”.

8. Next set up cash inflows.

9. Scroll down to the Customer Receipts section and click on “Select Manually”.

10. Select “Yes” for Include Clear transactions and include click on “Include”.

This is given below:

Decide whether to include Open Interface Inflows and User Defined Inflows.

11.Next setup Cash Outflows. This can be done in the same OAF page by scrolling down to the
Cash Outflows section.

12. In the Supplier Payments section click on Set Manually and set Include Cleared Transactions
to “Yes”.

13. After this uncheck Open interface Outflow and User-Defined Outflow.Once done click on
apply.
14. Once done we are asked for a confirmation along with a message to run a couple of
concurrent programs. Click on Search worksheets.

15. In the next OAF page click on GO and confirm that the new work sheet has been created.

Transaction Flow

Next for doing a transaction you need to enter a bank statement.

1. Create a new bank statement for the bank a/c BofA-204 with account No. 10271-17621-619.

Create the bank statement manually for at least one day prior to the present date.

Enter the following:

2. The account details, the Statement number which I have entered as “02-AUG-2017_1”. The
opening balance and the closing balance should populate automatically according to the last
statement if not enter the balances by yourself.

3. Enter the Receipts for the day and the Payments for the day.

4. Save the statement. When prompted that the control total receipt balances do not match click
on “YES”. Do the same for control payments and the control total ending balances.
It is not necessary to enter the lines.

The opening balance will be fetched from the control totals of the bank statement.

4. Create a Test Receipt in AR. This Receipt should be created with a receipt method for this
bank account.

Navigate to Receivables Manager-> Receipts

5. Enter Payments from Payables Manager

First navigate to Payables Manager and Create an invoice

Click on Enter/Adjust Invoices to enter the Invoice details and to enter the amount
6. Calculate prior day cash flow that is the inflow and outflow of cash between the date of the
last bank statement and the date for which the Cash Position is desired. This is required if there
is any gap between the last bank statement date and the cash position calculation date.

Navigate to the Cash Management responsibility and submit the concurrent program:

Cash Position Prior Day Cash Flow and Overdue Transactions Program with the worksheet
name and the Date of Cash Position.

Now to generate the cash position:

7. Navigate to the Cash Position OAF Page and in front of the cash positioning worksheet
created click on Generate Cash Position.
We get the cash position as shown beow:

Click on Export to get an Excel Output.

Cash Forecasting
Problem Statement: Business needs to calculate the cash inflows and outflows over a period in
the future which will help the business to plan its business operations over a period of time.

Functionality: Cash Forecasting

Cash forecasting is a tool that integrates within the E-Business Suite and with external data
sources to allow an enterprise to manage cash flow into the business based on configured
templates. These templates are configurable and you can choose the products/applications you
want to integrate selectively. Templates determine the presentation of sources (rows) and
forecast periods (columns) for your cash forecasts.

An important aspect is the forecast period types, either GL periods or days. It sources
information to show the inflow and outflow of cash from various modules like treasury, AP,
AR, Purchasing atc.

Functional Configuration
1. Navigate to the Cash Forecasting OAF page in Cash Management Super User Responsibility
2. Click on the tab Forecast Templates. On the OAF page click on Create Template.

3. On the Create forecast template page that appears click on fill in the details:

1) Template Name

2)Forecast by (You can choose “Days” or “GL Period”)

3) Choose whether to Exclude or Include “Over Due Transactions”

4. Click on Next
On this new page you can choose which rows and columns to include

In the above screen shot it can be seen that the “Add row of Source type” is for Supplier
Invoices.

5. Click on GO

We are taken to a new OAF page Wherein we the user must enter the following:

Row Number: 1

Description: Supplier Invoices for Vision Operations

Operating Unit: Vision Operations

Ledger: Vision Operations (USA)

Discount: None

Include Transactions in Hold: No

Lead time: 0

Enter the details as below:

6. Click on “Apply” to select this Template Row.

8. Next select “Supplier Payments” in the “Add Row of Source Type” LOV. Click on Go

Enter the details for the same. This is shown below:

9. Customer Invoices
10. Customer Receipts

11. Purchase Orders

12. Purchase Requisitions

13. Sales Orders

The date type can be either Entered or Requested.

14. Sales Forecast

Finally after adding all the row details for the forecast template confirm the same once again:
15. Click on Next.Update the Column Details for all the 8 rows as below:

16. Click on Finish.

Transaction

1. We can run a forecast after completing the template itself, as shown above. After creating the
forecast template, we can see an option “Run Forecast”.

Else navigate to Cash Management Super User-> Cash Forecasting-> Forecast Templates

2. Enter the name of the forecast template created and search for the same.
3. Click on “Run Forecast”.

4. We are redirected to a new “Submission Parameters” window.

5. Give a name for this forecast run.

6. Give the calendar name as “Accounting”, Forecast Currency as “USD”, select the start period,
Source Currency type as “All”.

7. Since we have entered the source currency type as All enter the Exchange Date and Exchange
Type.

8. If required select the Opening Balance Options. This is given below.

9. Click on Submit.

10. Navigate to the Forecasts Page and click on Go.

The forecast created above can be seen below:

11. Once done click on the concerned forecast name above. We get the forecast results as shown
below:
Interest Rate Calculation
Problem Statement: How to keep track of accrued interest available to all internal bank
accounts.

Functionality: Bank Account Interest Rates Schedules

To simplify the bank account interest calculation, you can create reusable interest rate schedules
that will contain the interest rates and other interest calculation parameters. Interest calculation
features will work not only for stand-alone bank accounts but also for the notional cash pools as
well.

For banks that earn interest rates real time, users can maintain interest rates schedules in oracle
cash management. Using these schedules, bank account balances that can earn interest rate or
where the interest rate can be charged.

Configuration: Creating an interest rates schedule

1. Navigate to Cash Management Super User Responsibility->Interest Rates Schedule

2. Enter the following

Name: Test Interest Rate Schedule

Currency: USD

Basis: Flat
* Basis: This parameter defined if the same interest rate applies to the entire balance amount or
of a different interest rate applies to different portions of the balance amount. The options
are: Flat and Step. 

Interest Rounding: Nearest

Day Count Basis: Actual/365

3. Enter the Balance ranges. If the option for Basis is Flat, the interest rate applicable will be the
according to the range in which the bank balance falls, for the entire balance.

If it is Step, interest rate applied is different for different portions of the bank balance according
to the bank balance range.
4. Once the interest rate ranges is defined the next step is to attach bank accounts to the interest
rate schedule. It is possible to apply any number of bank accounts.
Once this is completed the user gets a confirmation message.
Transaction

Interest Calculation:

1. Navigate to the Cash Management Super User-> Interest Calculation

2. Search for the account, or the cash pool, or by rate schedule. Enter the date ranges for which
to calculate the interest rate.
3. Click on Go.

4. We get the interest amount for the bank account as calculated by the interest rate schedule for
the entered dates.

5. By clicking on the interest amount above we get the interest rate calculation.