Future-business-dated transactions
Future-business-dated transactions, also known as postdated transactions, are financial transactions recorded with a business date later than the actual date of processing. This means the transaction is registered in the financial records on the specified future date. Postdating is commonly used for transactions occurring on non-work days to ensure payment recording happens on the next work day rather than immediately.
Here are some key points about future-business-dated transactions.
- Purpose: They are often used to manage accounting entries so that financial events align with accounting timelines.
- Recording: The transaction is not confirmed in the accounting records until the postdated date. This means that the financial impact is deferred.
- Legal considerations: Depending on jurisdiction, there might be legal implications or restrictions on postdated financial instruments.
- Examples: Postdated checks, postdated invoices, or any other financial commitments that specify a future date for their execution.
It's important for businesses to handle future-business-dated transactions carefully to ensure that their financial records are accurate and compliant with accounting principles and regulations.
Pismo allows you to request a transaction to be processed on the next business date using payment_datetime in Post payment or Post multi-leg payment; however, it is limited to only 1 business day to mitigate operational risks.
Overview of balance types and their effects
Details about balance types and the effect of future-business-dated transactions on balances are as follows.
| Balance type | Effect |
|---|---|
| Value-dated balance | This balance is used as the basis for interest calculations in an interest-bearing account. This is the balance where funds are available for immediate use. |
| Value date | This is equivalent to the payment_datetime in Post payment or Post multi-leg payment, and refers to the date from which interest is calculated for either credit or debit balances. |
| Ledger balance | This is a consolidate balance of all incoming transaction. It's calculated as book balance + uncleared funds. |
| Book balance | This is the running balance shown on account statements. This might sometimes include uncleared funds. |
| Available balance | This is the balance in the account that is validated every time a transaction is carried out. It is calculated as Book balance + overdrafts - earmark amount/blocked funds - uncleared funds. |
| Uncleared funds | These are funds that are still under clearance. On the value date, these funds are removed from the uncleared balance and impact other relevant balances. |
How future-dated-business transactions work
To demonstrate how future-dated-business transactions works, consider the following scenarios.
Scenario 1: Credit
- Begin with an account that has a zero balance, as indicated by the following account details.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"ledger_balance": 0,
"book_balance": 0,
"available_balance": 0,
"credit_balance": 0,
"debit_balance": 0,
"uncleared_funds": 0,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 0
}
- When a bank or financial institution credits $100 to the account, the balances change.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"ledger_balance": 100,
"book_balance": 100,
"available_balance": 0,
"credit_balance": 0,
"debit_balance": 0,
"uncleared_funds": 100,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 0
}
In the preceding example, the $100 credit is reflected as book balance and uncleared funds. Note that once the amount in uncleared funds is settled, the amount is reduced to 0.
On the other hand, if the bank decides to cancel the $100 credit after it has been issued, the bank initiates a cancellation request, and the balances revert to their original state.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"ledger_balance": 0,
"book_balance": 0,
"available_balance": 0,
"credit_balance": 0,
"debit_balance": 0,
"uncleared_funds": 0,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 0
}
Scenario 2: Debit
- Start with the following account details, which represent an account with $100 in book balance, credit balance, and value-dated balance.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"ledger_balance": 100,
"book_balance": 100,
"available_balance": 100,
"credit_balance": 100,
"debit_balance": 0,
"uncleared_funds": 0,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 100
}
- When a debit is initiated using Post payment with a specified future date in
payment_datetime, the balances change as follows.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"leger_balance": -100,
"book_balance": 0,
"available_balance": 0,
"credit_balance": 0,
"debit_balance": 0,
"uncleared_funds": -100,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 100
}
As shown above, the book balance and credit balance are reduced to 0, while uncleared_funds shows a negative value of $-100, indicating a pending debit. The value_dated_balance remains unchanged, as it awaits the specified date in payment_datetime to clear.
- When the bank decides to clear the funds, a request to clear is sent, resulting in the following balances.
{
"account_id": 1234,
"external_account_id": "b993ba96-b3e8-4ef7-9cf7-7eee5ddafdab",
"program_id": 8674,
"ledger_balance": 0,
"book_balance": 0,
"available_balance": 0,
"credit_balance": 0,
"debit_balance": 0,
"uncleared_funds": 0,
"earmarked_balance": 0,
"overdraft_limit": 0,
"value_dated_balance": 0
}
In the account details, both uncleared_funds and value_dated_balance are reduced to 0.
Updated about 14 hours ago