Oracle Payables Reconciliation Accounting (Oracle Cash Management User's Guide)


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Oracle Payables Reconciliation Accounting

Cash Management enables you to reconcile payments you created in Oracle Payables against your bank statements. You can use Cash Management to:

Automatically account for the delay in bank clearing of payments by crediting a cash clearing account when you issue a payment, and clear the balance with a cash account when you reconcile the payment.

Automatically account for differences between the amount cleared and the original payment amount, whether they are due to exchange rate fluctuations, bank charges, or bank errors.

When you reconcile your payments with Oracle Cash Management, the system automatically creates accounting entries to the Cash, Cash Clearing, realized Gains and Losses, Bank Charges, and Bank Errors accounts you specified in the Oracle Payables Banks window. You transfer the accounting entries resulting from Cash Management payment reconciliation to General Ledger from Payables.

Realized Gains and Losses

Cash Management automatically calculates your realized gains and losses, caused by exchange rate fluctuations, between payment creation and payment reconciliation time. Oracle Payables, on the other hand, calculates your realized gains and losses between invoice entry and payment issuance time.

Note: You must specify exchange rates for foreign currency payments to be reconciled.

Miscellaneous Payments

You can create miscellaneous payments directly from Cash Management to account for transactions such as bank charges. However, miscellaneous payments are actually created as negative miscellaneous receipts in Oracle Receivables. As a result, the reconciliation accounting for Receivables applies to these transactions.

Unreconciling a Payment

When you unreconcile a payment in Cash Management, it creates reversing entries if you have already posted the reconciled payment. Such actions in Cash Management automatically update information in Payables, and you can transfer these entries to General Ledger by submitting the Payables Transfer to General Ledger program. If you have not yet posted the reconciled payment, Payables deletes the reversing entries.

Reversals and Unclearing

You can use Cash Management to reverse reconciled transactions. You can also undo the cleared check status of a reconciled payment, whether that payment was originally cleared in Cash Management or Payables. When you undo the clearing, the check status reverts to Negotiable and, if you use a cash clearing account, the entry that debited the cash clearing account and credited cash is reversed.

Transferring Cash Management Transactions to General Ledger

You transfer the accounting entries generated in Cash Management to your general ledger when you transfer payments using the Transfer to General Ledger program from Payables. Payables performs the following accounting, depending on whether you have enabled the Allow Reconciliation Accounting Payables option:

Enabled: Payables transfers each payment you issue twice--once as an unreconciled payment and once again as a reconciled payment. The system creates an accounting entry for unreconciled payments to debit the AP Liability account and credit the Cash Clearing account you specify. Once you reconcile the payments in Cash Management and then transfer them using Payables, Payables creates an accounting entry to debit the Cash Clearing account and credit the Cash (asset) account. Payables also creates accounting entries to record bank charges, bank errors, and exchange rate gains or losses that occur between payment issuance and payment reconciliation.

Not Enabled: Payables transfers each payment once. The system creates an accounting entry to debit the AP Liability account and credit the Cash (asset) account.