The following table indicates the aggregate quarterly invoices (in US$) between
ID: 330416 • Letter: T
Question
The following table indicates the aggregate quarterly invoices (in US$) between each affiliated company for a recent quarter.
Payee (thousands)
Payor (thousands)
Australia
Belgium
Germany
Japan
Singapore
UK
US
Australia
9
217
197
282
211
144
Belgium
278
59
220
294
160
65
Germany
93
298
186
6
94
296
Japan
125
153
220
272
294
216
Singapore
15
190
240
9
238
95
UK
139
228
99
272
170
298
US
70
47
86
247
281
260
If the company uses a re-invoice center, there may be more payments and as a result higher transaction costs than with e.g., multi-lateral netting. Why might the company still elect to use a re-invoice center?
Payee (thousands)
Payor (thousands)
Australia
Belgium
Germany
Japan
Singapore
UK
US
Australia
9
217
197
282
211
144
Belgium
278
59
220
294
160
65
Germany
93
298
186
6
94
296
Japan
125
153
220
272
294
216
Singapore
15
190
240
9
238
95
UK
139
228
99
272
170
298
US
70
47
86
247
281
260
Explanation / Answer
In an company which has international operations the re-invoicing system is used whereby the center receives and pays all invoices in the currency of the originating country and then reinvoices the product to the receiving company in the currency of the receiver's home country.
This method is employed to protect the company from risk exposure caused by currency fluctuations.
This enables the local operations of the company to supply currency to the local units thus improving short term liquidity by providing flexiblity in intra-firm payments.
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