Intercompany Netting (IC Netting)

Intercompany Netting is used for subsidiaries to send money between another subsidiaries of their parent company. These amounts are entered throughout the month and are settled after a period, typically 1 month.

For instance, the Parent Company submits an IC Netting form that shows Subsidiary A owes $50,000 to Subsidiary B, and that Subsidiary B owes $40,000 to Subsidiary A. They can then set a netting value of $10,000 (that Subsidiary A owes to Subsidiary B). This would save the Parent Company the foreign exchange rate costs for $80,000 since it will only need to exchange $10,000 of the $90,000 in exchanges. Not only will it save money on the cost of an exchange, but IC Netting will save time as well. By submitting the IC Netting form, GPS will then do all the work to net them properly. This also means the company will not lose a rate when accepted. Submit the form, obtain a rate, accept the rate, and the rest is done by GPS.

There are three advantages to reducing the volume of foreign payments:

• Less money in transit means more money available for investment.
• Fewer foreign currency payments mean reduced transaction risk.
• A reduction in the commission paid on foreign exchange transactions.