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Treasury Structures

There are various models for structuring treasury to manage international flows. The trend is toward greater centralization on a regional basis to realize economies of scale and reduce duplication of systems, people, and functions.

Tax-advantaged Centers
A number of countries offer tax incentives and other benefits to attract multinational businesses to manage their treasury and other shared functions through a local subsidiary. Attracting international Read the rest of this entry »

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Netting

Netting is a process that allows entities to offset total receivables against total payables. The concept has already been discussed in the context of clearing and settlement systems. Each entity either receives or pays a single net amount to the netting center in its local currency. Exhibit 7.3 illustrates the process. Read the rest of this entry »

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Cross-border Concentration

Cross-border concentration is used when notional pooling is not available or when the cash manager wants to consolidate the surplus positions in currency accounts. Because funds are concentrated into cash pools, there is often a confusion between notional pooling and concentration. Some banks use the terms interchangeably, especially when referring to cross-border pooling, when describing cross-border concentration into cash pools, rather than cross-border notional pooling. Read the rest of this entry »

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Notional Pooling

Notional pooling (also known as interest allocation) is a bank service that, on a daily basis, offsets debit and credit balances of a company’s separate accounts to calculate a net balance. The bank pays interest on a positive overall position, or charges interest on a negative net balance. The individual balances never physically move and there is no commingling of funds. Notional pooling is available in most countries with a well-established, nationwide banking system. Read the rest of this entry »

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International Lockboxes

The concept of a lockbox is valid anywhere in the world where payments are still being made by check, across a wide geographical area, and where there is a potential for mail, processing, and availability delays. Although the precise mechanics may not be the same as in the United States, the effect of an international lockbox (also known as an intercept point) is to collect a check close to point of mailing, preferably in the same currency center, and to deposit the check into the local banking system as quickly as possible. Read the rest of this entry »

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Foreign Currency Accounts

There are various options in establishing foreign currency accounts. The two major ones are:

Centralized. One of the simplest ways to manage foreign currency accounts is to maintain subaccounts in the branch of a single bank, often called a multicurrency account. Centralized currency accounts are easy to set up and maintain: there is one set of account-opening documentation, lower maintenance fees, and a single point of contact for customer service. The disadvantage is that a currency handled in a country other than that of its domicile is subject to availability delays upon deposit and up to two days delay on transfer. Cross-border currency transfers Read the rest of this entry »

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Basic International Cash Management Tools (2)

It is important that users’ expectations be realistic as to what a global balance report can provide.

In the past, in order to be able to initiate transfers, a company had to subscribe to the proprietary electronic banking platforms of all their banks. These multiple subscriptions were not always convenient and posed additional access-security risks for the company. The SWIFT MT 101 message (see Appendix C) provides a solution by allowing a chosen “host” electronic banking platform to act as the conduit to transmit wire transfer messages to other banks. Read the rest of this entry »

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Basic International Cash Management Tools

Although companies have been managing their international cash flows for more than 20 years, it is only relatively recently that off-the-shelf cash management services have become widely available. Initially these products were offered only through the major global banks. However, smaller regional banks and third-party providers are now forming alliances and networks to offer international cash management services to their global customers. The growth of the Internet and improved communications technology means that many international services can now be offered without requiring physical branches worldwide. The principal tools are described in the sections that follow. Read the rest of this entry »

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Summary

The inevitability of financial change requires treasurers to be cognizant of new products, new regulations, and new opportunities to assist their organizations. Traditional U.S. cash management practice will become more electronic, and Internet-based technologies will drive the integration of accounting, treasury, sales, purchasing, and manufacturing systems. Bankers will use their scarce capital for profitable business opportunities, and will reduce Read the rest of this entry »

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Successful Story of Your Business with Best Website

Internet becomes the source of most successful story that you ever hear these days. This is true, because in the internet, you can get everything that you need. For a business, internet has a big part that can decide the successful story of your business. With internet, you can do every effective ways that can lead your business to the successful. One of them is by creating a website for your business. Read the rest of this entry »

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