Receivable Driven Multilateral Netting

There are many different ways to run a multilateral netting system. No two corporates are the same and therefore they have different needs for their netting solution. The Coprocess system allows for 3 different methods of multilateral netting:

• Payable Driven Netting
• Receivable Driven Netting
• Settle Only Matched

In a receivable driven multilateral netting system it is the payee (receiver) who inputs and therefore drives what is settled in the netting. This is a much more efficient way of running a netting system because the payee wants to get paid. The Accounts Receivable (AR) contains all the payees open invoices and they can then upload these directly into the netting (Invoices from AR).

The challenge however is then to give the payer some ability to control and potentially block any invoices that they are not ready to pay. Coprocess does these using 3 features:

Upload of Accounts Payable (AP) – Even though the system is Receivable driven we allow the upload of Accounts Payable data AS WELL AS Accounts Receivable data. We store all this data in the system and do an automatic matching on the differences between the AR and the AP, i.e. the difference between what the receiver expects to receive and what the payer expects to pay.

Matching - We allow the Payer to upload their payables from Accounts Payable (AP). The system does an automatic match on these AP invoices, comparing them with the Accounts Receivable (AR) invoices that are already in the system. The matching is governed by a set of rules defined in the configuration of the system and the result is a user interface showing which invoices match, which are missing and which are mismatching. Armed with this the payer can start to discuss the problem invoices with the counterparty directly in the application.

Discussion and Disputing – The payer is able to flag invoices and start a dialogue with the counterparty. In order to start a dialogue the payer must choose from a list of categories that define the reason for his discussion. This list of categories is modifiable by the netting administrator. Ultimately if the payer cannot get a satisfactory resolution of the problem they have the option to dispute the invoice which will result in the invoice not being paid. A dispute invoice can either be carried forward to the next month's netting or paid to a holding account for a dispute comitte to rule on. This is set in the configuration.