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.”


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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.

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