X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Fanny Niu, Senior Finance Manager, Microsoft GTFS

For a company that does as much business globally as Microsoft does, minimizing foreign exchange risk and bank fees can have a significant impact. That’s why Fanny Niu, a Beijing-based senior finance manager for Microsoft’s Global Treasury & Financial Services division, initiated a project to net the company’s accounts receivable (A/R) and accounts payable (A/P) balances with a major supplier.

The supplier, which is based in Taiwan, produces specific hardware devices for Microsoft. Each company runs both A/R and A/P balances with the other. Microsoft purchases $4 billion to $6 billion of raw materials annually, provides those parts and other manufacturing inputs to the device supplier, and then purchases finished goods from that same supplier. Every month, Microsoft owes the device supplier for the finished goods, and the supplier owes Microsoft for the materials provided.

In the past, the companies would settle their balances via a multitude of monthly payments in both directions. “For a certain month, we might have $500 million in payables due to Partner A and $600 million in A/R with the same company,” Niu says. “Our suppliers bill us upon shipment, and we do the same. So we would have a lot of invoices going back and forth, a lot of dunning letters. I would provide an SOA [statement of account] every week, and they might come back and say they needed extra time to pay because someone was on vacation or something.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.

More from this author

 

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk
Live Chat

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.