• Reduced foreign exchange spread cost: without a netting system, your company's offices  each have to buy and sell  the currency they need to settle their payments to and from each other on a bilateral basis. Their local banks will naturally earn an FX spread profit on each conversion, often using conversion rates that are far from competitive. But by netting out these conversions in a netting system, you will be able to trade just the net currency positions of all these payments with your lead FX banks at competitive rates. Not only will you be laying away a lower percentage of spread cost to your banks, but that spread will be applied to a significantly lower volume of currency trades.
  
• Reduced wire transfer costs: a netting system will reduce the intercompany settlement process to a single payment to or from each participant in each netting cycle, replacing the much larger number of payments required without netting.
  
• Reduced float: Settling your intercompany payments on a net basis will reduce the amount of cash being transferred, and therefore the float cost incurred by late, inaccurate or poorly managed settlements.
  
• Improved efficiency: a less tangible but equally important benefit from netting is efficiency - implementing a more rigorous process that ensures intercompany payments are settled according to a predetermined schedule.

Please note that some broad assumptions have to be made for this type of simple analysis; a more accurate analysis will take into account the transaction currency, payer's base currency and receiver's base currency for each item being netted in order to arrive at accurate calculations of the pre-netted and netted foreign exchange volumes. We will be pleased to help you perform a much more accurate analysis by reviewing one sample month's netting data from your current provider