It should come as no surprise that Microsoft's 450-plus legal entities, which operate in 118 countries, engage in intercompany transactions. But the scope of that activity is eye-popping: more than 35,000 transactions, worth over US$50 billion, each year. “We use intercompany payments for everything from foreign subsidiaries' dividend payments to the corporate parent, to 'commissions' that reimburse subsidiaries for products sold, to IP [intellectual property] royalties between business units,” explains Sunnie Ho, senior treasury manager in Microsoft's Global Cash Management group.

A couple of years ago, all these payments flowed through Microsoft's in-house cash centers (IHCCs) in a non-cash settlement process, but treasury had limited visibility into these transactions. Timing was unpredictable, and the company had to keep more than $1 billion in reserve to support intercompany cash flows.