Intercompany netting

Intercompany netting is the offsetting of accounts receivable and accounts payable between two business entities owned by the same parent, so that payment is only made for the net difference between their receivables and payables.

Intercompany netting is especially useful for international payments, since it identifies situations where a business can hedge the much smaller net amounts of foreign currencies owed between entities, rather than the gross amounts.

Related Courses

Corporate Cash Management 
Payables Management