International Cash Management Research Articles

A practical approach to global competitive factors

Multi-game simulations are the most widely used tools in international business and strategic management education. In Business Schools, all courses from Strategy to Finance are taught from case studies and books, using research results. But when managing a business, there is no way to learn the parts of the business from books by gaining experience in complete integrity. Company management competence requires practice in areas such as production, marketing, R & D, finance, operations, and strategy. The simplest way to practice this in the learning process is through business simulations and multi-game applications. These simulations help students to acquire workforce skills by practicing critical thinking, making better decisions and solving business problems. It has taken its place in education life as a powerful teaching tool for business simulations. The student teams compete with each other by running multinational enterprises over several game rounds, and the round represents a fiscal year. International business development games are decided and risk-free. During the simulation process, they have to decide on a product portfolio, pricing, advertising, production, R & D and financial structure in each round. International business aspects of the games include exchange rate fluctuations, trade barriers, different tax rates between countries, shipping points and international cash management. In the room, players are interested in the current national differences, including preferred ones, price sensitivity, production location, market growth, business environment, and economic growth. Instructors follow which decisions will be highlighted in the course's planned learning objectives and guide preferences for students. We will explore the decisions and knowledge of CAPSIM Global DNA in a multi-game design. This article differs from other studies in that it is a study that puts forward the theory and application of a computerized representation simultaneously.

The SEC and International Cash Management

This article describes the impact of the Securities and Exchange Commission (SEC) disclosure rules as they apply to U.S. corporations about transactions with companies in nations that were designated as state supporters of terrorism. The rules require broader and more detailed disclosures about executive compensation and the methods for valuing complex financial instruments. Various stakeholders want a deeper knowledge of management activities in these regions of the world. Cash balances held outside the United States by U.S. corporations are seen as being withheld from investing in growth and taxation in the United States. A most recent cause in the concern for increasing employment and economic growth is the focus on corporate cash balances held outside the United States by U.S. corporations, which are seen both as being withheld from investing in growth and providing jobs in the United States and not being taxed by the United States. This article describes the impact of the SEC disclosure rules as they apply to U.S. corporations, but does not address the validity of these concerns or the morality of corporate behavior. © 2015 Wiley Periodicals, Inc.

Letter From the Editor

Letter From the Editor

Currency Futures: Some Implications For International Financial Management

This paper tests the contemporary currency futures market for interest-rate parity, purchasing-power parity, market efficiency, and hedging effectiveness. The study finds that the currency futures markets is a highly efficient, hedging-effective market exhibiting significant degrees of interest-rate parity and (longer-term) purchasing-power parity. Finally, the study infers from such findings some practicable policy tools for international cash management, multi-country capital budgeting, currency forecasting, and the risk management of foreign exchange exposure.

A fuzzy transshipment model for allocating foreign currencies

A fuzzy approach is proposed to formulate and solve a transshipment-type model for the optimal allocation of foreign currencies in a Multinational Corporation (MNC) when costs are fuzzily defined. A simple method is presented to solve a transshipment model with fuzzy costs, and transshipment model with fuzzy supply and demand. The method is applied to an international cash management problem to handle the general problem of multinational cash flow netting and to provide the optimal solution of the allocation of foreign currencies in MNC. Such an approach can be important for transferring cash from subsidiaries which is a part of the cash mobilisation decision.

International cash management choices and SOX

When a multinational corporation that is an SEC issuer confronts the need to operate in different currency environments, the cash management question is simple: “In which currency should I settle my accounts?” The Sarbanes-Oxley Act (SOX) makes such cash management considerations immediate priorities of the certifying CEO and CFO. And the corporation faces several strategic choices. © 2006 Wiley Periodicals, Inc.

International working capital practices of Ghanaian firms

International working capital management is important to firms frequently operating in the international market. This article investigates the international working capital practices of top Ghanaian firms involved in international trade. The objective of the study is to ascertain the extent to which Ghanaian firms use international working capital management vehicles. The article focuses on two main areas of international working capital management; international cash management and international sales and accounts receivables management. The results of this study reveal low level of use of international working capital vehicles among Ghanaian firms. Recommendations are made in this regard.

