Check-clearing process
Check-clearing process is the process that starts when a customer's check is written upon one bank and a company deposits the check in its own bank, then, the company's bank must verify that the check is valid before the company can use those funds. Checks are generally cleared through the Federal Reserve System or through a clearinghouse set up by the banks in a particular city.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Check-clearing process. When a customer's check is written upon one bank and a company deposits the check in its own bank, the company's bank must verify that the check is valid before the company can use those funds. Checks are generally cleared through the Federal Reserve System or through a clearinghouse set up by the banks in a particular city.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
