In automated clearing, Bank statement details are automatically matched and reconciled with system transactions. Learn how this process works and what are the perquisites to enable the same.
Automated Clearing
In automated clearing, Bank statement details are automatically matched and reconciled with system transactions.
This method is ideally suited for bank accounts that have a high volume of transactions.
The following three are the basic steps are involved in Automated Clearing Process:
1 Map Transaction Codes
Bank statement lines are coded to identify the type of transaction the line represents. Since each bank might use a different set of transaction codes, the first step towards automatic clearing is to map each code that is used by a particular bank for which the transactions need to be reconciled.
2 Matching Criteria
Automated matching can only be done if you can find a common identifier between the transaction details as recorded in your sub ledgers and the bank statement.
Automated systems generally match a bank statement line against a payables payment transaction, receivables receipt transaction, payroll disbursals and miscellaneous transactions using a transaction number (such as the payment or deposit number), bank account, amount, and currency.
3 Reconciliation Tolerance:
Reconciliation tolerances are defined in the system as percentages and/or amounts.
If tolerance is defined then the difference between the statement line and sub-ledger transaction line will be auto-reconciled when it is within the tolerance limit. The system also creates a miscellaneous transaction for the difference between the remittance batch amount and the bank statement line.
Bank Reconciliation is a PROCESS to Validate the bank balance in the general ledger With Bank Statement. Learn the bank recon process.
Cash Clearing – Accounting Entries
The Cash Clearing process enables you to track amounts that have actually cleared your bank. Learn the steps and accounting entries that gets generated during the cash clearing process.
The objective of Financial risk management is to protect assets and cash flows from any risk. Treasury function works to accurately assess financial risks by identifying financial exposures including foreign exchange, interest rate, credit, commodity and other enterprise risks. Learn about the various risks that are managed by treasury.
The terms Treasury Management and Cash Management are sometimes used interchangeably, while, in fact, the scope of treasury management is larger and includes funding and investment activities as well. Learn all about Treasury Management here!
Have you ever wondered what is actually a Bank Statement and why it is needed. What is the information that is available in a bank statement?
Technology has enabled the treasury function by providing various solutions to manage it's complicated tasks. This article explains various types of treasury management systems available in the market.
In the previous article we talked about the meaning of the account reconciliations. Now as you now the definition of account reconciliation, in this article let us see why it is carried out.
Unravel the mystery behind clearing. Why we use clearing accounts. Find the relevance of word "Clearing" in business context.
In manual clearing, Bank statement details are to be matched manually considering certain rules. Learn the steps involved in manual clearing of bank transactions.
© 2023 TechnoFunc, All Rights Reserved