Understanding the Settlements Payment Process
This section discusses the process for handling settlements within Treasury.
Settlements are cash flow transactions that the system transforms into payment instructions for different financial institutions. In Cash Management you can generate settlements from bank account transfers, electronic funds transfer (EFT) requests, and fee entries. You can also generate a settlement by entering a deal in Deal Management. The settlement process involves three steps: selection, approval (an optional step), and dispatch. You first select settlements that are to be processed as payments by using the Select Settlements page. Depending on system settings, certain selected settlements must be approved prior to being processed. You can establish one of three following settlement approval methods:
No approval required.
Manual settlement approval, performed by an authorized user (or users) by using the Settlement Approval page.
Automatic settlement approval, performed by PeopleSoft Workflow.
If the financial sanctions service is enabled and the bank that is being used to pay requires validation, the system automatically performs a search for the matches between the names and addresses entered on the settlement with those on the financial sanctions list. This functionality is enabled on the Financial Sanctions Options page by selecting the Enable in Treasury Settlements check box.
See Financial Sanctions Options Page.
Next, the Financial Sanction Validation check box must be selected on the Bank Information page. Settlements transacted through these banks will initiate the financial sanctions comparison upon there selection.
Once the settlements are approved, they are either sent to Financial Gateway where they are dispatched to a financial institution using the Dispatch Payments page or obtained by the Pay Cycle Manager for processing. The system processes payments according to the pay method that is defined on the External Accounts - Payment Methods page. Depending on the payment method type, you can specify that the payment be settled through one of two methods: PeopleSoft Financial Gateway or the Payables Pay Cycle Manager. Within Financial Gateway, the dispatch process transforms these settlements into payment files, and submits them to the appropriate institution.
For payments that are set to be processed through Financial Gateway, you use the pages and functionality that is discussed in the PeopleSoft FSCM: Financial Gateway documentation.
For payments that are set to be processed through Payables Pay Cycle Manager, you should refer to the PeopleSoft FSCM: Payables documentation about Processing Pay Cycles to process these types of payments.
Note: If deal approval is required, then related deal transactions do not appear for selection on the Select Settlements page until the deal is approved.
Settlement selection and settlement approval functionality are integrated with PeopleSoft Workflow. When you select or approve settlements, the system routes workflow notifications to defined user's worklists, alerting them that the settlements are being processed.
If you implement multiple levels of approval, the system automatically routes the approval through the levels until the appropriate user authorizes it.
For example, you establish the following two levels of approval:
Administrator, with a 50,000 USD limit.
Manager, with a 100,000 USD limit.
If the administrator approves a settlement of 75,000 USD, the system does not set the settlement status to approved as the amount is over the defined approval limit. Instead, the system routes the settlement to the manager's worklist for approval. The manager can then select settlement approval work items on the worklist to access the Settlement Approval page, and approve the settlement.
You use one of two approval methods: manual settlement approval or automatic settlement approval. When using automatic settlement approval, you choose between a PeopleTools Workflow process called Virtual Approver and the Approval Framework. Once authorized, whether manually or automatically, you process the settlements for payment.
See the product information for PeopleTools: Workflow Technology "Defining Approval Processes," Understanding Virtual Approver.
See the product information for PeopleSoft Approval Framework.
This diagram illustrates the settlement process:
The settlement process using automatic approval or manual approval, from cash flow transactions through Financial Gateway or Pay Cycle Manager
Note: If you're enabling automatic approvals, you must select the approval method on the Treasury Options page. Also, you can only authorize settlements up to the maximum approval limit with Virtual Approver.