Automated Clearing

Automated Clearing

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.

Automated Clearing

cashmgmt

Related Links

You May Also Like

  • Treasury Management - Benefits

    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.

  • Disbursement Float

    Disbursement Float

    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!

  • Automated Clearing

    Manual Clearing

    In manual clearing, Bank statement details are to be matched manually considering certain rules. Learn the steps involved in manual clearing of bank transactions.

  • 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.

  • Treasury Management - Functions

    Treasury Management - Functions

    Treasury management has become an specialized function. Treasury function helps in managing the Risk-return profile as well as the tax-efficiency of investment instruments. In larger firms, it may also include trading in bonds, currencies and financial derivatives. Learn about the various tasks, activities and imperatives, undertaken by treasuries in in today's context.

  • Account Reconciliations– Why?

    Account Reconciliations– Why?

    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.

  • Cash Clearing Process

    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 Management Float

    Float

    To understand cash management, one must understand FLOAT. Float is the most critical component in Cash Management. Learn about cash float in this article.

  • Cash Clearing Learning Objectives

    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.

  • 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.

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

Subscribe to Our Newsletter


© 2023 TechnoFunc, All Rights Reserved