What is cash settlement?

Cash settlement occurs as part of payments concerning futures contracts and also as part of the settlement process in a legal dispute. In general, cash settlement is simply the process of using cash to settle a certain type of outstanding obligation, thereby fulfilling the conditions of the transaction and allowing the matter to be considered solved or completed. After delivery of cash, the originator and the receiver involved in the transaction can freely focus on other matters.

In terms of futures trading, the common process of using cash settlement as a payment method is a common process. In principle, the settlement of cash will be essentially extended at the date of trade for security than to the settlement date. This allows the bottom of the security to maintain the transaction to maintain the basic asset that formed the basis for futures or options in the first place.

In the case of legal situations, the settlement of cash is often ordered as a means of restitution in the event of an action. Generally speaking,The court shall order the entity to receive a fixed amount of cash or monetary assets that will win the action within the specified period of time. In the event that the conditions of cash settlement are not honored, further restitution may be ordered, asset may be confiscated to compensate for the debt, or one of the parties can spend time behind the bars.

Some suppliers also offer the client settlement cash to meet the outstanding debt. This is often the case where a customer faces serious financial problems and can consider bankruptcy. In order to avoid inclusion as a creditor in bankruptcy, the supplier may offer the offset of cash to the client who can be up to half the actual amount due. This is often sufficient to cover the actual cost of the supplier, although it eliminates any profitable factors.