Ledger System

A ledger system is a multi-layered financial record-keeping system that tracks money and transactions. The Federal Reserve maintains the master ledger for all banks, banks keep ledgers for their customers, and financial service providers maintain sub-ledgers for their individual client accounts. Each layer provides a more detailed view of account balances and transaction activity.

How Ledger Systems Work

Think of ledger systems as nested accounting books - each level tracking transactions in increasing detail:

• Federal Reserve Level - Master ledger showing balances between all U.S. banks
• Bank Level - Each bank's ledger tracking all customer accounts
• Service Provider Level - Sub-ledgers tracking individual client accounts within larger programs
• Individual Account Level - Detailed transaction history for each end user

Hudson's platform enables debt settlement companies to maintain sub-ledgers for individual client accounts. When a client deposits $500, this transaction appears in: (1) the client's individual sub-ledger showing their $500 deposit, (2) the debt settlement company's ledger at their bank showing total deposits, (3) the bank's ledger showing funds received, and (4) ultimately the Federal Reserve's ledger showing movement between banks. Each layer provides the appropriate level of detail for that stakeholder.

Key Benefits

• Transparency - Multiple independent records create accountability
• Accuracy - Discrepancies between ledger layers reveal errors quickly
• Auditability - Complete transaction history at every level‍
• Scalability - Sub-ledgers enable managing thousands of accounts efficiently