Eagle's Accounting solution can automatically match actual cash settlement records sent to the Eagle system from a bank, custodian, or third party to open receivables and payable created in Eagle's Accounting solution when you use cash segregation.

After you perform automated matching, you can manually match the records that the system was unable to match automatically and can research exceptions.

The system can then sweep cash that remains unmatched at the end of the day into a default portfolio within Eagle Accounting where it is held in suspense until the bank settlement is successfully matched to open receivables/payables.

About Automated Cash Matching

Before you process transactions in Eagle Accounting and begin to match cash based on actual cash settlements, you must set up cash segregation and cash matching, and ensure your target transactions include cash account information needed for matching.

After you receive the actual cash settlements, called bank settlements, from a bank, custodian, or third party, you run the automated matching process.

The system uses the following attributes for automated matching:

• Cash Account Number

• Security Alias

• Settlement Date

• Cash Event Type (Disbursement, receipt)

• Amount

• Settlement Currency

• Security Type

• Tolerance attributes that allow non exact matches (amount, percentage, and/or date, if used)

During automated cash matching, the system uses tolerances to allow non exact matches between the bank settlement and open receivables/payables. The open receivables/payables can include unsettled trades, unsettled corporate actions, or any open receivable/payable. Automated cash matching assumes use of cash breakage, as specified in the entity level Cash Breakage Election option. That is, if the non exact match falls within the allowed tolerance, the bank settlement is fully matched and in STAR accounting, the difference is tracked as cash breakage.

If a match is successful, the system sends the settlements that are successfully matched to the accounting engine for further processing. The accounting engine can then create settled transaction records at the entity level. It applies the cash settlements across all accounting bases, including the custody basis.

It creates cash ledger entries in the non custody basis, and creates sub ledger entries in all bases. During the matching, the system assigns the Cash Match Instance field (tag 16221) value and uses the user defined Source Reference ID field (tag 16220) to link together the incoming bank settlement with the resulting STAR cash settlement created in the accounting system. The STAR settlement also identifies the custodian location and cash account.

About Matching Multiple Bank Settlements or Receivables/Payables at a Time

In most cases, you receive one bank settlement that corresponds to one trade. The automated matching process and the manual matching process can also handle more complex matching scenarios. The automated matching process works as follows. The system tries to match records at three levels, in the following order. It tries to match:

• One bank settlement to one STAR open receivable/payable transaction.

• One bank settlement to many rolled up, or summed, STAR open receivable/payable transactions within an entity or across entities. This rollup does not include the netting of open payables with open receivables.

• Many rolled up bank settlements to one STAR open receivable/payable transaction.

• Many rolled up bank settlements to many rolled up, or summed, STAR open receivable/payable transactions within an entity or across entities.

The system first tries to find an exact match at each of the preceding levels. If it cannot find an exact match, the system then tries to match within tolerance, first by amount and then by date. During manual cash matching, you can manually match open receivables/payables to bank settlements on a one to one, one to many, many to one, or many to many basis.

The system updates the wire settled amount based on the net effect of the match. For example, if two receivables of 100 and a single payable of 100 are matched to a single bank settlement record, then a net of 100 is considered matched. 

About Automated Cash Matching for Separate Principal and Income

In some cases, and more specifically for close transactions, Eagle Accounting receives incoming principal and income bank settlements separately. When summed, the incoming bank settlements are equal to the total receivable/payable amount of the transaction. During Eagle Accounting's initial automated cash matching, these records do not auto match because the system denotes each incoming bank settlement as either income or principal and the auto match process uses the cash category as a means of matching to open rec/pay records.

The automated cash matching process includes a secondary matching process to address this scenario after it completes the initial automated cash matching process. During this part of the matching process, the system allows only two bank settlements (a principal and income bank settlement) to match to a single receivable/payable record. For a successful match, an income and principal bank settlement must match these two components of a single transaction and both bank settlements must match exactly. Eagle Accounting does not apply tolerance rules during the secondary auto matching process, and it allows only two bank settlements (a principal and income bank wire) to match to a single rec/pay record. The system does not roll up multiple records to generate a match during the secondary process.

About Manual Cash Matching

After you run the automated matching process, you can use the manual matching process available in the Cash Matching workspace to match any remaining bank settlements that did not successfully match to open receivables and payables. The manual matching process uses the same criteria as the automated matching process, but it does not enforce any tolerances defined for cash accounts. The tolerances apply only to automated matching.

The system uses the following attributes for manual matching:

• Cash Account Number

• Security Alias

• Settlement Date

• Cash Event Type

• Amount

• Settlement Currency

During manual matching, the system allows non exact matches for the same cash account. You can select the Write to Breakage option during manual matching to have the system fully settle the bank settlement and the open receivable/payable and track the difference as cash breakage. Otherwise, if you do not select the Write to Breakage option, you can perform a partial match where the manual matching process leaves the remaining amount of the receivable/payable open or leaves a portion of the bank settlement unmatched.

If the bank settlement amount:

• Exceeds the open receivable/payable amounts and you select the Write to Breakage option, the system prorates the difference across the open receivables/payables. The open receivables/payables are fully settled and the prorated excess appears as Breakage Amount Over for each receivable/payable.

• Exceeds the open receivable/payable amounts and you do not select the Write to Breakage option, the open receivables/payables are fully settled and the difference remains as a balance on the bank settlement.

• Is less than the open receivable/payable amounts and you select the Write to Breakage option, the system prorates the difference across the open receivables/payables. The open receivables/payables are fully settled and the prorated excess appears as Breakage Amount Under for each receivable/payable.

