Oracle Financials Cloud

Bank Statement To Cash Reconciliation

Vinit Poddar Sreeni Devireddy Harsh Tulsyan

Product Management Director Product Management Director Principal Product Manager
Oracle Development Oracle Development Oracle Development
 [ 27 Nov - 01 Dec ]

[ 11 Dec - 15 Dec ]

[ 08 Jan - 11 Jan ]

2 Copyright © 2021, Oracle and/or its affiliates | Confidential: Restricted

Agenda

• Bank Statement Reconciliation

• Cash Pooling

• Cash Positioning

• Bank Account Transfer

• Cash Forecasting
 Process Flow

• Supplier Invoice to Record

Reconcile Bank
Payment Record Bank Miscellaneous Reconcile Bank
Statement to • Period Close to
• Customer Invoice to Statement (1) Bank Transactions Balances to GL (4)
Receipt Transactions (3) Financial Report
(2)

4
Security Model

Security Reference Manual for Financials

User
Cash Manager
Protects and develops the company's liquid assets
maximizing their use and return to the
Job Role Duty Role organization. Reconciles bank statements and
transactions. Also manages setup information for
bank statement processing and reconciliation
Security Context Restricting Bank Accounts for Cash Manager*
Data Business Unit
Legal Entity*
Access Data Access Set 22D Bank Account Setup Restriction via Legal Entity
Ledger
Cost Organization
Asset Book

5
(1) Record Bank Statement - Setup & Demo
Record Reconcile
Reconcile
Record Bank Miscellaneous Bank
Bank Balances
Statement Bank Statement to
to GL
Transactions Transactions
• Setups
• Bank Accounts
• Demo

• Bank Statement Transaction Codes

- Loading of Bank Statement

• Parse Rule Sets

• Payment System

• Transmission Configuration

6
 Bank Statement Processing

Bank Manually Load Electronic Bank

Statement Automatically Load Electronic Bank Statements
File Statements
Bank
Import File into Web Statement
- BAI2 Payment
- ISO20022 Center File
Systems
- SWIFT
- EDIFACT
Submit Load and Import
URL Transmission Bank Statement
Protocol Configuration

- BAI2
- ISO2002
File Formats Bank Account
- SWIFT
- EDIFACT Process Electronic Bank Statements
✓ Bank Statement Formats Fetch Phase Load Phase Import Phase
- 010 Code Map Parse Rule Set
- 015
✓ Automatic Bank Statement - 020 Group • Map Field File to • Validate and
• Store Statement File Interface Tables Transform data
Import - 025
inside Database Transaction - CHK
- EFT
Type - ACH
✓ PGP Encryption - OPBD
Errors Errors Errors
- CLBD Transaction - 100
- OPAV Balance Code
- CLAV Code - 110
✓ Non-Standard Bank - 475

Statement Formats
Bank Statements

7
 Sample BAI2 File

Bank Account - Record 3 Creation Date (YYMMDD) – Record 01

Statement Date (YYMMDD) - Record 02

Transaction Amount

Transaction
Code - Record
16

8
 BAI Specification ✓ BAI Specification

Record Description Interested Fields/Position

01 Record 01 is the header record that indicates the beginning of the table. Sender Identification (2)
This record identifies the sender and receiver and describes the table structure. Record Receiver Identification (3)
01 ends with the file trailer record (99) File Creation Date (4)
02 Record 02 is the group header record. This record identifies the group of bank As-Of Date YYMMDD format (5)
statements with the same as of date and time. Record 02 ends with the group trailer Currency Code (7)
record (98). As-Of-Date Modifier (8)
1 = Interim/Previous-day
2 = Final/Previous-day
3 = Interim/Same-day (Intra-Day)
4 = Final/Same-day (Intra-Day)

03 Record 03 is the account identifier and summary status. This record identifies the Customer Account Number (2)
account number and shows account activity and status. Record 03 ends with the Currency Code (3)
account trailer record (49). Amount – Summary (5)
16 Record 16 contains transaction detail with accompanying text and reference numbers. Type Code (2)
All type 16 records correspond to the account number in the Record 03. Amount (3)
Value Date (4)
Bank Reference Number (5)
Customer Reference Number (6)
Text (7)

