International cash management

Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.

• Submitted by:• Iqbal Singh (07)• Ashish Borikar (09)• Gurdeep Nagi (37)• Kalpesh Nahata (38)• Rishi Shrivastava (54) Submitted to

Prof. Chitra Gouvnder

Cash Management

• Collection, concentration, and disbursement of cash.

• Preventing bankruptcy• Important for new and growing businesses

Cash Collection and Disbursement

• Reduce the time • Three "floats”

Cash Management in Troubled Times

SERVICES GENERALLY OFFERED

Account Reconcilement Services.Armored Car Services.Automated Clearing House.Cash Concentration Services.Lockbox - Wholesale

Contd…….

Positive Pay.Sweep accounts.Zero Balance Accounting.Controlled Disbursement.Advanced web service.

Objectives

• The ability to pay bills as they come due• Minimize the cash balance within the company with the

goal of optimizing corporate fund utilization.• To minimize the cost of funds, especially with high

interest rates in many countries.• Improve liquidity on a global basis.• To reduce political, economic, and exchange risks

through thing such as insurance, careful negotiations, forward contracts, and currency options.

• To improve the return on investment through careful consideration of return on investment and return on net worth.

Contd……

• Cash management can be centralized, regionalized, or decentralized.

• investment of excess funds.

• Accounts Receivable Management• Inventory Management• innovation or expansion

Cash Flow Analysis: Subsidiary Perspective

• Subsidiary Expenses• Subsidiary Revenue• Subsidiary Dividend Payments

Centralized Cash Management

Cash flow of overall MNC

Techniques to Optimize Cash Flows

• ¦ Accelerating cash inflows.• ¦ Minimizing currency conversion costs• ¦ Managing blocked funds• ¦ Managing intersubsidiary cash transfers

Complications in Optimizing Cash Flow

• ¦ Company-related characteristics• ¦ Government restrictions• ¦ Characteristics of banking systems

Investing Excess Cash

• How to Invest Excess Cash

Determining the Effective Yield

• Implications of Interest Rate Parity• Use of the Forward Rate as a Forecast

Diversifying Cash across Currencies

Dynamic Hedging

THE RISE OF THE MULTINATIONAL CORPORATION

Evolution of the Multinational Corporation

• Raw-Materials Seekers• Market Seekers.• Cost Minimizers.

CASE