• Is less than the open receivable/payable amounts and you do not select the Write to Breakage option, the system uses proration to determine how many units of each open receivable/payable to settle. The remaining units of each open receivable/payable remain as unsettled.

About Calculating Settlements Pro Rated Across Multiple Open Receivables/Payables during Manual Matching

During automated cash matching, the system can match one or more bank settlements to one or more open receivables/payables within tolerance, and those open receivables/payables can apply to one or more entities. It allocates the cash to the portfolios based on the amount of open receivables/payables in the portfolio to the total open receivables/payables across all portfolios for the matching record. If rounding causes a residual or shortage for the last portfolio, the largest balance receives the amount.

When you perform manual matching, a bank settlement may not fully cover a group of eligible open receivables/payables in different portfolios. You can elect to match the bank settlement to completely settle some receivables/payables and leave others completely unsettled. Or you can elect to partially settle all the receivables/payables and pro rate the amount across the selected records. By default, manual matching pro rates the units and amounts for you.

However, you do not have to use the pro rated amounts calculated and can manually select and clear different open/receivables to prevent use of pro rated amounts for allocation during the matching process.

The following example illustrates how the system pro rates amounts during manual matching.
You receive Bank Settlement (A) for $1,000 dollars from a custodian. You have four related open receivables that total $1,400. The open receivables (B) are for $500, $400, $300, and $200. How does the Cash Matching workspace attempt to match Bank Settlement A to these open receivables/payables?

The Cash Matching workspace cannot match the $1,000 amount to the $1,400 amount. Instead, the Cash Matching workspace allocates a pro rated amount across the four receivables. By default the Cash Matching workspace calculates the pro rated amounts as follows: 

The equation is B divided by C x A. That is, the open amount of 500 divided by the total receivable of 1400 multiplied by the total amount received from the custodian of 1000 to get the prorated amount.

After the Cash Matching workspace proposes a match with these pro rated amounts, you can review the proposed match and either submit the match or modify the receivables/payables selected for the match. You can allocate the open amounts in a different manner by adjusting the open local amounts for the receivables/payables. As you change the amounts, the system recalculates the corresponding units to reflect your changes.

About Manual Cash Matching with Different Cash Accounts

You can manually match cash records and bank settlements if they have different cash accounts but the cash accounts have the same custodian. Cash matching does not generally allow you to match one custody account against multiple cash accounts. As a rule, when you perform manual cash matching, the system uses the following attributes for manual matching:  Cash Account Number, Security Alias, Settlement Date, Cash Event Type, Amount, Settlement Currency.

You can set up cash account relationships for secondary cash accounts that allow you to manually match, or force a match, between a bank settlement and an open receivable/payable that share a custodian but have different cash accounts for use in certain scenarios.

For example, if you use cash matching with repurchase agreement (repo) trades, you can encounter scenarios where the counterparty changes during the roll. In the following scenario, the offsetting repo trades do not have the same custodian bank: 

1. Repo 1 matures under Custody Bank 1. 

2. Repo 2 is bought under Custody Bank 2. 

3. The bank sends one cash record for the difference under the underlying security of the repos under one of these custody banks.

To enable you to manually match a bank settlement for one cash account to a receivable/payable with another cash account, you can create one or more additional cash account relationships between the entity and the custodian that have the Cash Account Type option set to Secondary Cash Account. After you establish a cash account relationship with a Secondary Cash Account, you can use that cash account on transactions. However, if you set up a cash account relationship with a Cash Account Type option of Secondary Cash Account, be aware that Eagle Accounting does not use that cash account relationship to provide a default cash account value for internally generated cash, as it does for other cash account relationships.

When you use the Cash Matching workspace to perform manual cash matching, the system allows you to match a bank settlement of one cash account to a receivable/payable with another cash account. When you make this type of match, you see a warning dialog box verifying that you want to continue. If you continue with the match, the system settles the cash in the receivable or payable cash account and then transfers the cash in to or out of the bank settlement's cash account, depending on whether the cash is receipt or disbursement. In the end, the cash nets to zero in the receivable or payable cash account.

About Tracking Suspense Activity

While you are manually matching cash based on actual cash settlements and researching exceptions, you can identify cash activity held in suspense.

If the system cannot find an eligible match for a bank settlement related to trade or entitlement, and you sweep the unmatched cash into Eagle Accounting, the system places cash in suspense until it can match the bank settlement to the true open receivable/payable. In this case, the system places the cash in suspense in the default portfolio specified for the cash account associated with the bank settlement. 

In the Matched & Suspended tab of the Cash Matching workspace, you can use the Search criteria to view bank settlements associated with STAR accounting cash settlements in a suspense status in STAR accounting. The Matched & Suspended tab allows you to view suspense activity related to actual cash settlements. It does not display suspense activity for transactions settled using Eagle's contract cash methodology, for example. You can also use the Search criteria to view bank settlements associated with cancelled STAR accounting cash settlements. 

About Rematching during Rollback and Replay

During rollback and replay, the system can fully unmatch cash associated with the position and allow rematching to the receivable/payable. On replay, the system rematches unmatched items so long as the receivable/payable did not change. It rematches clean matches where the receivable/payable originally matched the cash exactly. It can also rematch certain types of non-clean matches where you originally required manual intervention to match the cash. During rollback and replay, the system determines whether there was a change in breakage amounts. If there was no change, it rematches the settlement. Otherwise, it cancels it in Eagle Accounting and makes it available for rematching during the Cash Matching process.

This applies to replay of settlements that you originally matched manually and processed outside of tolerance levels. The system can roll back and replay those settlements if the breakage amounts remain the same. This also applies to replay of partial settlements, which the system typically creates during matches of multiple bank settlements to multiple open receivables/payables.