International Cash Management Practices in a Russian Multinational

management practices in a Russian Multinational Company (RMC). The paper is motivated by the lack of empirical evidence on financial management practices outside the Western World (especially from Russia and from other Commonwealth of Independent States). Data for the analysis are gathered from documents and in‐depth interviews with finance managers in the company. The findings of the paper suggest that the company implemented an international cash management system reminiscent of international cash management discussed in the Western literature. For example, techniques such as netting, leading and lagging, re‐invoicing center and cash flow planning are used in the company. Thus, our conclusion is that financial management techniques are likely to be the same in Russia as in the Western world. However, differences are likely to be found in the ways in which these techniques are implemented and used in practice due to differences in environmental conditions. For example, the company did not use any of the sophisticated cash management models discussed in the literature. Our research has implications for understanding financial management practices outside the Western World, especially in Russia.

International Cash Management in the 21st century: Theory and Practice

This paper outlines the theoretical models of international cash management and assesses their implications for corporate practice. Corporate practice is then reviewed through the analysis of survey research and case studies. It emerges that whilst the implications of theoretical models are captured in essence by corporate practice, there is scant evidence of companies using sophisticated models in international cash management. The practice of international cash management is largely driven by developments in communications and computer technology, relaxation of regulatory and tax impediments, the internationalisation of banking and the development of new banking prod ucts. International treasurers may therefore be able to find appropriate cash management solutions to meet their business needs with the co‐operation of banks and technology providers. Further academic research should evaluate the extent to which corporate practice is consistent with extant multi‐currency balance and net work optimisation models and also explain why particular approaches to interna tional cash management persist in companies.

International Cash Management and Hedging: A Comparison of UK and French Companies

Several papers have investigated the use of foreign exchange (FX) derivatives but evidence on the use of international cash management meth ods to hedge FX is scarce. This paper contributes to the existing evidence by considering the use of international cash management systems to hedge foreign exchange (FX) risks using a sample of French and UK companies. We find that matching, netting and pricing policies are the most commonly used techniques in both the UK and French samples al though there is evidence of greater use of all cash management techniques in the UK. We also consider whether the theoretical explanations of hedging determine the use of cash management techniques for FX hedging, and if there are differences between the UK and French samples. We find support for the theoretical prediction that FX hedgers have higher levels of financial distress, and that these firms tend to be larger, more international and less liquid. We find little support for the under investment theory. The extent of internationalisation appears to play no role in the decision of French firms to use cash management techniques to manage FX risk, and the use of all cash management techniques were lower than in UK firms. These latter findings may be explained by the reduction in FX risk facing French firms following the introduction of the euro.

Leveraging geographic and information technology scope for superior performance: an exploratory study in international banking

Here we investigate the relationship between the use of geographic and information technology (IT) scope as complementary factors to affect the value of products, the cost of operations and the overall performance of firms. We introduce the IT/Geographic Scope Matrix (IGSM) as a framework with which to study and understand the relationship in order to better manage the firm. We develop expectations that the consistent use of either high or low levels of IT and geographic scope may result in better firm performance than inconsistent use, where high levels of one are matched with low levels of the other. We apply the IGSM in a study of eleven firms, all of which provide financial services, specifically international cash management and trade finance, to firms in Hong Kong. The results of our study suggest that the IGSM may be a useful tool for IS planning and research and have implications for the co-ordination of business and IT planning.

Expectations and Impacts of a Global Information System: The Case of a Global Bank from Hong Kong

Information system (IS) research suggests that the use of innovative information technology (IT), deployed globally with the right mix of organizational assets, may help firm performance by increasing scale and scope economies, customer value, operational efficiency and organizational effectiveness, and by providing opportunities for competitive advantage.This interpretive case study investigates the business value created by a combination of firm and IT strategy, global assets, and the use of an innovative IS to deliver products in the international trade finance and cash management business. Hexagon, a proprietary on-line banking application that supports the international management of financial assets, was developed by HSBC Holdings, plc. HSBC has used Hexagon to leverage a presence in 79 countries to create value for the customers and marketing advantage for itself Quantitative and qualitative analysis reveal Hexagon's impacts on HSBC in terms of performance impacts anticipated in the IS literature and in terms of firm level business objectives.

