Multilateral netting replaces the issuing of invoices on the one hand and their verification and payment by bank transfer on the other hand in companies with production and distribution companies.
Since all companies work towards a common goal and software-supported netting makes all processes transparent, the netting process can be extremely simplified and accelerated with Trinity TMS.
By freeing up resources previously used for the invoicing process, dispatch, verification, payment, invoice receipt control and largely eliminating external costs for postage and transactions, many companies can also make big savings.
The flexible module allows numerous variations that adapt to the needs of the respective company. A standardised input interface ensures that the required data is imported quickly and easily from a wide variety of sources and, if necessary, worldwide.
Trinity TMS Functions at a Glance
- Automated multilateral netting via netting centres
- Receivables and/or liabilities-driven
- Import of receivables or payables can be automated
- Mapping of turnover items to interest-bearing intercompany accounts
- Automatic mirroring on internal contra account
- Offsetting periodically or permanently (daily intercompany clearing)
- Dispute management
- Cross-currency clearing possible
- Periodic account settlement or generation of payments
- Preparation of periodical account closings
Benefits
Process optimisation
- Straight Through Processing from the import of receivables to multi-lateral clearing and the automated booking of netting results
Time and cost savings
- Saving transaction costs
- Reduced personnel deployment for the intra-group clearing process
Maximum transparency and auditability:
- Clear illustration of all receivables/liabilities and clearing results
- Process flow, data sources and calculations traceable at all times
Best Practice
Receivables are imported into the system on an ongoing or periodic basis, mirrored to the counterparty and offset against each other on a daily basis (intercompany clearing) or on predefined days (due date netting).
In order to avoid reconciliation differences, it is advisable to import the receivables and to use the automatic mirroring function in Trinity TMS to allocate the offsetting position to the internal clearing accounts of both parties. Following this process avoids discrepancies that would first have to be eliminated by a time-consuming matching process when importing receivables and payables, which would make immediate clearing without artificial values, as occurs with periodic netting, impossible. The incentive to delay liabilities by objecting to them is eliminated in so-called intercompany clearing on a permanent basis.
In the case of periodic netting, where settlement takes place on a weekly or quarterly basis, the users can be given the opportunity to object if this appears to make sense. The netting centre should think carefully about the extent to which the offering of a dispute management really creates added value or just additional work for all involved.
Cross-currency netting is also possible if suitable conversion rates are applied. As a rule, the most recent exchange rate is applied here, which in the case of periodic netting can develop conflict potential due to exchange rate developments in addition to the value date of the offsetting result.
Of course, all netting participants are informed about the ongoing processes and, if they wish, receive reports as well as booking files for maximum straight through processing.
Case Studies: TMD Friction
Tags
netting, intercompany-clearing, receivables, liabilities, offsetting, due-date-netting, dispute-management