Netting 

Use

The Netting function allows you to group together transactions from the Money Market, Foreign Exchange and Derivatives areas and to pay them collectively. Situations can arise where several transactions are to be paid collectively; this happens especially in the case of transactions with business partners that are not house banks, that is payments need to be exchanged.

 Example:

§         Fixed-term deposit investment in EUR and fixed-term deposit borrowing in EUR

§         You balance the open payment amounts and only pay or receive the net amounts

§         Advantage: Saving of transaction costs or bank charges

To do this, you can group transactions to form “Netting transactions”.

Prerequisites

·         The transactions must be created in the same company code with the same business partner and in the same currency. They must also have the same value date and identical payment details.

·         To trigger a netting transaction:

·        All netting transactions are explicit agreements between business partners to simplify payment processing.

·        When the transactions are confirmed (correspondence), they are assigned a reference to the other transactions involved.

·        The decision to create a netting transaction is usually taken shortly before the payment flows are due, mostly on the same day as the related transactions are posted. Only then do you know which transactions (such as forward exchange and spot exchange transactions) are suitable for net payment.

·        Before you can group transactions together, you have to create identical payment activities. It is particularly important to note that all the transactions you want to net must be able to produce payment requests because netting transactions can only be paid using the Payment Program for Payment Requests.

Activities

The Proposal List for Netting report program supports the selection of transactions that can be netted according to the criteria you select. You can process and execute the netting transaction directly from the report. Assigning individual transactions to netting transactions triggers the generation of payment requests that are grouped into one Grouping key and are processed collectively in the enhanced payment program (if required without posting to a customer account). This grouping key controls which payment requests will be separated from others. All the payment flows or their requests involved in the same netting transaction are assigned the same unique grouping key and are, therefore, separated from the other payment requests. They should not be grouped together with other requests. You cannot make retrospective changes to netting-relevant data in the individual transactions (especially due dates, amounts, house bank and payment data). A transaction linked to a netting transaction is shown as such when processed.

Features

·        Proposal list for netting transactions.

·        Create

·        Change

·        Display

·        Undo

Integration

Transactions that are linked by netting are referenced with each other by means of Object Links (Reference key: KMP).