ERP for Cash Management
Cash management is a fundamental application that allows you to manage your accounts. It includes banks, savings institutions and charge cards. All the appropriate functions are conveniently centralized in one location. The application provides facilities for accounting staff to receive payments, make deposits, print checks, record manual checks, record funds transfer and card charges, pay off charges and reconcile your cash accounts.
Cash management with ERP offers two options for making payments. First, the quick check feature allows you to print a check for a vendor immediately, but not against a specific bill, which is comparable to the bill centric payment cycle found in accounts payable.
You may substantiate the transaction by attaching a support document. Secondly, you can record and post checks you write through a checkbook. The application also smoothly handles the transfer of funds from one cash account to another.
You can examine the cash balance report to verify the balances of your account to determine if you need to make a transfer, and you can also check to see if there are sufficient funds.
Through ERP, the received payments can be deposited in two ways. If you have deposited the payment already, the receipt function records both the receipt of payment and its deposit.
However, you may also receive payments, accumulating them in an account for later deposit, at which point you can create a “deposit slip” on the system, which posts the amounts of the deposits.
Reconciliation facilities are provided for all checking, savings and charge card accounts. Upon your first reconciliation, you enter the initial items, the statement ending balance and Bank charges, and then select all the items that have cleared. The register allows you to drill through the details quickly and conveniently.
ERP and Workstations
Do you know the best way to integrate cash management activities with an ERP system? ERP vendors claim that treasury workstations are unnecessary and even dilute integration, while workstation vendors affirm that ERP systems keep running into essential activities they cannot perform.
For years vendors of enterprise resource planning systems and workstations helped each other. After all, their clients wanted to use both software packages and wanted them to work together smoothly. So the two camps made strategic alliances and built elaborate interfaces to link their applications.
Nowadays vendor groups are debating about the best way to integrate cash management activities with ERP. Workstation vendors suggest that companies now have three options in cash management: They can use basic cut and paste functionality to move data from their workstation into their ERP system (this type of integration avoids major programming but requires manual action every time data moves between the systems) or they can use new interfaces between the software systems that automatically import data from one into the other. The third option is to use an ERP package that includes a cash management module.
ERP Strengths for Cash Management
With a growing number of installations and new power to perform cash management tasks, ERP vendors are arguing that workstations are redundant attachments that dilute integration and increase maintenance costs.
Bankers are generally neutral in this debate. Some companies are willing to accept less functionality if they gain easier installation; they manage cash within their ERP systems. Others prefer to sacrifice integration for additional functionality, so they stick with a workstation. But banks do not care, as they make the same information available in whatever format – or over whatever network – their customers need. The transaction data is the same. This is true whether the information is flowing from the bank to the company, or from the company to the bank.
A workstation can handle the various components of treasury and cash management, including foreign exchange and debt and commercial paper, but it cannot do what an ERP system does: bring in accounts payable, accounts receivable, sales order and purchase order information.
ERP helps you to have much more information available when you need to set your cash position and determine your thirty days debts. It builds the funds flow by just pushing a button, and the funds flow automatically does the accounting entries.
Customization is Really Important
Because moving cash management to an ERP system does not eradicate the need for integration with the outside world, it does not eliminate compatibility problems. Integration is complicated by the industry’s lack of standards. You can plug in a standard interface along the line and have it work, but they almost always have to be customized.
Treasury workstations come with a general ledger interface, but you need a different interface for each ERP system, and then you have to customize the interface. This is because every company has its own idea of how things should be done.
ERP systems run an internal world in which the parts communicate instantly and seamlessly with each other. It offers treasury components to manage cash, deals and risk. The move of cash management into an ERP system might come as part of a reengineering project that goes after inefficiencies in accounting practices.
The ERP system allows Business units to access banking data at any time. Before ERP they could request information and they might be receiving it before the end of the day. With ERP employees can come in on their own any time and query against the data. It’s all self-service.
Benefits of Cash Management with ERP
Here you can find which functions of ERP allows you to perform related to cash management: unlimited numbers of checking, savings, charge accounts, and integration between accounts payable and accounts receivable. The regulation of information is also important, and every employee will only see what they have permission to see. It is also useful to establish access permissions such as: display only, excluded, and add /change /delete or supervisory.
Furthermore, this option permits you to receive payments, make deposits, print checks, record manual performed checks, and record funds transfers and card charges. The option will also allow you to accumulate receipts into undeposited funds accounts for later deposit, or record the immediate deposits you make.
Some additional options allow you to record funds transfers from any cash account, print quick checks to vendors and record manually written checks, and you can also set up specific security groups, thus limiting access to a defined group of users.
You can manage credit card transactions easily by transaction or by statement and checks can also be voided. The transactions are reversible, and you can generate period end audit reports such as bank account activity, cash trend analysis and periodic cash flow projections.
Some features appreciated by the users are the ability to post on current and future periods, or reopen posts for a prior closed period. You ca pay off credit card charges via locally printed or online checks, cash or funds transfer and reconcile cash accounts easily.
- Generate reports including bank, check, deposits, card charge registers and cash balances.
- Easy access to the registers of vendors, customers and transactions.
- Reports are viewable online, or exportable to Excel files, text files or PDF files.
- Post cash management transactions in detail or summary to the general ledger
- Set historical data retention parameters.
- Allow the creation of private batches to limit access to a batch to a single user.
- Define your own tender types for cash, checks, credit cards, money orders, drafts or coupons.
- Define an unlimited number of user – defined transaction types with a default offset account for quick processing of Bank transactions.
- Set up Bank accounts and enter transactions in currencies other than your organization’s home currency.
- Create multicurrency deposits. Transfer cash from Bank accounts with different currencies.
- Create private batches to prevent unauthorized access.
- Place a batch on hold to prevent posting to the general ledger.
- Update daily balances for a bank account automatically when transactions are posted from accounts payable or accounts receivable.
- Transfer funds from bank accounts with the same or differing currencies.
- Automatically create deposits in cash management when posting cash receipts in accounts receivable.
- Manually post miscellaneous deposits such as credit card payments.
- Combine undeposited manual accounts receivable cash receipt batches into a single deposit to a specific bank account.
- Import electronic bank files of cleared transactions from your bank account for automatic reconciliation and mark them accordingly. Confirm cleared transactions quickly and efficiently.
- Enter any bank transaction, such as bank fees, interest or adjustments, on the fly while reconciling your account.
Different types of Reports
- Daily cash flow projections (detail and consolidated)
- Periodic cash flow projections (summary, detail and consolidated view)
- Daily cash balance (summary and detail)
- Cash trend analysis (cash position summary and collection/ payment detail)
- Bank activity (summary and detail)
- Cash management options list
- Future cash flow list
- Bank list
- Bank account list (summary and detail)
- Tender type list
Period End Audit Reports
ERP cash management modules enable you to quickly and easily handle and track a wide range of bank transactions – including deposits, withdrawals, adjustments, interest earnings and charges, bank fees and transfers between accounts, with pinpoint accuracy. In addition to this, the module gives you fast, convenient access to transaction details and source information.
It also simplifies deposit generation by allowing you to automatically create deposits in the system when posting cash receipts in accounts receivable. Integration of cash management with accounts payable and accounts receivable enables you to access payment and deposit information by bank account, confirming transactions and import cleared transactions from your bank for automatic reconciliation.