The reinvoicing center in Mncs is Baku to’ a clearing h~use .n a’ banking system. It may be beneficial for an ENC’ to create a separate center 10 manage foreign exchange risk exposure. Such a center, known as reinvoicing center, is itself a subsidiary of the rent company; its location, for obvious reasons, is preferred in a country where exchange regulations, in terms of convertibility, repatriation and so on are the least constraining.
Subsidiaries are located in various countries of the world They have dealings it clients and suppliers involving receipts and payments in currencies of various countries. Subsequent to the creation of a evildoing center, the foreign currency invoices are made in the frame of the re invoicing center by the subsidiaries. The center receives the money in foreign currency, and in turn, makes payment/remittance of ‘equivalent sum in national currency to the subsidiary concerned. Similarly, payments to various suppliers/lenders are made by the center in foreign currency and it ‘is reimbursed. with an equivalent sum in the national currency from the concerned subsidiaries 10. , Being a centralized collection and payment center foreign currencies Joe all of its subsidiaries and affiliate companies, it not ~only helps in reducing the volume foreign currency transfers but also hedging Costs.