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Cash Pooling |
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The primary target of each
cash pooling is the optimization and use of surplus funds of all companies
in a group. Furthermore, especially interest benefits in multiple ways can
be achieved for the pool participants on the payable and on the receivable
side.
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Change
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Structure of a "Zero-Balancing-Pool"
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| The zero-balancing, also called cash-concentration or
sweeping, is in his form the easiest way to introduce cash pooling. One major positive effect is a shorter
balance and therefore the key-figure of the debt ratio improves. But there are also
some disadvantages, e.g.
liability-questions in case of a short-fall of
the pool-leader (see Erb-Gruppe and Swissair in Switzerland or
Bremer Vulkan in Germany). Also there is a higher administrative work
since all intercompany cash flows on a daily level have to be booked at
the pool-leader (can be automised). The key-element of a zero- or target
balancing is that all cash flows are physicly. Banks, which operate the
pooling on their systems for the customer require a rating of at least BBB.
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Structure of a "Notional-Pool"
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The
meaning of „notional“ say it: this pooling form is not real. But is is a
100% interest optimization.
There are no physical transfers between the accounts. The single
balance accounts will be counted together and netted against each other.
Therefore each pool participant belongs has his own bankaccount, but the
full interest spread remain within the group.
Therefore this kind of pooling meets perfect the needs of companies which
does not like to enter into any credit risk! In a few words: interest
optimization without having the character of loans and related risks.
An extended variation of this pooling allows you
the connection of multiple currencies into one single pooling. In consequence, with this kind of pooling you decrease your
currency exposure and increase your interest gains.
Reasons for Cash Pooling
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Reduction of financing
costs on group level, |
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Improvement of
investment-deposits by using economies of scale, |
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Simplification of
liquidity-management on domestic level, |
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Reduction of
expenses for financial intermediaries through centralization, |
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Improvement of
planning cash flows through coordination of financial cycles, |
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Optimization
of your financial image by decreasing external financing and better use
of internal financial potentials, |
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Break-Even at
about EUR 200'000 permanent liabilities on the accounts. |
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