The Cash Clearing process enables you to track amounts that have actually cleared your bank. Till reconciliation happens the amounts are parked in 'Cash Clearing Account'.
Cash Clearing Process
Rather than hitting the bank accounts, in cash clearing systems, the cash/bank transactions are parked in 'Cash Clearing Account'.
Once reconciliation with bank statement is done the reconciled amount is transferred to Cash/Bank Account.
This provides a clear snapshot of lying unreconciled amount in the organization at any point in time.
The Cash/Bank account reflects only the balance that has been reconciled with the transactions of Bank.
The Cash Clearing process enables you to track amounts that have actually cleared your bank versus amounts still floating in the banking system.
The Cash Clearing process creates accounting entries to record the actual settlement in your cash/bank account in general ledger only when you clear the payment transactions in the system during the reconciliation process.
Till reconciliation happens the amounts are parked in 'Cash Clearing Account'.
It creates the entries in the bank account only when the payments have cleared the bank AND they have been reconciled as cleared by the bank reconciliation process.
The system does not create cash/bank accounting entries for unreconciled DEPOSITS/payments.
This provides a clear snapshot of lying unreconciled amount in the organization at any point in time.
Before we dive into cash management, let us fist understand what we mean by cash and what constitutes cash in context of cash management process.
Treasury Management - Benefits
Effectively using treasury management with cash management and trade finance products brings tangible benefits to both corporates and financial institutions. Let us discuss some tangible benefits of treasury function.
Introduction to Cash Clearing Process
Unravel the mystery behind clearing accounts. Learn why clearing accounts are used in finance and accounting. Learn why so many clearing accounts are defined in ERPs and Automated Accounting Systems.
Introduction to Bank Reconciliation Process
These set of articles provide a brief introduction to Bank Reconciliation Process. This topic not only discusses the meaning of bank reconciliation process but also discusses how this process in handled in new age ERPs and Automated Reconciliation Systems.
The Cash Management component ensures that the enterprise has sufficient liquidity for payments that are due and to monitor payment flows. Learn how treasury plays an important role in cash management for the enterprise.
Cash Management - Integrations
Cash Management integrates cash transactions from various sources like Receivables, Payables, Treasury and creates reconciliation accounting entries after matching transactions with Bank Statements.
In manual clearing, Bank statement details are to be matched manually considering certain rules. Learn the steps involved in manual clearing of bank transactions.
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 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!
What is Invoice to Cash Process
In this article, we will explore the business process area known as; Invoice to Cash; Also known as I2C. Learning objectives for this lesson are: Meaning of Invoice to Cash Process; Sub Processes under Invoice to Cash; Process Flow for Invoice to Cash; Key Transactions Fields; Key Setups/Master Data Requirements.
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