YYOBTM – Pending Trademark Approval Optimizing global financial operations by enabling netting transactions to execute real-time and decentralized using new age technology tools for corporates operating in multiple jurisdictions. This white paper explores the strategic approach of netting intercompany transactions and establishing in-house banks as an effective solution for companies that are operating in multiple jurisdictions. These solutions are complex and are usually privy to mostly large global multinational companies using global banking infrastructure and expensive treasury systems. Increasingly, more companies are operating in multiple jurisdictions early in their life cycle. This leads to higher cost and complexity of financial operations through increasing foreign exchange exposure, trapped liquidity that leads to higher working capital, escalating transaction costs, and complex regulatory compliance. The paper provides insights into the rationale behind netting transactions, the benefits it offers, and a comprehensive roadmap for implementing an in-house bank. 1. Introduction: Corporates in multiple jurisdictions operate in complex international environments where managing foreign exchange risks, transactions costs, and working capital efficiently is paramount. As smaller businesses start going global sooner in their life cycle, these efficiencies are required to be universally available to all but current solutions are expensive and take a longer time to implement. Thankfully, the technology tools available now are able to provide such solutions so that smaller companies can get the same benefit as larger multinational companies. The modern technology now can also help these companies set up a platform to implement the structure we like to call You are Your Own Bank (YYOBTM) instead of in-house bank, which is complex, expensive, and difficult to implement even for large companies. 2. The Rationale for Netting Transactions: Netting transactions involve offsetting mutual obligations between different entities within a multinational structure. This practice reduces the need for multiple cross-border payments and receipts, resulting in lower transaction costs and a more efficient use of working capital. Netting also minimizes foreign exchange exposure and enhances cash flow predictability.
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