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Efficient Scheduling of Cross-Border Cash Transfers

M. Anvari
Financial Management
Vol. 15, No. 2 (Summer, 1986), pp. 40-49
Published by: Wiley on behalf of the Financial Management Association International
Stable URL: http://www.jstor.org/stable/3664977
Page Count: 10
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Efficient Scheduling of Cross-Border Cash Transfers
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Abstract

Cross-border cash transfers are required to effect intra-MNC payments. These entail transaction costs, e.g., direct transfer costs, opportunity costs of funds in-transit, and foreign exchange spreads. In addition, they expose the MNC to the risk of currency fluctuations and may lead to the necessity of costly hedging operations. In this paper a mathematical program is developed to aid the financial manager in identifying the optimal transfer schedule. The model uses a multiperiod framework and utilizes the existing opportunities for payment netting as well as leading and lagging of invoices. It yields a transfer schedule that conforms to foreign exchange control regulations and internally imposed exposure policies of the MNC.

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