Banking on the Cloud

OpenWorld 2018
Banking on the Cloud
Mahesh Vallampati
Cloud ERP Consulting Manager
North America Consulting
North America Applications
October 25, 2018

Copyright © 2018, Oracle and/or its affiliates. All rights reserved. |12/18/2018 2
Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
File Transmission to
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
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15

Team Dynamics
Bank Team Payables Team Implementation Team
• Each payment method has
different systems and different
resources on the bank side
• The Bank Project Manager and
Coordinator is the facilitator for
different resources across
different payment platform
• The Customer Payables team has
change management
considerations
• The Customer Payables team will
also own the solution after the
implementation team and Bank
Team have rolled off
• The nuances of the check
document, the bank specific
formatting considerations for ACH
and Positive Pay, The Oracle
specific considerations
• Skill levels of the team for BI
Publisher tool and the flexibility of
the Oracle Payment Process

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

Copyright © 2018, Oracle and/or its affiliates. All rights reserved. |
Bank
Branch
Accounts
12/18/2018 6
Bank Accounts
Dallas San Francisco
Acct #1 Acct #2 Acct #3

Bank Account and Natural Accounts
Assign a unique general ledger cash account to each bank account, and use it to record
all cash transactions for the account. This facilitates book to bank reconciliation.
Natural Accounts
Cash Account Cash Clearing Account
BOA Check Disbursement
Bank ACCT #1
1050 1051
BOA ACH Disbursement
Bank ACCT #2
1052 1053
BOA Wire Disbursement
Bank ACCT #3
1054 1055
We also recommend a separate bank account for each type of disbursement to facilitate faster and better reconciliation.
An example is given below:

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

Check Stock-Check Printing in House
12/18/2018 9

Check Stock
• 2 Section
• 3 Section
Fold/Seal
• Z-Fold
• Tri-Fold
Envelope
• Type
• Seal
Key Decisions for Check and Mail
12/18/2018 10

2 Section
Address
Remittance
[More commonly Used]
[Remittance with Address Box]
[More space for Remittances]
[Minimize Fraud as check will not be visible]
Check Stub
[Measure from bottom of Stub]
3 Section
Remittance with Headers
Check Stub
[Measure from bottom of Stub]
Address
Sample Check Stock layouts – 2 and 3 Section
12/18/2018 11

• In AP Departments, where large number of checks are printed, they may have check
stock that can be sealed, folded, postal stamped and mailed by a seal/fold machine
• The fold and seal machine cannot handle overflow checks as it can fold and seal one
page only
• In that case, it is possible to set up the payment process to pay up to the number of
invoices that can be printed on sheet of the check stock
• The downside is that we will have to make multiple payments
• The fold and seal machine also has some constraints on how the document/stock is
laid out
Fold and Seal Consideration
12/18/2018 12

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
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• In general, we do not recommend using the address on the check to be displayed in the address
window of the envelope
• The check is scanned by the bank for supplier information and if the address has multiple lines,
it can throw off the bank scan and also make the formatting of the check section harder
• On the check, we just recommend Supplier Name, Address Line 1, City-State-Zip on 3 lines to
keep the formatting simple.
• On the address part of the remittance section, you can print the additional Address Lines using
the post office standards.
• The formatting of the second, third and fourth lines add complexity to the check format report
and testing should be done for all address line cases
• We recommend using the Remittance section for the address window on the mailing envelope
to print the address line
Address Section
12/18/2018 14

• The US Post Office has guidelines for how to print addresses
• http://about.usps.com/publications/pub177/welcome.htm
• The link explains the approach
• The “Attn: John Doe” should be the first line
• The Business (Supplier) Name or the person name should be the next line
• The Address Line 1 should be the next line
• The City, State and Postal Zip code with the optional 4 zip should be on the next line
Printing Address on Remittance
12/18/2018 15

• All Caps
• Size 12 font
• OCR friendly font – Arial Black,
Courier, Courier New, Tahoma
Sample Address Format
12/18/2018 16
ATTN: POSTAL CUSTOMER
ABC COMPANY
123 MAIN STREET
ANYTOWN US 98765-4321

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
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12
13
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• MICR is Magnetic Ink Character Recognition
• Elfring MICR Gauge can be procured to check the alignment of the MICR
(https://www.elfring.com/MICR-gauge.htm)
• The MICR line has three elements
– Check Number
– Bank 9 digit routing number
– Customer Disbursement Account Number in the routing bank
• The MICR has to align in the MICR gauge
• The MICR gauge can be procured on any of the e-commerce web sites
• Oracle Supplies a MICR font in the BI publisher that is accepted by banks that can be used
MICR Gauge
12/18/2018 18

