Describe cash and bank management concepts
You can use the Cash and bank management module to maintain the legal entity’s bank accounts and the financial instruments associated with those bank accounts.
These instruments include deposit slips, checks, bills of exchange, and promissory notes. You can also reconcile bank statements and print bank data on standard reports.
The Cash and bank management module is intricately connected to the accounts receivable and accounts payable modules.
Business processes
There are four major business processes under cash and bank management:
Deposit bank funds.
Reconcile bank accounts.
Transfer bank funds.
Manage letters of guarantee.
Deposit bank funds
By using the Cash and bank management module in Finance, you can maintain your legal entity's bank accounts and the financial instruments that are associated with those accounts. These instruments might include deposit slips, bills of exchange, promissory notes, or checks.
A deposit slip is a document used to deposit checks, credit card notes, and cash into a bank account. Use the Deposit slip page to view and manage deposit slips for payments into bank accounts.
You can cancel a deposit slip payment if a customer payment is invalid. If you already reconciled the deposit slip in the bank statement, you can't cancel the payment.
Reconcile a bank account
When you receive a bank statement, you should periodically reconcile the legal entity bank transactions with the transactions on the bank statement.
You can't reconcile a bank statement with a bank account if any of the checks or deposit slip payments listed on the statement currently have a status of Pending cancellation. After a reviewer posts or rejects a check reversal or deposit slip payment cancellation, the status is no longer Pending cancellation, and you can reconcile the bank account.
To learn more about bank statement reconciliation, check the resource links provided in the Summary and resources unit at the end of this module.
Manage letters of guarantee
A letter of guarantee is an agreement by a bank (the guarantor) to pay a set amount of money to someone (the beneficiary) if a bank customer (the principal) defaults on a payment or an obligation to the beneficiary. Letters of guarantee aren't transferable. They apply only to the beneficiary who is named in the agreement. The principal can request an increase or decrease in the value of a letter of guarantee, subject to the terms of the agreement.
You can use the Letter of guarantee page to complete these tasks:
Create correct ledger entries and eliminate manual entry.
Record all monetary and nonmonetary transactions, and track balances of letters of guarantee.
Record and track the status and expiration of letters of guarantee.
Generate a report that lists the banks that are holding letters of guarantee.
Settlements
During settlement, the transactions on one document are applied to the transactions on another document to increase or decrease the balance of each document. For example, a payment can be applied to an invoice. Various types of transactions can be settled at different times through different methods. The settlement process can also generate new transactions.
Settlement can occur between any transaction types that affect the vendor balance or customer balance. These transaction types can include invoices, payments, credit memos, and fees. Any transaction type can be settled against any other transaction type.
The following transaction types are available for use in single-company and cross-company settlements:
Settlement
Cash discount
Foreign currency revaluations (includes realized and unrealized foreign currency revaluations)
Penny difference
Overpayment/underpayment
Cash flow forecasting
Finance provides the cash flow forecasting tool to analyze the current cash flow status and future need for cash. The cash flow forecasting process integrates all major finance modules: These modules include:
General ledger
Accounts payable
Accounts receivable
Budgeting
Inventory management
The cash flow forecasting tool considers the following transactions while calculating the current cash flow:
Noninvoiced sales orders, resulting physical and financial sale.
Unposted free text invoices, resulting financial sale.
Noninvoiced purchase orders, and resulting physical and financial purchases.
Unpaid customer invoices.
Unpaid vendor invoices.
Ledger transactions specifying future posting.
Budget register entries selected for cash flow forecast.
Inventory forecast model lines selected for cash flow forecast.
Predicted tax payment amount and time.
You need to first complete the configurations on the Cash and bank management module > Cash flow forecasting > Cash flow forecast setup page.
You need to complete the configurations related to all modules in the respective tabs. First, you need to identify the liquidity accounts—that is, the bank and cash accounts that influence the cash inflow or outflow.
In the accounts payable and accounts receivable, you need to define the default payment terms to consider for the cash flow forecast. You can also define the default payment terms based on the vendor groups or customer groups.
On the Budgeting tab, you can define the default Budget models to be considered for the Cash flow forecast. In the following screenshot, the budget model FY2024 is considered for the cash flow forecast.
The cash flow process is run from the Cash and bank management module > Cash flow forecasting > Cash flow forecast automation page. You can select the Create new process automation button in the action pane of the Cash flow forecast automation page followed by entering the schedule type and company to create a new series of forecasts.
When the new automation series is created, you can define the run schedule for the process. The name, schedule start date, and time can be defined here. This is one of the steps to create the process automation for cash flow forecast.
