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

A couple of years ago, all these payments flowed throughMicrosoft's in-house cash centers (IHCCs) in a non-cash settlementprocess, but treasury had limited visibility into thesetransactions. Timing was unpredictable, and the company had to keepmore than $1 billion in reserve to support intercompany cashflows.