Elfring MICR Gauge
12/18/2018 19

• BI Publisher supports most of the standard fonts
• https://docs.oracle.com/middleware/12211/bip/BIPAD/GUID-1EBF6921-41D4-4DB7-90A3-
BB0EF1FD534C.htm#BIPAD337 lists the fonts provided by BI publisher
• Out of the box, Oracle supports the MICR font, MICR MT (MICR____.ttf).
• MICR MT supports the E13B MICR font too.
• Customers can use the Oracle supported MICR MT font for printing checks in E13B font.
• Check Printing with MICR Fonts and Configuring Printer (Doc ID 1681859.1) is the support
document that needs to be reviewed
BI Publisher fonts and MICR
12/18/2018 20

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

• Banks have specific requirements on the format of the check document
• It is related to the scanning technology used at the banks using OCR
• So the check spec should be OCR friendly
• WHAT IS CAR/LAR/MCAR AND GETTING 100% ACCURACY?
• CAR/LAR/MCAR (Courtesy Amount Recognition, Legal Amount Recognition,
Machine CAR) is the process by which recognition engines read the numeric and
written values on a check or other payment document automatically so that
operators do not have to key in most of the data. Since recognition is never 100%
accurate, validation processes such as balancing must be used to supplement
these engines to get to this goal.
Bank Check Verification—Specs
12/18/2018 22

• It is important to use the seeded BI Publisher format for the check format as a
starting point and the MICR gauge to send the first draft to the bank for feedback
• The bank will provide feedback on specific layout areas like signature placement,
amount placement box, name of supplier etc.
• It is important to understand that the test checks are sent to a scanner and an
OCR Check is done and the better the OCR the better the success rate
• The OCR scanners at the bank are very powerful and intelligent but have some
constraints on placement of various check elements
Bank Check Verification
12/18/2018 23

• We recommend at least 2 iterations with the bank
– Use different amounts
• 0.01 to 0.99
• 1.0 to 9.99
• 10.00 to 99.99
• And so on till the largest number for the check
– Use Supplier names of different length
• The bank requires 25 checks for each verification
• So it is recommended to buy enough check stock samples and ensure the same
check stock is procured for go live without any layout changes of any kind
• The banks have a lead time of 3-5 business days
• A lead time of at least 90-120 days before go live is recommended
• Your check should be approved by the bank 30 days before go live (at least)
Bank Check Verification
12/18/2018 24

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
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• We recommend procuring two printers at the check printing location
• The printer should be of the same model and type
• The printer should be a network enabled printer
• The Printer should be a color printer
• The printer should be able to support a MICR ink cartridge
• We recommend a heavy duty printer
• We also recommend a high speed printer (20+pages a minute)
• We also recommend spread the printing load across the printers and do proactive
maintenance of the printers
• Replace the cartridge at the first sign of the diagnosis sign on the printer dashboard
• These printers should be in a secure area with limited access other than trusted and
vetted resources
Printer Procurement
12/18/2018 26

Configuring Printer in Cloud
Document ID Support Document Title
1964157.1 Setup Instructions for Printing from Oracle Cloud
2140116.1 Troubleshooting Guide For Cloud Printer
2120300.1 How To Install End Point URL SSL Certificates In Default Fusion Truststore
2121015.1 SRDC - Data Collection Request for Fusion Payments - Cloud Printing
551270.1 Linux OS Service 'cups'
1903739.1 IP Whitelist for Web Service Calls Initiated by Oracle Sales Cloud
12/18/2018 27

• Following the steps in the documents listed above and
the supporting documents should let you print
• There are several steps to perform
• Some of the steps require SR’s and working with support
and cloud Ops
• The network team, the IT support team need to work
with the Oracle team to perform the steps
• A head start will go a long way in getting the task done
on time
Configuring Printer
12/18/2018 28

• Configure a UNIX or a Windows server as a print server
• Expose the printer as an ipp service on the web server of the print server with
port 631
• Have a firewall bypass for Oracle cloud to access the printer from Oracle cloud
environment. Procure a certificate for the server from a cert provider and
register the cert with Oracle Support
• Oracle Support can provide a white list
• The printer should be secured using a userid and password using the Basic or
Digest authentication type and encryption type is SSL
Configuring Printer
12/18/2018 29

