Payments netting

Treasury Management was tasked with setting up and running a payments netting process for an industrial business group active in over 30 countries

  • First inter-company netting run within two months of initial decision
  • Immediate benefits from a new managed multilateral netting process
  • Receivable driven structure gave administrative advantages such as reduced payments ledgers, improved payments discipline and quicker inter-company reporting at month-end
  • Pay-off on investment was less than three months

After a pre-study on intra-group invoicing and the inter-company payment process, a client sought a managed multilateral netting routine. We assisted in the decision making process by analyzing payment flows and creating a case with pros and cons. We agreed on a timetable for implementation and with a two months lead time from decision to launch, the group had sufficient time to also analyze specific country restrictions and we could set-up and control, for example, system parameters, netting base, static data, and inform group companies and banks. The savings potential indicated a less than twelve month’s return on investment.

The group is active in some 30 countries, but given that the main intra-group invoicing was denominated in EUR, the anticipated cost benefits were held prudent. Besides EUR some 14 other currencies for 51 netting participants were set-up. To add to the efficiencies a receivable driven structure was selected.

Utilizing our experience in management of outsourced netting and treasury activities together with our state-of-the-art netting product, the client received a professional and efficient implementation of the netting platform while running the ongoing activities in relation to the netting process, settlements, reconciliation and follow-up as well as Foreign Exchange activities.

back to case studies >