The savings in a Multilateral Netting System are large and understated. There are 2 main areas of savings:

Savings in the Banking System

  • Payment costs are reduced because fewer payments are made
  • Float. Concentration of payments and reduction in number of banks used leads to a reduction in float
  • FX. Centralised and netting off. Remaining FX is dealt centrally at significantly better rates.

We estimate you will save at least 1% on all (unhedged) International payments made through the netting i.e. $10,000 on every $ Million. Please run the Netting Savings Calculator to see what savings you might expect to make.

Some examples of Savings

CorporateNo. of EntitiesNo. CurrenciesNo. Invoices per MonthGross Vol. per MonthSaving per Annum
Group A 352 24 43,000 $ 320M $ 3,700K
Group B 100 22 2,700 $ 60M $ 1,200K
Group C 40 13 26,000 $ 25M $ 800K
Group D 12 3 800 $ 6M $ 240K

We estimate the saving from a corporate group between 0.1% and 0.4% of gross volume of intercompany.

Savings in Time and Effort

Simplified payment procedures across group

  • One payment per month, simplifies in-house financing
  • Brings structure and discipline to Intercompany
    • Impacts on collection, cash flow, liquidity
    • Visibility of Intercompany across group
    • Internal payments are settled in due time
    • Good forecasting of internal receivables
    • Improvement of communication between units
    • Disagreements between units are discussed and solved
    • Huge reduction in internal mismatches at group level

A properly implemented and run multilateral netting system can be the most profitable corporate treasury vehicle.

Who Can Benefit from Multilateral Netting?

  • Any corporate group or collective body with
    • Reasonable cross border Intercompany flows > $10M per month
  • Or Any corporate group where the Intercompany is a mess

Coprocess conducted a poll amongst users who attended the Coprocess User Group Meeting and these are the results

How important is netting to your company?
  • Important - 34
  • Very Important - 62
 
Do you think the benefits of multilateral netting are well known?
  • Not at all - 14
  • Somewhat - 14
  • Yes to some extent - 41
  • Yes to large extent - 28
 
Do you think the benefits of multilateral netting are understated?
  • Not at all - 3
  • Somewhat - 20
  • Yes to some extent - 48
  • Yes to large extent - 21
 
In the Corporate Treasury environment, do you think multilateral netting is underused?
  • Not at all - 3
  • Somewhat - 21
  • Yes to some extent - 48
  • Yes to large extent - 21
 
We asked attendees at our 2014 User Group Meeting what is the single most important feature of intercompany netting:
 
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+41 22 311 1383

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+1 844 332 7083

or click here

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