A cash management tool that minimizes intrafirm fund transfers is ______.
A) cash in advance
B) lockboxing
C) multinational netting
D) transfer pricing
E) None of the above

Question

Quizplus · Accepted Answer

Multinational netting is a cash management tool that allows multinational firms to reduce the number of intrafirm fund transfers by netting out the balances owed between subsidiaries in different currencies. This results in a more efficient cash flow management system with reduced transaction costs and foreign exchange risk. Cash in advance requires customers to pay upfront before goods and services are delivered, lockboxing is a system where customers mail their payments to a specific address for processing, and transfer pricing is a mechanism for determining the price of goods and services transferred between different units within the same company. None of these options specifically minimize intrafirm fund transfers.

A Cash Management Tool That Minimizes Intrafirm Fund Transfers Is