The benefits of netting fall into two categories: ones that are easy to put a figure on, e.g. reduction in payment costs, and ones that are more difficult to quantify.

QUANTIFIABLE BENEFITS OF NETTING:

• Transaction costs are reduced because fewer payments are made.

• Concentration of payments and reduction in number of banks used leads to a reduction in float Float is typically zero (same day value payments) in a well run netting system.

• FX is matched, (i.e., less FX is purchased).

• Non-matched FX is aggregated to larger volumes at better rates.

NON-QUANTIFIABLE BENEFITS OF NETTING:

• Simplified payment procedures throughout the whole group substantially reduces administrative costs at each subsidiary.

• Improved payment discipline.

• Financial planning is made easier and improved.

• Creation of a useful cash management database and integration possibilities.