9
 BAI Specification

Record Description Interested Fields/Position

88 Record 88 is the continuation record for record 16. If the data in record 16 exceeds the
maximum physical record length or if dividing the record is necessary for any reason, the
continuation record allows the data to continue in the same format.
49 Record 49 is the account trailer record. It provides account level control totals and includes Account Control Total (2)
the sum of all amount fields in record type 03 as well as the total number of records Number of Records (3)
associated with an account from records 16 and 88. A record 49 exists for each record 03.
98 Record 98 is the group trailer record. It provides group control totals and corresponds to the Group Control Total (2)
group header in record type 02. The system uses the information in the record to identify Number of Accounts (3)
the end of the bank statement. Number of Records (4)
99 Record 99 is the file trailer record. It provides file control totals and corresponds to the file File Control Total (2)
header in record type 01. The system uses the information in the record to identify the end Number of Groups (3)
of the text file. Each text file has one record 99 and one record 01. Record 01 identifies the Number of Records (4)
beginning of the text file.

10
 Flow Indicator ✓ Flow Indicators

• BAI2
Type Codes Description Flow Indicator
100-399 Credit Summary and Details Type Codes Credit
400-699 Debit Summary and Details Type Codes Debit
720-728 Loan Payment Summary and Detail Credit
760 Loan Disbursement Summary Debit
920-959 Custom Credit Summary and Detail Credit
960-999 Custom Debit Summary and Detail Debit

• EDIFACT – Negative Amount is Payment and Positive Amount is Deposit

• SWIFT – Based on Fund Code, C = Credit, D = Debit, RC = Reversal of Credit, RD – Reversal of Debit

• ISO – Based on CdtDbtInd, CRDT is Deposit, DBIT is Payment

11
Transaction Code Mapping ✓ Code Mapping

• When Banks provide codes not in lines with the flow indicators

12
 Bank
Parse Rule Sets Statement
File
Interface
Table
Bank
Statement

Parse Rule
Set

• Parse rules are used to transform and move data from one field to another
during the Bank Statement Import process.
• It is most commonly used to parse data from the statement line addenda field
into more specific statement line fields.
• Parse Rule Set is associated to a Bank Account.
• Each parse rule within a parse rule set consists of the following fields:
• Sequence - determines the order in which to process the rules.
• Transaction Code - is the code used to determine the statement line type.
• Source - is the interface table field that contains the data to be parsed.
• Target - is the statement line field that the data is to be parsed to.
• Rule - contains the syntax for determining the data within the source field to be parsed.
• Overwrite - is used to control whether to overwrite existing data in a target field or skip parsing the data.

13
 Manage Parse Rules

Source - is the interface

table field that contains
the data to be parsed.
Overwrite - is used to
control whether to
overwrite existing data
in a target field or skip
parsing the data
Transaction
Code - is the code
used to determine
the statement line
type
Rule - contains the
syntax for determining
the data within the
Target - is the statement line source field to be
field that the data is to be parsed
parsed to.

14
Parse Rule Syntax ✓ Define Parse Rule Sets

✓ Rule to remove leading Zeros

The parse rule syntax is described below:

[LITERAL](<[MATCHING TOKEN],[START-END]>)[LITERAL]

Where
• LITERAL = A string or character value represented by an identifier that should match the source data
exactly.
• MATCHING TOKEN = A token (or set of tokens) which describes the data to extract. Valid tokens are:
N = Extract a valid number
. = Decimal position
X = Extract an alpha numeric
~ = Extract everything in the source field from the parse position to either the end of the data or
upto the next literal.
• START = A position to begin extracting data, offset by the parse position. It must be a valid numeric.
• END = A position to stop extracting data. END can be either a valid numeric or the ~ token.

15
 The parse rule syntax: [LITERAL](<[MATCHING TOKEN],[START-
END]>)[LITERAL]

Parse Rule Example •MATCHING TOKEN = A token (or set of tokens) which describes the data
to extract. Valid tokens are:
N = Extract a valid number
. = Decimal position
X = Extract an alpha numeric
~ = Extract everything in the source field from the parse position to
either the end of the data or up to the next literal.

