Netting

This refers to a technique for managing foreign exchange risk by aggregating transactions between parties to result in a single payment.

Within large multi-national companies Payment Netting is used to centrally manage intra-company transactions, where subsidiary companies are trading in different currencies. This reduces each subsidiary’s need for foreign currency and the associated exchange rate risks.

Netting is a term normally found in financial management and business economics.

Explore our learning zone to discover more