Clearing Account Balance

A clearing account balance is the balance of a clearing account, a term with two related uses. For banks and payment firms that take part in a clearing system, it is the funds held in the account used to settle their net positions, for example at a central bank or settlement bank, which must be sufficient to cover each settlement. In accounting, it is the balance of a temporary or suspense-style ledger account through which amounts pass while they are being identified or matched, such as card receipts awaiting settlement or payroll funds awaiting payout. In the accounting sense, the balance should return to zero once items are cleared, so a lingering balance signals unmatched items, errors or timing differences. Finance teams therefore review clearing account balances regularly as part of clearing and settlement reconciliation and investigate old items. Regulators and auditors also pay attention to large or persistent balances because they can hide losses or misappropriation.