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.
Related Links
You May Also Like
-
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.
-
The objective of funding Management is to implement strategies that lead to the best borrowing rates and lower investment costs. Learn how treasury aids in loans and investment management functions.
-
Account Reconciliation – How? Learn the three key attributes to perfom account reconciliation.
-
Why enterprises need cash management. What is the purpose of having a well defined cash management 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!
-
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.
-
Unravel the mystery behind clearing. Why we use clearing accounts. Find the relevance of word "Clearing" in business context.
-
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.
-
Complete Bank Reconciliation Process
Bank Reconciliation Process is a eight step process starting from uploading the Bank Statement to finally posting the entries in General Ledger. Learn the Eight Steps in Detail!
