Glossary

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Participant

A subsidiary or legal entity within the multinational company or perhaps a 3rd party supplier, a counterparty bank often used for foreign exchange etc. Typically participants have a unique code, uniform across the company, for each participant. Participants may also be assigned a type, such as Group Company, Bank, 3rd party to help streamline the settlement process and avoid incorrect settlement treatment.

Payable Driven Netting

The payer decides which invoices will be paid.

Payment Factory

Software that centralises the payments process for the whole group. This is an important system for any company wanting to reduce the risk of fraud, boost liquidity and improve control, see also Vendor Payments.

Payment Formats

To settle the netting clients output payments in the correct format for SWIFT, various electronic banking packages, local payment mechanisms, etc. ISO2022 XML can be used for a large range of payment formats.

Payment Netting

Netting of payments between two or more counterparties in order to minimise the number of payments paid and received.

Payment to Suspense

Some companies want the amount of any invoice settled, even where it is in dispute. Payment to holding (or suspense) forces settlement to a suspense account until the issues can be resolved see also Make No Payment.

Payments On Behalf Of (POBO)

Because the Netting Centre is making payments centrally for all subsidiaries, they must be in countries that allow payments to made or received by an entity other than the billing entity see Netting Regulations and Intercompany Agreement.

Physical Payment

Some Netting Centres settle all items for cash, some all via In-house Bank. Because of currency restrictions normally there must be a mix of the two.

Profit & Loss

An income statement or profit and loss account is one of the financial statements of a company and shows the company's revenues and expenses during a particular period.