Protecting a company from foreign exchange exposure: an organizational approach
Article Abstract:
Decentralized management of decentralized foreign exchange exposure can work just as well for some firms as complete centralization works for others. Treasurers attempting to choose a specific framework should investigate such issues as intercompany billing policy, the volume of intercompany cash flows, third-party billing policy, cash-flow volume by country, marketing's determination of the foreign-currency-denominated price of a service or product that has a US dollar cost price, the location within the company of foreign exchange risk management expertise, the segmentation of the company's exposure management information and accounting needs, and the extent to which centralization might lead to fewer conversions. An organizational matrix is presented showing four ways to manage foreign exchange exposure.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1987
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Close scrutiny of LC (letter of credit) documents speeds cash, cuts discrepancy rate
Article Abstract:
According to a 1985 survey by the National Conference on International Trade Documentation (NCITD), the average discrepancy rate on initial letter of credit (LC) documentation is 53 percent. Until discrepancies are cleared up, sellers do not receive payment for goods, resulting in cash flow problems. The most common discrepancies are due to expiration of credit, late presentation, shipping later than designated shipping dates, discrepancy between LC and invoiced description of goods, and missing documents. Companies should first determine their discrepancy rate; discrepancies may be reduced by having LC documents double-checked by an experienced company executive and by encouraging staff to attend LC training seminars.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1986
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