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.
Related Links
You May Also Like
-
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.
-
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.
-
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.
-
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 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.
-
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!
-
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 has increasingly become a strategic business partner across all areas of the business, adding value to the operating divisions of the company. Managing activities that were traditionally carried out within the general finance function. Learn about the drivers for this change.
-
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?