Check Printing Architecture
Print Server
Basic Authentication
Check Printer 1
Check Printer 2
IPP on Port 631
Basic SSL Authentication
with CertificateCoStar Firewall with exception for Oracle
Cloud IP Range (whitelisted)
Oracle Cloud BI
Publisher Print Server
Corresponding Print Server
Certificate configured on cloud side
as well to facilitate cert exchange
Oracle Cloud Printing
12/18/2018 30

Configure BI Publisher
12/18/2018 31

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
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11
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13
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15

• The positive pay is a simple spec the bank requires to clear checks for
disbursement when presented
• At a minimum, the positive pay file contains in each line
– Check Number
– Check Date
– Check Amount
– Payee Name (Optional but stronger verification and less fraud)
• The bank scans the check and looks at the “Pay to” on the check and tries
to match it closely to the Payee name in the Positive pay file
Positive Pay
12/18/2018 33

• The positive pay file is a position delimited format file
• It is possible to write a series of simple excel functions to parse the positive
pay file lines to verify the formatting as required by the bank
• The excel functions mid, left and right can be used to parse the file
• This will be a good check of the formatting done by the development team
• This file will have to be uploaded to the bank site for validation during testing
• The positive pay file will have to be validated in conjunction with the printed
check stock by the bank
Positive Pay File Validation
12/18/2018 34

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

• The ACH File is an electronic file and is a variant of the NACHA format
• NACHA (National Automated Clearing House Association)
• There are a few variants of ACH File
• ACH, CCD and CCD+ and CTX are variants of these files
• These files have other features other than the standard money transmission
• The CCD plus format has an additional line with the payment that can be used
to send to the supplier bank account as additional information
ACH File
12/18/2018 36

• Oracle provides sample rtf files for standard ACH format files
• These files should be used as a starting point for development
• ACH Payment Transmission File is Out of Balance by $0.01
(Doc ID 1968701.1) is a known issue
• The rtf file should be modified to handle this per the document
• Two payments of 400 and 276.84 tally to 676.83 and not 676.84
• This should be used as a test case and verified
ACH File
12/18/2018 37

• The ACH pay file is a position delimited format file
• It is possible to write a series of simple excel functions to parse the ACH file
lines to verify the formatting as required by the bank
• The excel functions mid, left and right can be used to parse the file
• This will be a good check of the formatting done by the development team
• This file will have to be uploaded to the bank site for validation during testing
ACH File Validation
12/18/2018 38

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
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• ISO 20022 is the emerging standard for payment file transmission
• ISO 20022 will be a required payment format for outsourced checks where the
bank prints and mails the check
• ISO 20022 can be used a substitute for ACH and Positive Pay file transmission
• Most major banks support the XML V3 variant of the ISO 20022 implementation
• If possible, we recommend implementing this payment format
ISO 20022
12/18/2018 40

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

• SFTP is a standard approach to transmit files (ACH and Positive Pay) to the
bank and also receive Bank Statement files in BAI2 format from the bank
• AS2 is an emerging standard for file transmission with the bank
• How To: Fusion Payment File Transmission Using SFTP Protocol
(Doc ID 1901745.1)
• This support note contains an embedded word document that has several
details on the implementation of the tasks
• One of the tasks is Proxy connectivity enablement and is listed in the next slide
File Transfer
12/18/2018 42

Proxy Settings for SFTP Connectivity
12/18/2018 43

• Once the bank provides connectivity, use a standard
SFTP client to connect and verify the IP and credentials
• Ensure the bank whitelists the Oracle Cloud IP
Connections so that the bank does not deny
connectivity due to spurious IP Address concerns (SR
with Oracle Support)
SFTP Connections
12/18/2018 44

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

Bank Statement Formats
IBAN Support From 17855962:
– ISO20022 - supported version MX
CAMT053.001.01, version
CAMT053.001.02 to be support at
some time in the future.
– SWIFT (MT940)
– BAI2
– EDIFACT (FINSTA)
– In Europe, all banks will change to a Single
Euro Payments Area (SEPA). The
International Bank Account Number (IBAN)
will be mandatory for all banking
transactions in countries that use the euro.
– SWIFT MT940 Bank Statement Format
currently does not currently support IBAN.
– Therefore this is an Enhancement Request,
as agreed with Fusion Cash
Management Development, for SWIFT
MT940 to support IBAN.
What Seeded Formats Are Available
For Bank Statements
(Doc ID 1372887.1)

