Transactions sometimes need to be processed as if they were received on a different date than when they were actually processed. For instance, a transaction might be processed after the business day has ended, but must be treated as if it was received during that business day due to an error. Conversely, a transaction received on a particular day might need to be recorded as if it was received on a later date, such as when it arrives on a day the bank is closed.

To manage these situations, the Pismo platform uses business dates. A business date is a substitute date used in calculations instead of the actual transaction date and is the date that appears on the customer statement. Transactions with a populated business_date field are referred to as business-dated transactions.

Another important concept to understand is the value date. The value date is when the value of a financial transaction becomes effective and determines when the funds are valid for interest accrual purposes. Unlike the business date, the value date specifically indicates when interest calculations begin, as interest accrual only starts when the funds are actually available.

Cutoffs, EOD, and product processors

To understand business-dated transactions, you must first understand how cutoffs are defined. In traditional banking, cutoffs refer to moments in time when the activities for a given branch are closed for that business day, with any new operations recorded on the next business day.

A commonly-used term for one type of cutoff is EOD (End Of Day), which signifies the time when daily operations are concluded. This concept is used by banking systems across the market to support operations in different time zones and locations.

Some banking institutions use third-party systems that offer customized options to trigger cutoffs. These institutions might employ multiple cutoffs for various operational reasons. A cutoff is triggered when the product processors complete their EOD processes. A product processor is a system or application that manages specific financial products or services within an organization. Product processors typically handle tasks such as calculating interest rates, processing transactions, generating reports, and maintaining records, ensuring that these financial operations are carried out accurately and efficiently.

If any processes take longer than expected, a human operator waits and triggers the cutoff only when all processes are finished.

For business-dated transactions, product processors need to know the end of the cycle date and the specified business date in order to start calculating interest rates and preparing financial reports for that specific date.

Cycle closing versus EOD

Traditionally, the EOD is used to represent the conclusion of the business day. The primary goal of EOD operations is to finalize all financial operations for the day and prepare the system for the next business day. Usually, EOD operations for a branch can begin only after all the transactions for that business day have been cleared and settled. This means the Start of Day (SOD) process can only begin after the EOD processes are completed, resulting in downtime for transaction processing.

The Pismo platform, however, adopts cycle closing, which ensures continuous operation, 24/7, to replace the traditional EOD process. At business closing, each account transitions smoothly between business days, minimizing transaction processing downtime to nearly zero. Other routines typically associated with EOD, such as dormancy evaluation, are configured to run independently and on their own schedules.

Other key terms for understanding business dates

How Pismo handles business-dated transactions

Use the Create account balance history configuration and Update account balance history configuration endpoints to configure cycle closing for an account at the division level by providing a value for the cycle_closing_time field. Transactions posted before a division's cycle_closing_time are included in the account's balance history for the business date.

At the cycle_closing_time of a given business date, the Pismo platform sends the account balance history event for each account. Note that if cycle_closing_time is not specified, it defaults to 23:59:59 UTC.
Use the following endpoints to manage cutoffs.