For BAI2:
BAI2 File Transaction data = Record 16
Additional Info = Record 16 Position 7

TRANS SOURCE OVERWRIT

SEQ TARGET FIELD PARSE RULE
CODE FIELD E
Payment-
Parse Rule 1 475 ADDENDA_TXT RECON_REFERENCE
INSTRUCTION_IDENTIFICATIO
(NNNN) N

2 475 ADDENDA_TXT N FROM:(X~)CR N

3 475 ADDENDA_TXT CHECK_NUMBER Payment(2-5) N

TRANS CODE SOURCE FIELD (ADDENDA_TXT) PARSE RULE TARGET FIELD TARGET FIELD VALUE
Result 475
Payment-5199 CKNA# BC1 2789 85851 87 GBP
FROM:4522020843 CR 28/
FROM:(X~)CR Instruction ID 4522020843
Payment-5199 CKNA# BC1 2789 85851 87 GBP
475 Payment(2-5) Check Number 5199
FROM:4522020843 CR 28/
Payment-5199 CKNA# BC1 2789 85851 87 GBP
475 Payment-(NNNN) Reconciliation Ref 5199
FROM:4522020843 CR 28/
16
(2) Record Miscellaneous Bank Transaction
Record Reconcile
Reconcile
Record Bank Miscellaneous Bank
Bank Balances
Statement Bank Statement to
to GL
Transactions Transactions

• Setups • Demo
• Bank Statement Transaction Creation Rule - Automatic creation of Bank
Interest Line

✓ Bank Statement Transaction Creation Rules

17
Transaction Creation Rule

18
(3) Reconcile Bank Statement to Transactions
Record Reconcile
Reconcile
Record Bank Miscellaneous Bank
Bank Balances
Statement Bank Statement to
to GL
Transactions Transactions
• Setups • Demo
• Bank Statement Reconciliation Matching Rule - Automatic Reconciliation of Bank
Statement
• Bank Statement Reconciliation Tolerance Rule
- Generation of Bank Charges and
• Bank Statement Reconciliation Rule Sets
Exchange Gain/loss line
- Manual Reconciliation of Bank
Statement

✓ Automatic Reconciliation - Overview and Key Considerations

19
 Automatic Reconciliation Setup ✓ Automatic Reconciliation Overview

1 2 3 4

Set up Matching Set up Matching Assign Matching Rule

Set up Matching
Tolerance Rules Rules Set Set to Bank Account
Rules

• Matching Rules • Tolerance rules enables • Matching Rules Set is a • Assign Reconciliation
determines how to to specify date and group of matching rules Matching Rules Set to a
match bank statement amount tolerances that and tolerance rules. Bank account to reconcile
prevent or warn when bank statement lines with
lines and application
• Each rule set consists of transactions.
transactions. reconciliation would be a
breach of a defined one or more matching
tolerance. rules that can be
• This helps to achieve a
prioritized or sequenced.
higher match rate in
automatic ✓Date Tolerances
✓Amount Tolerances • The rules should be
reconciliation and
✓Percentage ordered to achieve a
minimizing the need for
Tolerances greater reconciliation
manual intervention
success rate.

20
 Automatic Reconciliation Processing

5 6 7 8

Submit Review Automatic Review Exceptions Mark Reviewed

Autoreconciliation Reconciliation Results
process

• Autoreconciliation • Review Reconciled and • An exception occurs • After completing the

process will use Unreconciled lines. when the reconciliation reconciliation of a bank
matching rules and program cannot find a statement use the mark
• If necessary, perform system transaction to reviewed feature to
tolerance rules to
manual reconciliation prevent accidental
match bank statement match with a particular unreconciliation.
(unreconcile, reconcile),
lines to system or submit Bank Statement Line.
transaction lines Autoreconciliation from • These exceptions are
Bank Statements and
classified as ambiguous,
Reconciliation
Dashboard . date or amount.
• Reconcile lines from
Review Exception UI