• Currently, there are only two ways of uploading bank statements
– Manual
– BAI2 format
• How To Upload Bank Statements Using Spreadsheet (Doc ID 2033808.1) indicates it is not
possible to use spreadsheets to upload bank statements
• It is fairly easy to import bank statements from the bank to Oracle Cloud ERP if connectivity has
been established for ACH and Positive Pay
• Automatic Bank Statement File Import for Cash Management Cloud Service (Doc ID 2109691.1)
lists the steps to connect to the Bank and download bank statements
• Bank Statements use the SFTP get protocol to get data from the banks
Bank Statements
12/18/2018 47

• Oracle Supports only one Bank Statement per bank account per day
• How To Load 2 BAI2 Bank Statements For Same Day?
(Doc ID 2219156.1)
• This note clearly mentions if a bank provides different Bank Statements for ACH
and Checks for the same bank account, they will have to be merged offline and
imported into the system
• For ease of reconciliation, an account for checks and an account for ACH is
recommended. A separate account for wires will facilitate wire reconciliation as
well as these tend to be large amounts
Bank Statements
12/18/2018 48

• It is essential that your bank provides a BAI2 file for activity for a date range.
Most commercial banks in the US provide this feature
• Some smaller banks and credit unions may provide a csv file which will have
to be transformed to a BAI2 file
• A good understanding of the BAI2 file is essential for processing Bank
Statements
• Bank Statement Files, Transaction and Balance Codes Explained (Doc ID
1407463.1) is an essential guide
Bank Statements
12/18/2018 49

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

• CE (the abbreviation used internally ERP Cloud Financials Cash Management) is designed to facilitate book-
to-balance reconciliation, and provide accurate cash position and short-term cash forecast information
– CE automatically maintains a cash sub-ledger with copies of all bank-relevant transactions from all other ERP Cloud
and interfaced external system transactions (in R13 GL journals can also be used as an automated source)
– Bank statements are automatically downloaded to CE and automatically reconciled against those transactions using
standard bank statement download functionality and related automatic reconciliation rules
– GL transactions are automatically generated to the associated GL cash account and a GL-to-CE reconciliation report
confirms everything is in balance
• The best method that achieves book-to-balance reconciliation when a 1-to-1 relationship between GL
accounts and bank accounts is maintained
• By maintaining a dedicated 1-to-1 relationship between GL accounts and bank accounts, a book balance by
bank account is always available—this is one of the reasons we recommend a 1-to-1 relationship
Bank Reconciliation Considerations
12/18/2018 51

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

Foreign Currency Payments
Bank Exchange Rates
– Every country receiving or sending
payments has rules on what
additional information needs to be
tagged in the payment format
– For e.g. sending payments from the
US to Russia needs additional
information that will and may have to
be notified to the FBI and IRS
– Payments above $10,000 trigger all
kinds of red flags
– Banks will charge a different rate than
what is expected by the system
– This impacts Realized Gains and Losses
accounts in Payables and Receivables
– We recommend extensive testing of
the process
Foreign Currency Payments add another
layer of complexity

Foreign Currency Payments
Bank Electronic Payment Formats
– If there are only few currency
payments, we recommend using the
bank wire systems to make the
transfers
– It is faster and the bank payment
system will ensure that all relevant
information is collected
– These wires can be then recorded in
the system
– This can get very complex as each from and to
country combination has to be developed
– The invoices then have to be separated and
paid from a different paygroup
Wires

Program Agenda
Team Dynamics
Bank Accounts
Check Stock
Address Format
MICR and Fonts
Bank Check
Verification
1
2
3
4
Printers and Check
Printing
Positive Pay
ACH File
ISO 20022 XML V3
Format
and from the bank
Bank Statement
Bank Reconciliation
Considerations
Foreign Currency
Payments
Timeline
5
6
7
8
9
10
11
12
13
14
15

• Typically Bank Integrations tend to go to the wire
• We recommend starting early
• Use Cloud ERP Implementations to rethink your bank,
bank account and bank document strategy
– Changing Bank
– Book to Bank Account Strategy
– Outsourcing check printing or eliminating checks altogether
• The engagement contract with the bank takes time
• Plan on finishing Bank Integration by end of SIT
Timeline
12/18/2018 56

Q&A
Bank Integration Simplified

Thank you!

Banking on the Cloud

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