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