Revenue and Cash Controls

This topic covers Enabling Cash Controls.

Enabling Cash Controls

Enable cash controls to fund the cash control budget from standard and miscellaneous receipts and to allow payment of invoices only when funds are available in the cash control budget.

When you enable cash controls for a ledger, a cash control budget is automatically created. You can modify this control budget to meet your business needs before using it.

To enable budgetary control validation on Receipts, enable the Receivables receipt funds the cash budget check box.

Note: Cash budget funding with Receivables receipts only applies to ledgers with business units enabled for Multifund Accounting.

To enable budgetary control validation on Payments, enable the Payables payment consumes the cash budget check box.

Note: If you’re not budgetary controlling expenses, that is, not creating procure to pay control budgets, but you want to enable cash controls for Payables payments, then you must also enable Budgetary Control for your ledger and the Payables invoicing business function for your business unit in the Edit Budgetary Control and Encumbrance Accounting page.

Accounts in Journals Subject to Cash Controls

This region determines which accounts from journal entries will impact the cash control budget.

For example, enter your bank account’s cash account. Journals for transactions not reserved in the subledger that post to cash account, such as manual journals or journals from other sources, will be budgetary controlled against the cash control budget in GL.

Debits to the cash accounts are considered negative expenditures and increase the cash control budget funds available balance. The opposite is true for credits to the cash accounts and the funds balance is decreased as an expenditure.

Procure to Pay control budgets aren’t applicable to journal entry lines with these cash accounts. Instead, they’re only applicable to a cash control budget.

Note: Reserved transactions will not be reprocessed when enabling or disabling accounts in this region.

To avoid overstating the cash budget, it is recommended to assign different natural accounts on these receivables remittance bank GL accounts rather than the natural account defined for cash:

Receipt Confirmation
Remittance
Unapplied receipts
Unidentified receipts
On-Account receipts

For example, this table illustrates how to set up the remittance bank account so that the cash budget isn't overstated when Receivables journals are posted in General Ledger.

Remittance Bank Account Setup

Remittance Bank GL Accounts	Remittance Bank GL Accounts Natural Account Value	Add to Accounts in Journals Subject to Cash Controls?
Cash	1111	Yes
Receipt Confirmation	1172	No
Remittance	1173	No
Unapplied Receipts	1174	No
Unidentified Receipts	1175	No
On-Account Receipts	1180	No

To illustrate how the assigned accounts on the remittance bank account impacts the cash budget balance let's look at these examples:

Example 1: Remittance Bank Account’s GL Accounts Assigned Different Accounts Results in a Correct Cash Budget Balance

For this example, let's assume these:

Budget account is fund-account for the cash control budget.
Account 1111 is enabled in the Accounts in Journals Subject to Cash Controls region.
The Remittance Bank Account, called RBA1, assigned these GL Accounts:
- 1111 for cash
- 1172 for Receipt Confirmation
- 1173 for Remittance
Invoice, INV1, is for $60 with fund 0006 assigned as the revenue distribution.
The cash funds available balance for 0006-1111 is $0.
You don’t want to allow payments to be paid for 0006-1111 when there are insufficient funds.

This table shows how different transactions impact the cash control budget.

Number	Step	Fund- Account	Amount	Cash Budget Funds Available Amount	Notes
1	In Receivables, create a receipt in confirmed status that is applied to invoice INV1 with the remittance bank account RBA1.	0006-1111	$60	$0+$60=$60	Any accounting that impacts the Cash GL account won't be budgetary controlled in General Ledger and has a funds status Reserved in subledger.
2	Create accounting, post and reserve in GL the receipt created in step 1.	0006-1172 (Receipt Confirmation GL Account)	$60 (debit)	No impact	The journal entry is budgetary controlled, but not against the cash control budget because the account (1172) isn't assigned in the Accounts in Journals Subject to Cash Controls.
3	In Receivables, create remittance for the receipt created in step1. Receipt is now in Remitted status. Create accounting, post and reserve in GL.	0006-1173 (Remittance GL Account)	$60 (debit)	No impact	The journal entry is budgetary controlled, but not against the cash control budget because the accounts (1172 and 1173) aren't assigned in the Accounts in Journals Subject to Cash Controls.
3		0006-1172 (Receipt Confirmation GL Account)	$60 (credit)	No impact
4	In Cash Management, reconcile receipt in step 1. Receipt is now in Cleared status. Create accounting, post and reserve in GL.	0006-1111 (Cash GL Account)	$60 (debit)	No impact	The journal entry isn’t budgetary controlled and has the status of Reserved in subledger.
4		0006-1173 (Remittance GL Account)	$60 (credit)	No impact
5	In Payables, create and reserve a Payment Process Request.	0006-1111	$110	$60-$110=<$50>	Funds available is negative and the payment isn’t allowed.

Example 2: Remittance Bank Account’s GL Accounts Assigned the Same Account Results in an Overstated Cash Budget Balance

For this example, let's assume these:

Budget account is fund-account for the cash control budget.
Account 1111 is enabled in the Accounts in Journals Subject to Cash Controls region.
The Remittance Bank Account, called RBA1, assigned these accounts:
- 1111 for cash
- 1111 for Receipt Confirmation
- 1111 for Remittance
Invoice, INV1, is for $60 with fund 0006 assigned as the revenue distribution.
The cash funds available balance for 0006-1111 is $0.
You don’t want to allow payments to be paid for 0006-1111 when there are insufficient funds.

This table shows how different transactions impact the cash control budget.

Number	Step	Fund- Account	Amount	Cash Budget Funds Available Amount	Notes
1	In Receivables, create a receipt in confirmed status that is applied to invoice INV1 with the remittance bank account RBA1.	0006-1111	$60	$0+$60=$60	0006 is the fund from the invoice’s revenue distribution and 1111 is from the remittance bank account’s cash GL account. Any accounting that impacts the Cash GL account won't be budgetary controlled in General Ledger and has a funds status Reserved in subledger.
2	Create accounting, post and reserve in GL the receipt created in step 1.	0006-1111 (Receipt Confirmation GL Account)	$60 (debit)	$60+$60=$120	The journal entry is budgetary controlled and added budget 0006-1111. This is an overstatement of funds available since the receipt is only for $60.
3	In Receivables, create remittance for the receipt created in step1. Receipt is now in Remitted status. Create accounting, post and reserve in GL.	0006-1111 (Remittance GL Account)	$60 (debit)	$120+$60=$180	The journal entry is budgetary controlled, but the impact to funds available is $0 since the budget account is the same for both the debit and the credit. The funds available is still overstated.
3		0006-1111 (Receipt Confirmation GL Account)	$60 (credit)	$180-$60=$120
4	In Cash Management, reconcile receipt in step 1. Receipt is now in Cleared status. Create accounting, post and reserve in GL.	0006-1111 (Cash GL Account)	$60 (debit)	No impact	The journal entry isn’t budgetary controlled and has the status of Reserved in subledger. The funds available is still overstated.
4		0006-1111 (Remittance GL Account)	$60 (credit)	No impact
5	In Payables, create and reserve a Payment Process Request.	0006-1111	$110	$120-$110=$10	Funds available for fund 0006-8111 should be $60, and the payment shouldn’t have been allowed. Since the accounting for the receipt confirmation was for account 1111, this increased the funds available balance by an extra $60, and this payment was allowed.