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One of the disadvantages for utilizing wholly owned subsidiary is the potential lack of access to...

One of the disadvantages for utilizing wholly owned subsidiary is the potential lack of access to cash flow of the subsidiary on behalf of the parent company. Any potential methodologies to minimize the impact of this advantage?

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Answer #1

Ways to minimize the impact of disadvantage of cash flow visibility is:

  • Integrated financial information system which helps both the parent company and subsidiary to present data in same format and provide better visibility of cash flow
  • Simpler reporting and financial services which helps to easily understand and reduce complexity in reporting

The period review in form of Quarter or Half yearly can also help to provide better visibility in terms of cash flow

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