Financial and Accounting Systems
1. Reconciliation information with regards to payments
One of the benefits the Settlement with Order Standard and Process must deliver for the involved parties is the ability to automate reconciliation of payments with financial accounting entries. There are two messages that are designed to facilitate such improvement.
a) ClearingNotif message for Settlement Payee
is sent when the payment is made to the Settlement Payee’s bank account. The “Clearing ID” that identifies the message is also used to identify the bank transfer that equals the “Total Amount” value in the ClearingNotif message. The “ClearingID” is included in the bank order of the Clearance Manager. The message will include all transactions that were supposed to be settled at that day using the “Clearance Status Code” to define each transaction’s status. For example, if transaction has been settled the “Clearance Status Code” for that transaction will have value “Fully Settled”. When transaction is only partially settled the “Clearance Status Code” will have value “1-Partially Settled” if it is the first partial settlement or “N-Partially Settled” for all partial settlements after the first. In this case the field “Remaining Amount” will be populated with the amount not yet settled. When the last amount of partially settled transaction is settled the “Clearance Status Code” will have value of “Final Settlement”. In the cases when already settled transaction has to be reversed the “Clearance Status Code” will have value “Claw Back”. Finally, when the Clearance Manager has exhausted all possible options to collect money for not-settled, partially settled or reversed transactions, the Clearance Manager will set the “Clearance Status Code” of such transactions to “Write off”. The value of the data element “Total Amount” in the ClearingNotif message is the sum of all Clearance transactions with “Clearance Status Code” equal to “Fully Settled”, “Partially Settled” and “Final Settlement” and Clearance transactions with status “Claw Back” subtracted. Only the values in the data element "Net Clearance Amount" are used to calculate the “Total Amount” in the ClearingNotif message. The Settlement Payee will have to reverse any entries that have not been settled or have been settled partially. Thus the funds received in the bank will match the accounting records.
b) ClearingNotif message for Remittance Payer
is sent to inform the Remittance Payer of the amount due and the Clearing Date when it is due. The message includes all relevant Clearances where the Remittance Payer is either the Payer or the Payee. The value of the data element “Total Amount” in the ClearingNotif message is the amount that the Remittance Payer must pay into the Clearance Manager’s operational account. The Remittance Payer must include in the bank transfer order the “ClearingID” from the ClearingNotif message relevant to the payment.
2. Cash Management
Thanks to the ClearanceRS and ClearanceNotif messages both parties to a Clearance now know when to expect to pay or receive funds. Because the “Remittance Date” and the “Settlement Date” are included in both message the two parties to the Clearance can record either Accounts Payable with expected Remittance Date or Accounts Receivable with expected Settlement Date.
3. Timing of Accounting records
Carrier (ORA) will process accounting entries as per internal financial and accounting policies. One possibility is that at the time when the ClearanceRQ message is created accounting entries are prepared but not yet recorded. Only when the ClearanceRS is received with values for Settlement and Remittance Dates carrier adds the respective date and records the previously prepared accounting entry. Alternatively, ORA can prepare and record the accounting entry only when the ClearanceRS has been received indicating that the ClearanceRQ has been received and processed successfully.
Seller will receive the same information at once with the ClearanceNotif message and will decide what and when to record in its financial system as per internal rules.
Examples of accounting postings are provided in Annex A to this document
4. Internal reconciliation refence
This is an optional identifier provided by the Clearance Payer or the Clearance Payee ORA that is used in their own processes (for example accounting posting references). If these identifiers (called Clearance Payee Reconciliation ID and Clearance Payer Reconciliation ID) are provided by the carrier then it is mandatory to include them in all messages.