This lesson examines the financial arrangements between entities within a corporate group, including intercompany loans, netting, and the use of an in-house bank.

7.1 Intercompany Financing
Multinational corporations often require funds to be moved between entities to support operations. This is a key task in treasury operations; the CTP exam includes “Manage intercompany financing (including loans, repatriation, in-house banking)” . This can involve direct intercompany loans, repatriation of dividends, and other transfers.

7.2 Intercompany Netting
Intercompany netting offsets accounts receivable and payable between business entities within the same company, bringing intercompany invoice settlement into a single transaction in the parent company’s home currency . This approach reduces both cost and FX risk . It can also help centralize the invoice review process and create discipline around settlement .

7.3 The In-House Bank (IHB)
An In-House Bank is a sophisticated solution, often used by large multinationals, that uses a company’s own resources to manage all financial transactions and fund each business unit . It is a cost-effective way of consolidating treasury functions into one central entity, removing the need for each subsidiary to work through a different local bank . It establishes funding parameters by setting up intercompany loans, cash pooling arrangements, or equity investments within an organization .