21
 Reconciliation Matching Rules
✓ Reconciliation Matching Rules Overview

Task: Manage Bank Statement Reconciliation Matching Rules

• Transaction Sources: Payables, Receivables, Payroll, External,

Journal.
• If multiple sources are selected in a one to many or many to many
matching rule, then the program first finds all available transactions
across the selected sources and then applies grouping rule to the whole
data pool.
• This means that statement lines can be reconciled to a group that
includes transactions across the different sources

• Matching Type: Group by attributes for bank statement lines or

system transactions, depending upon match type
Group by Attributes
• One to One
• One to Many
• Many to One
• Many to Many

• Matching Criteria: List of matching attributes:

• Amount (always checked)
• Date
• Reconciliation Reference
22 • Transaction Type
• Use Advanced Criteria
 Matching Type

One to One One to Many

One Bank Statement Line Matches to One System Transaction One Bank Statement Line Matches to Many System
Transactions
• Bank Statement Line and System Transaction
needs to have the same amount Define Attributes to Group
System Transactions and
• User can define other attributes as matching match them with One Bank
criteria as: Date, Reconciliation Reference, Statement Line
Transaction Type, or they can enter advanced
criteria manually

Many to One Many to Many

Many Bank Statement Lines Match to One System Transaction
Define Attributes to Group
Statement Lines and match
them with One System
Transaction
Many Bank Statement Lines Match to Many System
Transactions
Define Attributes to Group Bank
Statement Lines and System
Transactions, resulting in a unique
matching results

Zero Amount
Clear Zero Payments made
Clear zero payment batches created in AP to
close the invoices and credit memos

23
 Tolerance Rule ✓ Tolerance Rules Overview

Tolerance Rules enables you to specify date and amount tolerances that prevent
or warn when reconciliation would be a breach of a defined tolerance.
• Date tolerances are to validate that the source transaction date or dates are within a certain number of days before
and after the bank statement line date or dates.
• Amount tolerances are most often - used when reconciling foreign currency transactions where there may be
differences due to rounding or fluctuations in the conversion rate. They can also be used if a bank includes a
processing fee in the bank statement line amount.
• Percentage tolerances are used to specify the percentage on the original transaction
24
Rule Sets
✓ Reconciliation Rule Set Overview

• Bank Statement Reconciliation Rule Set is a group of Matching Rules and Tolerance Rules.
• Each Rule Set consists of one or more Matching Rules that can be prioritized or sequenced.
• The Rules should be ordered to achieve a greater reconciliation success rate.

25
Assign to Bank Account

26
Mass Reconciliation (21D)

• Perform mass reconciliation by selecting a large volume of system transactions (mainly

journal lines) and bank statement lines, group, and reconcile them using a spreadsheet

• FBDI template for Bank Statement Reconciliation Data Import for this purpose

• Perform the following steps:

o Export the unreconciled transactions into a spreadsheet

o Import the reconciliation data into Oracle Cash Management

✓ Mass Reconciliation Steps

27
 (4) Reconcile Bank Balances to GL
Record Reconcile
Bank Reconcile
Record Bank Miscellaneous
Statement to Bank Balances
Statement Bank
Transactions to GL
Transactions
✓Cash to General Ledger Reconciliation
Report
✓Bank Statement Report
✓OTBI – Bank Statement Analysis
Report

✓ FAQ on Cash to GL Reconciliation Report

28
 Period Close and Reports

Period Close Activities

• Complete Daily Cash Management Activities • Ensure that all the bank related transaction are recorded
• Load Bank Statements in the respective subledger and general ledger
• Reconcile Bank Statements
applications before starting the reconciliation process
• Review Autoreconcile Bank Statements Results and
Resolve Exceptions • Cash Management does not have a separate period to
• Create Bank Statement Transactions be closed
• Resolve Un-reconciled Statement Lines
• Create Accounting and Post to General Ledger
• Submit Cash to General Ledger Reconciliation Report
• Submit Bank Statement Report • List of seeded Cash Management Reports
• Submit General Ledger and Subledger Account
Analysis Report
• Correct any Invalid Entries to the General Ledger Cash
Account (Optional)

