A clearing account provides a better overview in a company’s accounting. A clearing account may also be necessary for fixed-term deposits and custody accounts.
- A clearing account is an auxiliary account that records and manages cash bookings.
- To trade stocks, an auxiliary account in the form of a clearing account is essential.
- Clearing accounts are important for accounting in order to be able to record debits and credits quickly.
What is a clearing account?
A clearing account is not an account in the traditional sense, but a so-called auxiliary account. It is only used to simplify the booking of amounts of money. Normally, a clearing account only exists together with another account. There it functions in the background and is used solely for booking purposes. Clearing accounts balance each other out again and again. Your main task is therefore to “offset” all existing payment flows and make them traceable. According to abbreviationfinder, CAI stands for Clearing Account Indicator.
A clearing account is particularly advantageous for large companies with a large number of shareholders. For example, if an employee should lay out payments for the company, such as the cost of a business lunch or a rental car for a business trip, they can recover the expenses. In the clearing account, a note on the chargeback shows who the money was sent to and for what purpose. Conversely, all those involved can use the clearing account to see exactly whether, when and for what purposes someone used the company’s funds for private expenses. This makes it possible to easily identify hidden and unlawful withdrawals as such.
Clearing account at the depot
Who wants to get into the stock exchange trading or one Owns a private custody account, there is no avoiding a clearing account. Only then is it possible to buy and sell securities. All transactions are detailed in the clearing account.
The reason you don’t just do that Can use current account is that the account holder of a clearing account is neither authorized to transfer funds from the clearing account to other accounts, nor to withdraw funds from it. When creating the clearing account, the account holder specifies a selected reference account to which automatic remittances are made, for example when selling stocks .
Account and securities account holders should look at the exact conditions before opening a clearing account in order to find out about any fees for the account management. If you have your current account with the same bank as your depository, you sometimes don’t need a separate clearing account because the booking processes are already linked.
Settlement account for fixed-term deposits
A Fixed deposit account is a savings investment to which the account holder does not have permanent access. For the duration of the investment, he cannot dispose of the money at will, as with one overnight account would be the case. Ergo, he cannot make deposits or withdrawals either – an entity such as a clearing account must be interposed for all transactions. Thus, the clearing account is a kind of middleman between the fixed deposit account as a financial investment and the current account from which the invested money comes and to which it also flows again.
In principle, a clearing account fulfills two functions in a fixed-term deposit account: At the start of the contract, the investment capital is posted to the account, and at the end of the investment period, the existing capital is included Interest posted back.
Clearing account and balance sheet
The balance sheet compares income and expenses. In the accounting, a distinction is made between debit and credit in this context. Both terms are important for regular account management and form opposing poles. In the case of a current account, the account statement shows whether the account is debit or credit. The target is on the left or in the minus range. Having is positive on the right. An account in the negative is overdrawn and has a debit balance, an account in the plus has a credit balance.
With regard to the clearing account, this means that wherever there is a credit account, there must also be a debit account in the same amount. This ensures that the so-called debit-credit equality is given. This plays a role, for example, in the clearing account for sales tax. It records both the balance of the input tax account and that of the sales tax account. This enables the accounting department to determine whether payments to the tax authorities are outstanding (balance on the credit side) or whether there is a credit (balance on the debit side).
What are the legal requirements for a clearing account?
First and foremost, the “Principles of Proper Bookkeeping” (GoB) apply. They require that all postings that have something to do with the assets or the success of the company are to be documented without any gaps. Clearing accounts help the account holder or the accounting department to understand the bookkeeping and to avoid possible errors (see, for example, Paragraph 146 Paragraph 1 in the Tax Code (AO) or Paragraph 239 Paragraph 2 in the Commercial Code (HGB)).