Cash Clearing Process
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.
Related Links
You May Also Like
-
What is Account Reconciliation?
Before you understand the Bank Reconciliation Process it is important to understand what is account reconciliation and why it is carried out.
-
How the inflow and outflow of cash is linked to the operating cycles of the business? Learn the cash management process in an enterprize and it's key components.
-
Why enterprises need cash management. What is the purpose of having a well defined cash management process?
-
Unravel the mystery behind clearing. Why we use clearing accounts. Find the relevance of word "Clearing" in business context.
-
Treasury has increasingly become a strategic business partner across all areas of the business, adding value to the operating divisions of the company. Managing activities that were traditionally carried out within the general finance function. Learn about the drivers for this change.
-
The topic for this lesson is "Introduction to Cash Management Process". We start with the learning objectives for building requisite functional expertise in cash management process.
-
So many codes in the lines that are there in a Bank Statement. It contain lots and lots of meaningful information that can help automated many tasks. Explore more!
-
Many different accounts are used in finance. Understand the representation and nature of clearing account in context of accounting, finance and ERP Systems.
-
Disbursement Float is the time taken from payment creation to settlement. Collection float is the sum total of time taken by Payment Float; Mail Float; Processing Float and Availability Float. Learn more!
-
Account Reconciliation – How? Learn the three key attributes to perfom account reconciliation.
