PURPOSE
This document explains the procedure to instruct the bank counterparty to make payment to another entity’s bank account and how the system handle the accounting journals.
WHY IS THIS IMPORTANT?
This is important when an entity is authorized to trade but the traded amount is required by intercompany entity. After a trade is done, an entity can instruct their bank counterparty to make payment directly to the intercompany entity’s bank account instead of crediting to their bank account. Sometimes, an entity may not have the bank account in the currency of the transaction.
PROCEDURE
1. The following example shows a Foreign Exchange trade booked, TFS-SG buy USD 1,000,000.00 against SGD with DBS bank.
2. In Cash Settlement screen, you will see two cash flows (USD and SGD) created from this Foreign Exchange trade.
3. To instruct DBS bank to credit USD to another entity TGL-SG’s bank account, click on the USD cash flow of this Foreign Exchange trade.
4. Select the entity of the bank account to credit to from the Acct Cntr drop down field on the left menu and select the bank account. In this example, TGL-SG is selected and bank account to be credited is TGL-USD-ANZ-389.
5. Next, select the counterparty’s bank account from which the USD 1,000,000.00 will be debited from.
6. Click Add.
7. The assigned settlement instructions will be updated to the table listing on your right.
8. Click Update.
9. Assign the settlement instructions as per normal for the SGD cash flow. In this example, SGD 1,200,000.00 will be debited from TFS-SG’s TFS-SG-CITI-SG-S428 account to DBS bank account DBS-SG-SGD.
10. The accounting journals for the Foreign Exchange trade when there’s settlement to intercompany are as follows. Note that system booked to the intercompany account.
11. The intercompany mapping is set up as below example. For more details, see Chart of Account set up.
FREQUENTLY ASKED QUESTIONS
RELATED INFORMATION
CHANGE HISTORY
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