Period Close Whitepaper is available in the folder: Labs > Supporting Files

29
Agenda

• Bank Statement Reconciliation

• Cash Pooling

• Cash Positioning

• Bank Account Transfer

• Cash Forecasting
Cash Pooling

Notional Cash Pool

• No physical transfer of funds between cash pool members
• Reporting of cash balances and cash positioning at cash pool
level

Physical Cash Pool

• Physical transfer of funds between cash pool members
• Bank initiated sweeps
• Self initiated sweeps

✓ Cash Pool Overview

31
 Physical Cash Pool

Single Two
Concentration Concentration Nested
Pool Pool Cash Pool

Investment Funding Cash Pool Cash Pool

Concentration
Account Account Account 1 2

Concentration Investment Funding

Sub Sub
Account Account Account
Sub Account 1 Sub Account 2
Account 1 Account 2

Sub Sub Sub Sub

Account 1 Account 2 Account 1 Account 2

✓ Notional and Physical Cash Pools

32
Rest Services for Maintaining Cash Pool
✓ REST API

33
Cash Leveling Proposals

34
Agenda

• Bank Statement Reconciliation

• Cash Pooling

• Cash Positioning

• Bank Account Transfer

• Cash Forecasting
 Cash Positioning

Cash Positioning is a planning tool to view your daily cash position based on actual cash flows
from data sources such as bank statements, payable payments, receivable receipts and
external transactions.
✓ Preparing Cash Position

✓ FAQ - Cash Position

✓ Import Cash Position

36
Cash Positioning and Forecasting Option

• Extraction Duration: Extraction period used to transfer

data to the Essbase cube. Transactions with transaction
dates within that period are extracted to the cube.

• Reporting Currency: Reporting currency used in

EssBase Cubes, Cash Balances, 5-day Cash Forecast
and Cash Management Infolets.

• Balance Code: Balance code from the bank statement

that will be used to determine the last known balance in
Cash Balances workarea, and the beginning balance in
Cash Position. The LOV is based on
CE_INTERNAL_BALANCE_CODES lookup code.

• Balance Date Threshold Days: The number of days

before a bank statement is reported missing for a bank
account.

• Default Transaction Calendar: Default calendar

assigned to transactions used in cash positioning and
forecasting.

37
Cash Position UI

38
 Cash Position UI

• Cash Position reports the accurate position of the current date.

• Amounts are reported per Bank Account and Bank currency.
• The projections take into account: Intraday Bank Statements, External Transactions and Manual Transactions.
Opening Closing Balance reported in the
Balance Prior-day Bank Statement
(Closing
Booked Today = 08/10/2016
Balance) We need Closing Booked Balance
for previous day 08/09/2016
Inflow/Outfl • Intraday Bank Statements
ow • External Transactions
• Manual Transactions
Projected Opening Balance + Inflow – Outflow

Target Target Balance defined at Bank

Account setup
Variance Difference between Projected x
Target Balances.

39
 Cash Positioning – Opening and Target Balances

Closed Booked Balance reported

in the Prior-Day Bank Statement

Target Balance
Defined at Bank
Account setup

40
Cash Positioning – Adding Manual transactions

• Manual Transactions will be added into Cash

Position Manual Cube
(CashPositionManualApp)
• When ESS Cash Position Data Deletion is
submitted, the manual entries are deleted.

41
Cash Positioning – Drill Down

All your cash balances and

projections can be drilled back
at the click of your mouse to
review the source detail in order
to investigate any condition

42
Agenda

• Bank Statement Reconciliation

• Cash Pooling

• Cash Positioning

• Bank Account Transfer

• Cash Forecasting
 Bank Account Transfer

External Transaction
(Outflow)

• Bank Account: Source Bank Account

• Origin: Bank Account Transfer
FROM BANK ACCOUNT TO BANK ACCOUNT • Cash Account(Cr.): Bank Account’s Cash Account
(Outflow) (Inflow) • Offset Account(Dr.): Intercompany Balancing Rules

(Payables) (Receivables)

