One of the big—and costly—hassles for treasurers of globalcompanies that operate in many different currencies has always beenthe need to hedge payables and receivables to minimize the risk ofa significant shift in exchange rates.

For example, if a U.S.-based company had a subsidiary in Italythat expected to have to pay in euros in six months for anexpansion, the parent company would enter into a transaction tohedge the anticipated payable amount out to the payment date at aset exchange rate. That meant paying a bank or dealer for a forwardeuro contract and tying up the money for six months.

Ferdinand Jahnel, treasurer at global medical, dental andveterinary supplies distributor Henry Schein Inc., says his companyrarely needs to do such transactions. Instead, his company andothers that operate in multiple currencies can set up a notionalmulticurrency cash pool, which allows the treasury to hedge bothpayables and receivables without ever having to enter into an FXcontract.