- EDI and EFT avenues
- Same-day value basis transfers
The parent firm, its treasury staff, and bank representatives would in turn also be
responsible for gaining whatever scale and scope benefits which may be derived from
managing the related-party payments, the cash flows that are intrafirm:
- Leading and lagging of payments
- In-house factoring
- Bilateral or multilateral netting of payments
- EDI and EFT avenues
- In-house banking/reinvoicing
The last item on the list requires additional discussion. The multinational frame-
work illustrated in Exhibit 5.4 includes the potential creation of an in-house bank, a
unit that could borrow and lend between units of the firm, offering competitive mar-
ket rates for credit/investment that could be managed more effectively given proper
cash planning throughout the multinational.
Each of the two cash management goals could be more effectively achieved with
this type of structure, more effective cash management by either using excess cash
flow from some units to supplement cash needs in other units (in-house banking), and
to reposition funds for tax and foreign exchange management through repricing and
invoicing (reinvoicing center). This comes at varying degrees of cost; in-house bank-
ing can often be achieved with acceptable separable costs, the savings often easily
5.4 INTERNATIONAL CASH MANAGEMENT 5 • 13Exhibit 5.4. International Cash Management: U.S.-Based Multinational with French and
Spanish Subsidiaries.