As a senior-level financial executive, I can now pursue many more options in managing the treasury function for my company, ULVAC Technologies. At the recent Committee for Finance and Information Technology (CFIT), John Howell of Grant Thornton presented a number of these treasury topics in detail: in-house banking, intercompany netting, intercompany payments and cash pooling.
My transfer price experience has kept me an arm’s length from transactions and may have been a reason I neglected to look further into treasury options between a sister or parent company. Intercompany cooperation in banking had also not been on my radar of things to change in our treasury operations, but learning is the primary reason for me to participate as a member of FEI and specifically, CFIT.
From what we discovered, in-house banking (IHB)
advantages include the improvements in the use of liquidity, risk management, operational efficiency and visibility of group activities.
Below is an excerpt from my favorite slide from the presentation:
Like all CFIT presentations, there is a technology component to these financial options, but rarely have I seen treasury solutions at these meetings. The technology available today makes it much easier to keep track of the complexities around IHB. The IHB acts like an external commercial bank by keeping track of all the transactions and providing statements at the end of period. I found the presentation to be particularly interesting as it is something I could implement based on my international transactions between related entities.
As for cash pooling, I could manage all the U.S. dollars for our 50 plus global subsidiaries and possibly invest all those globally pooled USD funds at better interest rates than my sister companies could get in their respective countries.
Like all CFIT events, it was truly an eye opening and educational experience.
Dave Sackett is CFO of ULVAC Technologies, Inc.