Means reconciliation prior to Settlement which is made in the financial field by the means of employing intermediary simultaneously assuming roles of Originator and Beneficiary. Most commonly Clearing is carried out by Clearing Systems which allow for parties to reconcile the Account Balances. Such way of action provides smoother and more efficient Transfers.
Clearing works when the Originating Financial Institution processes the order and further dispatches it to the Receiving Financial Institution. It acts as an intermediary which helps those Institutions to communicate and Settle the requested Transfers by reconciling their accounts accordingly.