Clearing – A business concept

Clearing – A business concept

Unravel the mystery behind clearing. Why we use clearing accounts. Find the relevance of word "Clearing" in business context.

In banking and finance,

Clearing denotes all activities from the time a commitment is made for a transaction until it is settled.

In trading, clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction.

For example once a buyer agrees to buy, he can issue a cheque to the seller as proof of commitment. The seller need to get this cheque cleared through the banking system to turn the promise of payment into actual movement of money from one bank to another. This example is generally referred to as cheque clearing.

Some other examples of clearing are securities clearing, cash clearing etc.

Clearing – A business concept

cashmgmt

Related Links

You May Also Like

  • Introduction to Bank Reconciliation

    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.

  • Treasury Management

    Treasury Management – What?

    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!

  • Cash Management Process

    Cash Management - Process

    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.

  • What is a Bank Statement?

    What is a Bank Statement?

    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?

  • What is Invoice to Cash Process

    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.

  • What is Account Reconciliation?

    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.

  • Clearing Account

    Clearing Account

    Many different accounts are used in finance. Understand the representation and nature of clearing account in context of accounting, finance and ERP Systems.

  • Collection Float

    Collection Float

    Collection Float is the time spent to collect receivables. Collection float is the sum total of time taken by Invoice Float; Mail Float; Processing Float and Availability Float. Explore more!

  • Treasury - Cash Management

    Treasury - Cash Management

    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.

  • Treasury Organization

    Treasury Organization

    Although there is no straight forward answer to the question, how to best organize a treasury function, this article provides an generic view of the way large MNCs creates departments or sub-functions within the treasury function.

Explore Our Free Training Articles or
Sign Up to Start With Our eLearning Courses

Subscribe to Our Newsletter


© 2023 TechnoFunc, All Rights Reserved