Notional vs. Physical Cash Pooling Revisited

1 International Treasurer / February 2011 n For additional information visit Pooling has enjoyed renewed inter-est over the past few years as the fi nan-cial crisis has raised many fi rms interest in maximizing the availability of internal sources of capital. This very useful cash management strategy, particularly when executed on a global scale, is a proven method of eff ectively making more cash available while simplifying bank account structures and reducing overall bank transaction costs. Any multinational company look-ing to embark on an international cash Pooling project should start with a basic understanding of a typical cash Pooling arrangement and then consider organiza-tional, tax, regulatory and banking issues critical to a successful implementation (a subject for part 2). Pooling is usually accomplished through an arranged bank account struc-ture that mimics corporate accounting treatment and off sets cash defi cits with cash surpluses between diff erent legal en-tities in a corporate group.

CASH MANAGEMENT For additional information visit iTreasurer.com n International Treasurer / February 2011 2 Source: Treasury Alliance Group LLC EXAMPLE — EUR PHYSICAL POOL account (see chart below). These accounts

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