What is netting in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: netting

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Agreement with the business partner that states that in the case of the termination of the entire contract in the event of bankruptcy, for example all mutual claims and receivables are canceled, fall due, are valued at the market rates, and the balance is determined balancing by netting. Netting has the effect of reducing the attributable amount for the credit risk. Settlement risk is unaffected by netting.

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• Key Concepts: 
  Netting is a process used in the IS-B-RA-CL Default Risk and Limit System to reduce the number of transactions that need to be processed. It involves combining multiple transactions into one, resulting in a single net amount. This reduces the amount of time and effort required to process the transactions, as well as reducing the risk of errors.
  
  How to use it: 
  Netting can be used in the IS-B-RA-CL Default Risk and Limit System by setting up a netting rule. This rule defines which transactions should be combined into one net amount. Once the rule is set up, the system will automatically combine the transactions into one net amount when they are processed.
  
  Tips & Tricks: 
  When setting up a netting rule, it is important to consider which transactions should be combined and which should remain separate. For example, if two transactions have different currencies, they should not be combined into one net amount. Additionally, it is important to ensure that all transactions are correctly identified and included in the netting rule.
  
  Related Information: 
  Netting is also used in other SAP systems such as SAP Cash Management and SAP Treasury Management. Additionally, there are other processes that can be used to reduce the number of transactions that need to be processed, such as batch processing and document splitting.