Cash management module provides information relating to cash flow of the organization, by processing and analyzing all cash and bank transactions, arising out of payment of supplier’s invoices, receipt from sales invoices, stand alone payment and unallocated payment/receipts.

Cash management module also allows analyzing financial transactions for a given period of time and provides information regarding sources of fund and use of fund to ensure liquidity in order to meet payment obligations of the organization.

A typical payment/receipt flow in an organization

Integration with other modules

1. Accounts payable where from processed purchase invoices are received.
2. Accounts receivable wherefrom processed sales invoices are received.
3. General Ledger where transactions processed within this module are posted.

Maintaining Master Data: Some of the master data parameters for cash management modules are

1. Maintain payment/receipt method: This will determine how payments/receipts are processed, for which following parameters are needed to be defined:
   1. Whether automatic (where invoices or receipts are selected automatically depending upon payment term) or manual payment/Receipt.
   2. Maximum Amount per Business Partner in a single payment batch.
   3. Bank Account/Bank Address for making/ receiving payments.
   4. Output option-whether paper (cheque) or file (Direct debit).
   5. Composing Options – Where receipt/payment are processed individually (remittance) or combined for a number of invoices.
2. The bank relations: Where details of currency (home currency/ foreign payment), type of bank, whether blocked for payment or receipt, default priority etc. are maintained.
3. Linking to General Ledger – Defining of several chart of accounts related to posting of various stages of transactions processing within cash management to General Ledger, such as anticipated payment, anticipated receipts, cheque issued not realized.
4. Payment authorization – Maximum amount a user can pay to a supplier or if the user is authorized to make advance payment.

Functionality of Cash Management module

1. Supplier Payment – The standard procedure for supplier’s payment is given below. However a variation of this process is followed for payment relating to standing order (where payments are made without an invoice), payment against proforma invoices, stand alone payment etc
   1. Select and compose invoices for payment
   2. Print payment advice list
   3. Modify payment advice
   4. Reconcile amount as per payment advice and invoice
   5. Assign bank
   6. Print cheque or post bank orders in an electronic file.
   7. Post cash transactions to general ledger

   A flow chart showing supplier payment procedure is given below:

   

2. Receipt of sales invoice amount:
   1. By Cheque:
      1. Cheque received from customer (anticipated receipt)
      2. Cheque sent to bank (cheque anticipated status).
      3. Cheque paid by bank (bank relation-reconciliation).
   2. Direct debit: Applicable for customers who have authorized the organization to directly debit their bank accounts.
      1. Select Invoices for Direct Debits
      2. Direct Debit Advice
      3. Compose Direct Debits
      4. Assign Banks to Direct Debits
      5. Audit Direct Debits
      6. Create Direct Debit Orders
      7. Print Remittance Letters
      8. Post Direct Debits into general ledger.
3. Cash flow Forecast: This functionality provides an insight of the projected liquidity position of the organization at a certain point in the future. While forecasting cash flow the system uses available data regarding I)purchase orders and purchase invoices, ii) sales quotation, sales order and sales invoices iii) standing orders and iv) financial budgets.