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
-
Learning objectives for this lesson are: Meaning of Order to Cash Process; Sub Processes under Order to Cash; Process Flow for Order to Cash; Key Roles & Transactions; Key Setups/Master Data Requirements.
-
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.
-
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.
-
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.
-
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'.
-
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 are the various sources of cash in an organization. Which sources increase the cash available with the enterprise and which sources results in outflow of the cash? Let us explore!
-
Unravel the mystery behind clearing. Why we use clearing accounts. Find the relevance of word "Clearing" in business context.
-
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.
-
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.
