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Efficient Scheduling of Cross-Border Cash Transfers
Vol. 15, No. 2 (Summer, 1986), pp. 40-49
Stable URL: http://www.jstor.org/stable/3664977
Page Count: 10
You can always find the topics here!Topics: Payments, Cash transfers, Transaction costs, Cash management, Conversion costs, Cash payments, Multilateralism, Third party reimbursement, Scheduling, Foreign exchange
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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.
Financial Management © 1986 Financial Management Association International