Explore cash and bank management concepts

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You can use Cash and bank management to maintain the legal entity’s bank accounts and the financial instruments associated with those bank accounts.

These instruments include deposit slips, checks, bills of exchange, and promissory notes. You can also reconcile bank statements and print bank data on standard reports.

The Cash and bank management module is closely connected to the Accounts receivable and Accounts payable modules.

Business processes

Diagram depicts the cash and bank management business processes: deposit bank funds, reconcile bank accounts, transfer bank funds, and manage letters of guarantee.

There are four business processes under cash and bank management:

  • Deposit bank funds.

  • Reconcile bank accounts.

  • Transfer bank funds.

  • Manage letters of guarantee.

Deposit bank funds

By using the Cash and bank management module in Finance, you can maintain your legal entity's bank accounts and the financial instruments that are associated with those accounts. This might include deposit slips, bills of exchange, promissory notes, or checks.

A deposit slip is a document used to deposit checks, credit card notes, and cash into a bank account. Use the Deposit slip page to view and manage deposit slips for payments into bank accounts.

You can cancel a deposit slip payment if a customer payment is invalid. If you have already reconciled the deposit slip in the bank statement, you cannot cancel the payment.

Reconcile a bank account

When you receive a bank statement, you should periodically reconcile legal entity bank transactions with the transactions on the bank statement.

You cannot reconcile a bank statement with a bank account if any of the checks or deposit slip payments listed on the statement currently have a status of Pending cancellation. After a reviewer posts or rejects a check reversal or deposit slip payment cancellation, the status is no longer Pending cancellation, and you can reconcile the bank account.

  • To learn more about bank statement reconciliation, access the corresponding link in the Summary unit at the end of this module.

Manage letters of guarantee

A letter of guarantee is an agreement by a bank (the guarantor) to pay a set amount of money to someone (the beneficiary) if a bank customer (the principal) defaults on a payment or an obligation to the beneficiary. Letters of guarantee aren't transferable. They apply only to the beneficiary who is named in the agreement. The principal can request an increase or decrease in the value of a letter of guarantee, subject to the terms of the agreement.

You can use the Letter of guarantee page to complete these tasks:

  • Create correct ledger entries and eliminate manual entry.

  • Record all monetary and nonmonetary transactions, and track balances of letters of guarantee.

  • Record and track the status and expiration of letters of guarantee.

  • Generate a report that lists the banks that are holding letters of guarantee.

Settlements

During settlement, the transactions on one document are applied to the transactions on another document to increase or decrease the balance of each document. For example, a payment can be applied to an invoice. Various types of transactions can be settled at different times through different methods. The settlement process can also generate new transactions.

Settlement can occur between any transaction types that affect the vendor balance or customer balance. These transaction types can include invoices, payments, credit memos, and fees. Any transaction type can be settled against any other transaction type.

The following transaction types are available for use in single-company and cross-company settlements:

  • Settlement

  • Cash discount

  • Foreign currency revaluations (includes realized and unrealized foreign currency revaluations)

  • Penny difference

  • Overpayment/underpayment

Note

To learn more about settlement for centralized payments, access the corresponding link in the Summary unit at the end of this module.