Learn something new every day
More Info... by email
Also known as CNS, a continuous net settlement is an accounting resource that allows for automated entry of various types of line items to accounting records. The idea behind this type of automated process is to quickly and easily settle compared transactions while also providing up to the minute information on the current money balances that are tracked in the system. Along with tracking the movement of cash, a continuous net settlement system will also manage the posting and integration of activity on various types of securities.
The centralizing of the settlement process is one of the main benefits of a continuous net settlement strategy. Information is continually updated as it is received, making it possible to immediately ascertain the current status of different investments and money balances in various accounts. In contrast, other processes would rely on posting the data in different sections of the accounting record books, in order to maintain a proper balance to the overall records. Depending on the complexity and number of accounts that must be tracked, this can be a somewhat cumbersome process.
Report generation through a continuous net settlement system is another advantage that users often find helpful. Systems of this type can be programmed to automatically generate reports at specific times of the day or allow for the generation of a report when certain transactions are posted. As with the other automated features of CNS, this structured generation of informational data in report form can save a great deal of time and effort.
Just about any type of cash flows or assets can be managed using a continuous net settlement entry system. Financial instruments like municipal bonds as well as corporate bonds can be cleared with ease. The same is true for assets like Unit Investment Trusts or various types of equities. Since the system itself manages the posting of these types of line items, the potential for making a posting error is minimized, a factor that can make the process of auditing the records much easier.
In practical terms, the function of a continuous net settlement posting process means that the funds are readily available much faster than with other processes. This is due to the rapid clearance process that is inherent in the system. Businesses will find this approach extremely helpful, since assets can often be posted one day and be ready for use the next morning. Investors also find this type of accounting strategy helpful, in that funds generated from various activities can be drawn upon sooner rather than later, which may be important if the investor wants to use the profits from existing investments to fund the purchase a new investment.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!