Method and system for clearing and settling multiple inter-entity transactions

Abstract

The present invention relates to a method and system for settling multiple transactions executed in a system based on auditable logging technologies. Said system and method operate by representing the actual opening balance of the participating entities in a transaction module, tokenising transactions between one or more of said entities, which are reflected in real time in virtual individualised balances for each entity, consolidating balances and minimising transactions in the traditional transaction system.

Description

[0001] Method and system of inter-entity clearing and settlement of multiple transactions

[0002] Description

[0003] Technology Sector

[0004] The present invention falls within the field of financial technology (FinTech) and enterprise transaction management. Specifically, it focuses on a method for account settlement and reconciliation in an intra-corporate or inter-company organizational environment.

[0005] In today's business world, the efficient and accurate management of financial transactions between companies and their various subsidiaries or related entities is of vital importance. This includes the settlement or agreement of debts, credits, and commercial transactions, as well as the reconciliation of balances between the parties involved. The present invention addresses the challenges in this technological sector by offering a unique system for the automation and simplification of these processes.

[0006] The technology behind this invention incorporates highly specialized software components, advanced reconciliation algorithms, and security systems to ensure transaction accuracy, confidentiality, and traceability. It also integrates with business management and accounting systems for efficient financial data synchronization.

[0007] This intra-corporate or inter-company settlement system has applications in a wide variety of industries, including banking, finance, international trade, and multinational corporations. It provides an innovative technological solution that facilitates financial management, reduces transaction costs, and facilitates strategic business decision-making by simplifying and optimizing the settlement process between two or more payers of multiple transactions, reducing errors, and increasing efficiency in asset flow and accounting. Previous State of the Art

[0008] There are some prior art methods for reconciling and clearing transactions between corporately related or external entities. For example, US Patent 2019 / 0385157 discloses a method for intercompany clearing based on a distributed ledger comprising: receiving, from a first entity within an organization, a deposit of a first amount of funds into a first account; tokenizing the first amount of funds and writing the first amount of funds to a first token wallet for the first entity on a distributed ledger; receiving, from a second entity within an organization, a deposit of a second amount of funds into a second account; tokenizing the second amount of funds and writing the second amount of funds to a second token wallet for the second entity on the distributed ledger;and executing a transaction involving a transfer of a transaction amount from the first entity to the second entity by deducting the transaction amount from a token balance in the first wallet and adding the transaction amount to a token balance in the second wallet.;

[0009] Other related systems or processes have also been developed, such as the one described in the solution taught in WO 2019 / 173645. Specifically, a transaction clearing system is disclosed in which a financial management system receives information associated with multiple transactions and calculates the overall obligations and exposures by asset and counterparty. The financial management system further identifies multiple thresholds associated with the multiple transactions and selects transactions for a particular clearing cycle that align with the overall net bilateral obligations and exposures between the counterparties.

[0010] From another perspective, intercompany loan management systems have also been proposed, such as the one described in US 2006 / 0294003. Specifically, this solution provides a computer-based intercompany loan system (ICLS) for managing multiple intercompany loans between multiple lending companies and multiple borrowing companies. The ICLS includes a loan management module for establishing and maintaining a loan between a borrower and a lender, and also comprises a batch processing module for receiving and processing entries from a master ledger representing loan events to facilitate automatic intercompany settlements. Furthermore, this invention provides an administrative module for defining and managing user access and privileges with respect to the computer-based intercompany loan system, and for maintaining general ledger tables.

[0011] There are also other related systems such as the one described in WO 2002 / 015097 which focuses on the development of an electronic information processing repository that receives position information from clearing houses, determines net margin and hedging information using the position information for an entity, and returns the net and hedging information to the clearing houses.

[0012] In this scenario, systems that promote transactional efficiency between entities and deliver reliable methods are a real need for companies, and there remains an opportunity to develop comprehensive systems for multiple entities and iterative or repeated transactions, such as the one proposed in this invention.

[0013] Description of the Invention

[0014] The present invention relates to a method for settling multiple transactions executed in a system based on auditable record technologies, said system and method operating as follows: Considering a group of entities participating in the system, and controlling means composed of business rules executed by software layers or logical means, the process begins with the representation of the initial real balance that each entity has, in a transactional module. As transactions are carried out between the participants of the group, the virtual balances reflect in real time the final liquidity position of each and every one of the participants.

[0015] Once a time interval, defined by the controlling media, is reached, they execute the balance consolidation stage. This stage seeks to reflect the system's evolution in the actual balances, with the fewest transfers possible in the traditional system. This is done by applying a netting algorithm based on maximum flow resolution algorithms on graphs, which ensures the minimum number of transactions between participants.

[0016] The method also provides an accounting system leveraged on blockchain technologies, with cryptographic wallets and smart contracts to track transactions between entities, offering a comprehensive solution.

[0017] Access to this system is achieved through one or more application programming interfaces (APIs) provided to participating entities so that they can connect to a platform (or proprietary means) where the controlling means operate and the method of the invention is executed. Likewise, connection to the traditional banking system occurs through this platform via secure channels and application programming interfaces with traditional entities.

[0018] Description of the Figures

[0019] Figure 1. Diagram of the system of the invention in a general aspect.

[0020] Detailed Description The multiple transaction settlement system and method is an innovative solution that aims to improve the efficiency and accuracy of handling financial transactions between multiple entities, whether companies, financial institutions, or other organizations. In the case of business groups, the dominant entity of the group will have the authority to establish the rules of the system; alternatively, there may be an entity that establishes said rules for the organizations participating in the system. This entity will be responsible for parameterizing the execution rules of the system's controlling means. The invention is based on several key steps, described below:

[0021] Entities using the system have their balances represented in a virtual wallet. When a circumstance triggers a payment obligation between two represented entities, that obligation is recorded in the system through a token transfer from the debtor's wallet to the creditor's wallet. This allows the balances between these entities to be represented in the system (virtual balances), verifiable in real time.

