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
-
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.
-
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.
-
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.
-
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.
-
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!
-
Suspense and clearing accounts resemble each other in many respects but there exists important fundamental difference between the two. Read more to explore these differences.
-
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.
-
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!
-
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.
