2.5 Configuring Cash Management for Payables: Statements, Reconciliation Rules and Clearing

The published objective is Configure Cash Management. For Payables, Cash Management matters in two places:

• Internal bank accounts are maintained here (section 2.3).
• Bank statements are reconciled here. That is what marks payments as cleared, and if the business unit accounts for payments at clearing (section 7.4), it is also what creates the clearing accounting.

Electronic bank statement processing

The electronic bank statement process imports statements into Cash Management in three phases:

1. Retrieve. Get the file from an external or local source and store it.
2. Load. Populate the bank statement interface (staging) tables.
3. Import. Validate the staged data and create the bank statements. Parse rules run during this phase.

Supported formats include BAI2, SWIFT MT940, EDIFACT FINSTA, ISO 20022 camt.052 (V1) and ISO 20022 camt.053 (V1 to V3). Supported file extensions are .txt, .dat, .csv, .xml and .ack.

If the import phase fails, correct the errors and rerun only the import from Processing Warnings and Errors on the Bank Statements and Reconciliation overview. If the load phase fails, purge the error data and resubmit.

Prerequisites include:

• The bank account.
• Balance codes. ISO 20022 opening and closing booked and available balance codes are delivered, and you can add more in the CE_INTERNAL_BALANCE_CODES lookup.
• Transaction codes.
• Optionally, parse rules.

The configuration objects

Tolerance rules in detail

• Date tolerances are day ranges before and after the statement line date.
  • In manual reconciliation, a breach only gives a warning; the user can still reconcile.
  • In automatic reconciliation, a breach prevents reconciliation.
  • With no date tolerance, the dates must match exactly.
• Amount tolerances apply only to one-to-one matching, in both manual and automatic reconciliation. You can set a percentage, an amount or both.
  • With both, the application uses the more conservative one for the line amount. Oracle's example: ±USD 5 and ±1% on a USD 100 line gives ±USD 1, so the transaction must be between USD 99 and USD 101.
  • If you put an amount tolerance on a rule that isn't one to one, it is ignored.

Date tolerances are mostly for checks that clear days or weeks after issue. Amount tolerances suit foreign currency rounding or bank fees deducted from the line.

Autoreconciliation and exceptions

Autoreconciliation uses the rule set assigned to the bank account. Before you run it:

1. Create the matching rule set.
2. Assign the rule set to the bank account.

Then submit the process from the Bank Statements and Reconciliation page. Its parameters include bank account, statement or statement end date range, number of days, and Generate Cash Transactions. Generate Cash Transactions runs Create Bank Statement Transactions afterwards, applying the transaction creation rules.

When a line can't be matched, the process records an exception. For each one-to-one rule it looks for exceptions in this order:

1. Ambiguous: more than one possible match.
2. Date: everything matches except a date outside tolerance.
3. Amount: everything matches except an amount outside tolerance.

You resolve exceptions on the Review Exception page. Mark Reviewed protects a reconciled statement from accidental reversal.

Rejected payments

The optional Automatic Reconciliation of Reject Payments feature handles payments the bank rejects. Enable it on the Opt-in page and give the bank transaction code the Reversal type. The rejected line is identified by its transaction code and reversal indicator. Autoreconciliation then:

• looks back six months for the original line with the same amount and reconciliation reference;
• unreconciles the original line;
• reconciles the rejected line against it.

Why this matters for Payables accounting

If payments are accounted at clearing, or at issue and clearing, a payment's clearing accounting depends on Cash Management clearing it, usually through reconciliation. The date and amount tolerances above decide whether a check that cleared two weeks late, or a wire with a deducted fee, reconciles automatically.

A reconciled payment is also protected. Unreconcile it in Cash Management before you correct it in Payables.

Ad hoc payments made from Cash Management use a Cash Management payee rather than a supplier. They also need a payment method whose usage rules are enabled for Cash Management.