12.16.1 Multilateral netting
When accounts among subsidiaries lead to partially or wholly offsetting transfers, a cash management centre at corporate headquarters can net the transfers and move only the final sum required. For example, in Figure 12.3, if Nestlé France sells $1 million of products to Nestlé US, it will incur an account receivable. Simultaneously, the home office in Switzerland may borrow $1 million from Nestlé US . If Nestlé Switzerland sells some product to Nestlé France , the account could be denominated in US dollars, so partially or completely offsetting the other two liabilities. Where more than two parties are involved, this process is called multilateral netting of accounts.
Now read the Hill (2005) version of centralised cash management and multilateral netting.
In your text
Hill 2005, Chapter 20, pp. 680-683.
Previous Page