Cash Pooling is a structure comprised of multiple accounts opened with the Bank, whose statuses are consolidated to better manage the liquidity (and/or optimize interest rates that bank pays/charges for these accounts). Accounts can be owned by different companies belonging to the same holding/group.
- clients using transaction account overdraft can cover their negative status using positive status/funds of other clients from the same group, and shall pay agreed internal interest rates, instead of contracted interest rates (internal company interest rates shall be agreed between group members when setting up intercompany loan).
- clients with positive status after funds have been used to cover negative status of user of transaction account overdraft shall charge a higher internal interest rate instead of banks a vista interest rate
Advantages
1
Profit Maximization
Increase of interest rate income and lower interest rate expenses
2
More efficient financing within the same group
3
No administrative work
Bank shall provide all administrative tasks