[0022] The controlling entity defines a recurring reconciliation period during which a settlement algorithm is executed, netting the obligations to be finally executed in the traditional transactional system. This netting and the reduction in the number of transactions in the traditional transactional system result in financial savings related to cost optimization.

[0023] In this particular aspect of the invention, the cost reduction comes from the execution of transactions, settlements, operations, and netting within the inventive system, compared to the execution of these same operations within the traditional system. Specifically, the cost reduction consists of providing an alternative to the traditional transaction mechanism through proprietary recording media, the cost of which is much lower than the cost of a transaction within the traditional transaction system.

[0024] Recording payment obligations: Once the payment obligation or transaction to be executed has been recorded, it is represented on the blockchain by the transfer of tokens from the debtor's wallet to the creditor's. Tokenization involves the digital representation of this transaction in the form of a token transfer, which guarantees its security and traceability.

[0025] Specifically, the tokenization of the transaction proceeds as follows: for each transaction, tokens are debited from the debtor's balance sheet and credited to the creditor's balance sheet; the number of tokens allocated represents the same amount as the payment obligation in the currency previously agreed upon in the system's controlling media.

[0026] In this same aspect of the invention, the tokenization of the transaction comprises a rules engine that, based on the executed transaction, determines the tokens to be allocated, a tokenizer for the balances, and a transaction ledger. Specifically, the availability of the tokenized variations is individualized according to the agreements between the system participants and the predetermined rules of use recorded at the time by the controlling entity. The transaction engine comprises an accounting ledger system, which represents the asset to be transacted and the transacting parties, as well as the operations between said parties. The engine involves systems to ensure the transparency of the transactions, as well as the integrity of the accounting, making use of database and / or blockchain systems, if necessary.

[0027] Finally, in this same aspect of the invention, the process is repeated in the period established by each controlling entity, which results in each iteration in a balance to be transacted between the system participants, and generates a payment obligation to be executed in the traditional transactional system.

[0028] Specifically, this process is repeated as follows: entities or users participating in the system maintain a balance within it. As entities generate transactions between themselves, said transaction is recorded in the system through a transfer of tokens from the debtor's wallet to the creditor's wallet. This allows the balances between said entities to be represented in the system (virtual balances), verifiable in real time. Through a netting algorithm, the obligations between the entities are determined and settled with a minimum number of transactions in the traditional system or through the international network necessary for reconciliation.

[0029] Financial Cost Savings: The system enables an efficient flow of financial resources to cover operating expenses associated with transactions and balance settlements.

[0030] Specifically, financial cost savings operate as follows: expected transactions between entities occur within a specified time interval. If each of these transactions is carried out using traditional mechanisms, then the total cost of the transaction during the specified time depends on the costs associated with each transaction. The proposed system performs a given number of transactions in a proprietary ledger where the cost per transaction is negligible compared to the transaction costs of traditional mechanisms. The netting results in a minimum number of transfers between entities using traditional means to achieve reconciliation.

[0031] Similarly, transaction verification and balance validation will depend on the transparency, publicity, and validation needs of each case, as well as the parameterized or predefined rules defined. These verifications can optionally include centralized methodologies such as traditional databases, or decentralized ones such as blockchain, among others.

[0032] In another general aspect of the invention, the multi-transaction settlement system comprises proprietary recording means, a tokenization engine, and a balance consolidation process.

[0033] The multi-transaction settlement system relies on blockchain technologies and smart contracts, ensuring the security and automation of the entire process. Smart contracts allow for parameterization of rules, facilitating the system's adaptability to the specific needs of the entities involved. In this same aspect of the invention, proprietary record-keeping media operate as a lower-cost transactional alternative to the traditional transactional mechanism, and the tokenization engine provides the digital representation of transactions in the form of tokens.

[0034] This invention represents a comprehensive solution for managing financial transactions between entities, improving efficiency, accuracy, and transparency in account settlements. Its application can be extended to a wide variety of industries and organizations seeking to simplify and optimize their financial and accounting processes, as well as those seeking a strategic business interest in developing their own settlement ecosystem.

[0035] Additionally, the APIs provided to entities to communicate with the system must be taken into account, using a standard, open, and independent description format. These interfaces provide the secure connection layer necessary for communication between parties, as well as sufficient resilience and availability to provide a robust service. Similarly, the system connects through secure channels via APIs with traditional entities, which are provided by these entities to the platform to carry out the clearing transactions necessary for the system's flow.

Claims

Claims 1. A method for settling multiple transactions, comprising the steps of: representation of the actual balance of the participating entities in a transactional module, recording of transactions between one or more entities through tokenization within a set period with a settlement and netting algorithm, which are reflected in real time in individualized virtual balances for each entity, consolidation of balances and minimization of transactions in the traditional transactional system.

2. The method of settling multiple transactions according to claim 1, wherein as transactions are carried out between the participating entities, the virtual balances reflect in real time the final liquidity position thereof.

3. The method of settling multiple transactions according to claim 1, wherein a financial cost compensation step is included.

4. A multi-transaction settlement system comprising an accounting system leveraged on blockchain technologies, with cryptographic wallets, proprietary record-keeping media, and a tokenization engine, all of these associated with one or more smart contracts for tracking transactions between entities or database structures.

5. The multiple settlement system according to claim 5, wherein the proprietary recording media operates as a lower-cost transactional alternative to the traditional transactional mechanism.

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