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International Monetary Relations
Finance & Accounting
Pages 5 (1255 words)
Name: Institution: Instructor: Subject: Date: International Monetary Relations: Five steps to a more effective global treasury Companies in different regions are focusing their expansion in the developing countries a move that is adamantly creating difficulties in efficiency and effective business operations management.
This will be centralized in one country hence policy setting as well as decision making can be improved on funds management. Execution is however, not personalized. Amongst the problems experienced, is currency risk when the value of exchange rates is not monitored. The treasurer and CFOs of the MNCs need to understand fully how to organize, report and integrate business operations for efficiency in resource use. Globally, it has been seen that idling of cash of up to $80 billion is a loss to the economy. Such a huge cash flow not invested for 3 months is non-beneficial and in turn loses value. Effective global treasury is aimed at managing such funds seldom producing economic benefits. Other aspects to be considered include the reporting systems in use, managing cash flow and working capital, and strengthening governance. The analysis shows that MNCs are making detrimental decisions if errors are made. One example reveals a loss in the value of foreign exchange when a North American company erroneously paid the wrong employee in the wrong country. A reversal of the transaction saw the company lose part of its money. Spreadsheets programs predispose the MNCs to inaccurate reporting. This can cause hedging of funds, to invest or to borrow where conditions do not depict so. ...
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