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In banking and finance, clearing refers to all activities from the time a commitment is made for a transaction until it is settled.This process turns the promise of payment (for example, in the form of a cheque or electronic payment request) into the actual movement of money from one account to another.
Cheque clearing (or check clearing in American English) or bank clearance is the process of moving cash (or its equivalent) from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the cheque to the paying bank, either in the traditional physical paper form or digitally under a cheque truncation system.
The first automated clearing house was BACS in the United Kingdom, which started processing payments in April 1968. [4] In the U.S. in the late 1960s, a group of banks in California sought a replacement for check payments. [5] This led to the first automated clearing house in the US in 1972, operated by the Federal Reserve Bank of San Francisco ...
This process, which establishes adjudication as the primary dispute resolution mechanism, was designed to ensure cash flow to businesses in the construction industry, without the parties getting tied up in lengthy and expensive litigation or arbitration. In addition to quick payment, the scheme also allows for security of payment to be provided ...
Security related to imaging and creating an electronic cheque is defined and the cheque clearing process adjusted to accommodate electronic cheques. Banks and financial institutions use cheque truncation systems (CTS) as part of this process. These systems deal with two main processes, outward clearing and inward clearing:
The Building and Construction Industry Security of Payment Act 2002 was passed by the Australian State of Victoria to allow for the rapid determination of progress claims under building contracts or sub-contracts and contracts for the supply of goods or services in the building industry. This process was designed to ensure cash flow to ...
In the United States construction industry, contract agreements are usually written to allow the owner to withhold (retain) the final payment to the general contractor as "retainage". [3] The contractor is bound by the contract to complete a list of contract items, called a punch list, in order to receive final payment from the owner.
In the United States, the ACH Network is the national automated clearing house (ACH) for electronic funds transfers established in the 1960s and 1970s. It is a financial utility owned by US banks, and is one of the largest payments networks in the United States, both by volume and by customer reach; virtually every bank account in the US, whether personal or commercial, is connected to the ...