External Transaction
(Inflow)

✓ FAQ on Bank Account Transfer • Bank Account: Destination Bank Account

✓ Intercompany Balancing Rule Setup for Account Transfer • Origin: Bank Account Transfer
• Cash Account(Dr.): Bank Account’s Cash Account
Approval Task - BankAcctTransferRequestForAction • Offset Account(Cr.): Intercompany Balancing Rules

44
Bank Transfer Accounting

Bank Transfer from HSBC - Current to HSBC - Overdraft

Outflow External Transaction Inflow External Transaction

Receivables Account

45
Agenda

• Bank Statement Reconciliation

• Cash Pooling

• Cash Positioning

• Bank Account Transfer

• Cash Forecasting
 Cash Forecasting ✓ FAQ - Cash Balances and Forecasting

Cash Forecasting is the estimation of cash position on the basis of sources that affect cash
position such as: Payables (Payables Invoices, Payables Payments), Receivables (Receivables
Invoices, Receivables Receipts), Payroll (Payroll payments), External transactions.
Prior to cash forecasting, cash positioning is usually performed on a daily basis by every cash management
or treasury department. The goal of the cash position is to estimate with an acceptable degree of
confidence the projected closing bank account balances. In doing so, cash forecasting decisions such as
investing and borrowing, can be made in a timely manner.

47
 5 Day Forecast ✓ Cash Forecast using Smart View

✓ Cash Forecast for longer periods

• 5 Day Forecast projects the short-term activities for the next 5 days.
• The forecast takes into account the likely cash inflows and outflows from transactions in Payables, Receivables, Payroll,
and Cash Management.
• Amounts are reported per Legal Entity and Reporting Currency (Defined at Specify Cash Positioning and
Forecasting Options)
Balance First Day: Prior-day Closing Ledger Balance if
available, or last known Closing Ledger
Balance +/- Inflows and Outflows up to and
including previous day.
For the next 4 days, the total Projected
Balance will be used as beginning balance.
Inflow/Outflow • AP Invoices
• AP Payments
• AR Invoices
• AR Receipts
• Payroll Transactions
• External Transactions
Projected Opening Balance + Inflow – Outflow

48
Cash Forecast – Drill Down

All your projections can be drilled

back at the click of your mouse to
review the source detail in order
to investigate any condition.

49
Implementation Considerations
Bank Accounts
1. Define unique bank account
names that are easily searchable
2. Use defining attributes, such as
bank, currency, and account use
in the bank account name to
uniquely identify it. e.g., B of A
USD Disbursement.
3. Consider assigning a unique GL
cash account to each bank
account to record all cash
transactions to facilitate book to
bank reconciliation
50
Bank Statement Reconciliation
1. When creating rule sets for automatic
reconciliation, rules should be ordered to
achieve a greater reconciliation success rate.
2. Consider changing the sequence number
depending on how accurately the given rule is
likely to reconcile against the correct
transactions.
3. It is recommended that if all other criteria in a
rule is the same that one to one match type
rules be sequenced above rules of other match
types
Recent New Features

• Reconcile journal lines for multiple cash account combinations

• Drill down from OTBI to Bank Statement

• Reconcile zero amount system transactions

• Notional and Physical Cash Pool

• Automatic reconciliation of Bank Accounts for a Bank, Branch or Legal Entity

✓ Replay: What’s New in Cloud ERP Financials 23D

✓ For a complete list of update-wise new features, visit Oracle Cloud Readiness

✓ Feature Opt-in Matrix

✓ Enable Offerings for Oracle Applications Cloud Release 13 Upgrade (Doc ID 2317112.1)

✓ Cloud Applications Roadmap

51
Reference Documents

• Bank Statement Files, Transaction Codes Explained

• What Seeded Formats Are Available For Bank Statements

• Creating a Parser for a Custom Bank Statement Format

• Automatic Reconciliation in ERP Cloud Cash Management

• Cash Management – Cash Positioning and Forecasting

• Bank Account Validation

52
Thank You

53 Copyright © 2023, Oracle and/or its affiliates | Confidential: Restricted