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## 1 Overview of Netting

This topic provides an overview of the Netting module.

The Netting module of the Oracle® Banking Cash Management system involves setting off the receivables or payables among the subsidiary participants. The parties/subsidiaries have a multilateral trading relationship with each other, i.e., each party can play the role of both supplier and buyer. It ascertains the party who owes obligation in a multilateral agreement. It reduces the absolute number and volume of payment transactions required to settle those receivables and payables, leading to significant cost savings.

The creation of a netting transaction involves the maintenance of netting parameters/rules that filters out the eligible receivables and payables to be considered for the netting process. Parameters can be configured through Netting Structure maintenance. Based on the Netting Structure maintenances, the netting transactions are created, settled and paid off through a batch process.

The various stages of Netting Transactions are as follows:

1. Creation/Registration: The netting transaction gets created/registered once the Netting Transaction Creation batch is triggered. The transactions get created for each parent subsidiary attached to either sub-center or global netting center. The status of the Netting Transaction is updated as "Awaiting Acceptance".
2. Acceptance/Rejection: The transaction is available in the back office and Oracle Banking Digital Experience for a corporate user to accept or reject the same. If either of the subsidiary rejects, all the receivables and payables linked to that specific transaction is excluded from netting cycle. Also, the same receivables and payables is delinked from netting transactions of other parent subsidiaries. The subsidiaries have an option to delink the invoice from the netting transaction. The delinked invoices from a specific netting transaction gets delinked from the netting transactions of other subsidiaries as well. The status of the netting transaction is updated as “Accepted/Rejected” post acceptance or rejection of netting transaction.
3. Settlement: Settlement batch gets executed based on the elapse of netting settlement days post netting creation batch run date. Netting settlement days parameter can be configured as part of netting structure creation. All the accepted transactions get netted (internally reconciled) and final pay in/pay out gets calculated. The status of netted invoices is marked as "Paid". If any of the subsidiary has not accepted or rejected the transaction, the netting settlement batch will get halted. The batch gets executed only if the all the netting transactions associated with that settlement batch have been marked as accepted or rejected. The status of the netting transaction is updated as “Settled”.
4. Pay In - Pay Out - Post Settlement batch execution for a specific structure, the application generates payout transaction for subsidiary/sub center and global center. Once the payout transactions are authorized, the appropriate accounting entries get posted, and the subsidiary accounts with payin/payout obligation gets credited/debited accordingly. The status of the netting transaction is updated as “Payout”.