Using Cash Management with Automatic Clearing (Oracle Cash Management User's Guide)


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Using Cash Management with Automatic Clearing

In addition to Cash Management, you can use Automatic Clearing to clear receipts in Oracle Receivables, as well as payments made using the future-dated payment method in Oracle Payables. However, unlike Cash Management, Automatic Clearing in both Receivables and Payables is date-driven and does no matching to bank statements.

If you use Automatic Clearing within Oracle Receivables, you can choose whether to clear remitted receipts after they have matured, and whether you want to clear or eliminate risk for factored receipts. You can match automatically cleared receipts with bank statement lines in Cash Management.

If the amount that was automatically cleared equals the statement line amount, no further accounting takes place. Receivables handles any cases where the automatically cleared amount differs from the amount cleared at reconciliation.

If you use Automatic Clearing only to eliminate risk for factored receipts, there are no special considerations. However, if you use Automatic Clearing to clear payments and receipts rather than using Cash Management, your General Ledger balance may not match your Cash Management reports. For example, the GL Reconciliation Report will not show correct results if you clear the receipts with Automatic Clearing in Receivables. For this reason, we recommend that you use Cash Management to clear your receipts and payments.

If you use the Oracle Payables Automatic Clearing for Future Dated Payments utility to clear future dated payments made with the future dated payment method, Payables performs the accounting for cash clearing. You can match payments cleared in this manner with bank statement lines in Cash Management.

Example of Reconciliation with Automatic Clearing

You have set up an automatic receipt for 100 FF, with an exchange rate of 5 FF=1 USD. On its clearing date, the Automatic Clearing program clears the receipt for 100 FF (20 USD). The Receipt Class for this receipt has the following options:

Creation Method: Automatic

Require Confirmation: No

Require Remittance: No

Require Bank Clearance: By Automatic Clearing

Your bank statement shows that the payment cleared for 100 FF, with an exchange rate of 4 FF to 1 USD, representing a gain in your functional currency of 5 USD.

When you transfer your receipt information to your general ledger, Journal Import creates a journal entry to record the reconciled receipt along with the realized gain.

Activity Accounting Entries

Enter invoice for 100 FF
(exchange rate: 5 FF = 1 USD) DR Accounts Receivable 100 FF (20 USD)
CR Revenue 100 FF (20 USD)

Enter receipt for 100 FF
(exchange rate: 5 FF = 1 USD) DR Remittance account 100 FF (20 USD)
CR Accounts Receivable 100 FF (20 USD)

Clear receipt using Automatic
Automatic Clearing DR Cash 100 FF (20 USD)
CR Remittance account 100 FF (20 USD)

Reconcile receipt with bank
statement DR Cash 0 FF (5 USD)
CR Exchange Gain 0 FF (5 USD)

Creation Method:	Automatic
Require Confirmation:	No
Require Remittance:	No
Require Bank Clearance:	By Automatic Clearing

Activity	Accounting Entries
Enter invoice for 100 FF (exchange rate: 5 FF = 1 USD)	DR Accounts Receivable 100 FF (20 USD) CR Revenue 100 FF (20 USD)
Enter receipt for 100 FF (exchange rate: 5 FF = 1 USD)	DR Remittance account 100 FF (20 USD) CR Accounts Receivable 100 FF (20 USD)
Clear receipt using Automatic Automatic Clearing	DR Cash 100 FF (20 USD) CR Remittance account 100 FF (20 USD)
Reconcile receipt with bank statement	DR Cash 0 FF (5 USD) CR Exchange Gain 0 FF (5 USD)

Using Cash Management with Automatic Clearing

Example of Reconciliation with Automatic Clearing

See Also