Short-Term Financial Management.

Most finance students will do short-term finance assignments when they go to work. In recent survey of CEO's, Controllers, and Treasurers that appeared in Financial Practice & Education, the question was asked which elective is the most important and 81% responded a short-term financial management course should be required. Both authors hold a Certified Cash Manager credential. Strengths include broader and better integrated coverage of treasury and working capital management, while using valuation and the cash flow timeline as integrating themes. Up to date presentations of developments in treasury management, banking deregulation, globalization of financial services delivery, electronic commerce, international cash management, and foreign exchange risk with a decision making emphasis throughout offers a complete view for students. This text is appropriate for upper level undergraduate finance courses in short-term financial management, working capital management, treasury management, and cash and cash flow management. It can also fit the MBA level financial management and short-term financial management courses.

Stochastic Network Programming for Financial Planning Problems

Several financial planning problems are posed as dynamic generalized network models with stochastic parameters. Examples include: asset allocation for portfolio selection, international cash management, and programmed-trading arbitrage. Despite the large size of the resulting stochastic programs, the network structure can be exploited within the solution strategy giving rise to efficient implementations. Empirical results are presented indicating the benefits of the stochastic network approach for the asset allocation case.

A dynamic deterministic model for international cash management

The continual growth and proliferation of multinational firms has made the task of managing international cash payments exceedingly complex. This has prompted the design and construction of deterministic network-based models to aid management in deriving efficient programmes of payments netting in a multicurrency environment. Previous solutions have been limited by either adopting a single period approach, or neglecting the cost compounding effects of executing financial contracts, or lacking the scope to fit into a global cash management system. The present formulation attempts to resolve these mismatches by adopting a wider perspective than currency netting. The model is designed using a network formulation driven by an objective function based on the maximal flow principle and illustrated by an example.

International cash management: a study of the practicles of u.k.‐based companies

International cash management: a study of the practicles of u.k.‐based companies

International cash management: A study of the practices of U.K.-based companies

Little information is available on the current practices of cash and foreign-exchange management by companies—especially outside the United States. The purpose of this survey was to investigate responsibilities and practices of international cash management. Although the survey had a much broader scope, this article addresses six important issues with regard to cash and foreign-exchange management: policy and responsibility, centralization versus decentralization, cash-flow planning and foreign-exchange forecasting, banking relationships and cash management services, hedging translation and transaction exposures, conflicts with other departments. Although the size of the sample is too small to permit statistically significant conclusions, some interesting findings can be drawn from this study.

Payments Netting in International Cash Management: A Network Optimization Approach

Rationalization of global production and operations by multinational corporations have created a large volume of inter-company funds flows. By a process of netting interaffiliate payments, significant savings in cost can be realized. Shapiro formulated the multinational payment netting problem using linear programming. This paper presents a network optimization approach that is both computationally efficient and intuitively appealing. Further, the proposed approach recognizes the need to integrate the netting system with the MNC's overall cash management systems as well as by explicitly accounting for cash outflows on account of transfer costs. Additionally, the paper provides insight into actual corporate netting practices.

International Cash Management A study of the practices of Netherlands Based Companies

An increasing amount of effort has been devoted to cash management in the Netherlands in recent years but a survey undertaken among 350 Netherlands based companies (1982–3) indicates that cash flows are generally badly managed, cash and foreign exchange being handled on the basis of ad hoc opinions rather than soundly conceived cash management policy. Improvements can be achieved through clarification of organisational problems, positioning cash management within the entire financial function of the company, and definition of the foreign exchange managers' tasks and responsibilities.

An Exercise in Product Development for the 1980s:

The author takes one example of product development, the introduction by Midland Bank in 1982 of its International Cash Management Service, in order to highlight the way that a new product may in practice be brought to the market.