1. Cash Flow Engine User Guide
  2. Introduction to Oracle Cash Flow Engine
  3. Key Benefits

2.1 Key Benefits

OFSCFE calculates cash flows at the most granular level of account/instrument and sometimes at sub-account level if tiered-balance interest rate is used or multiple repayment types are used for same account. Since no aggregation is performed, it allows you to do micro-analysis of each payment. You can choose to generate cash flows using pure contractual terms agreed with customer or incorporate certain customer behaviour like prepayment, redemptions, non-maturity profiles, and so on.

Since cash flows are at an instrument level, you can perform unlimited dimensional analysis for an advanced insight. Few ways in which you can benefit from this are:

  • Improve insight into branch liquidity and cash-in-hand
  • Optimize payables and receivables by focusing on customers with large exposure
  • Cash management
  • Create analytics-driven efficient collections strategy, chase late payers promptly and regularly

In addition to cash flows such as principal, interest, prepayment, maturity, etc, the CFE calculates and stores a variety of financial measures for greater insight and auditability:

  • Accrual period, Rate set date
  • Accrual adjusted and Compounded interest rate used for calculations
  • Repricing balance, Before and after repricing interest rates
  • Accrued interest
  • Accumulated interest amount, Interest credited
  • Core, Volatile runoff for non-maturing deposits
  • Devolvement and recovery runoff for products like bank guarantee
  • Non-performing runoff
  • Periodic & Life cap effect rate and amount
  • Tease effect rate and amount
  • Negative amortization balance
  • Prepayment rate and runoff
  • Mortgage offset account expected balance and runoff

OFSCFE is designed to operate on instrument-level data, using Oracle’s highly accessible and flexible financial data model. Each account is modelled independently on a daily cash flow basis using daily forecasted interest rates, where applicable.

A wide range of products are supported for both on-balance sheet and off-balance sheet, with a variety of amortization and repricing methods, including:

  • Revolving loans, Mortgages, Consumer loans, Leases
  • Negative amortization mortgages
  • Mortgage offset accounts
  • Irregular payment and repricing schedules on, for example, agricultural or construction loans
  • Step-up and step-down loans
  • Balloon and Bullet instruments
  • Instruments with different interest and principal frequency and dates
  • Bonds and money market instruments
  • Open and fixed maturity deposits
  • Tiered rate loans and deposits
  • Annuities
  • Swaps, Caps, Floors, FRAs, Forwards and FX Derivatives
  • Inflation indexed instruments
  • Interest Only instrument

Unique payment, interest rate and holiday characteristics are directly used to accurately model cash flows for multiple time horizons:

  • Conventional, simple Interest and Level Principal for regular payments
  • Principal only
  • Interest only
  • Schedule and Patterns for irregular payments
  • Fixed, floating, adjustable rates and pattern (for irregular repricing)
  • Interest repricing & payments in advance and arrears
  • Multiple day count conventions
  • Caps and floors, both absolute and incremental
  • Gross and Net Rates
  • Margin, Spread
  • Rate cap & floor - Life
  • Rate increase & decrease limit – periodic
  • First reset cap/floor (tease)
  • Lag, rounding
  • Compounding and interest credited
  • Holiday adjustments