Cash Pooling

What can you expect?

With UniCredit Cash Management solutions, all accounts of a company and its subsidiaries (participant accounts) can be combined into what is known as a cash pool (domestic, respectively, cross-border). Debit and credit balances of each participating account are offset against each other within a single bank. The value for your company is created through the “interest compensation.”

How does it work?

Cash pooling includes techniques like physical and non-physical cash pooling. With physical pooling, various accounts are linked to one single account. Non-physical pooling is combining the balances of several accounts in order to limit low balance or transaction fees without moving funds.

Physical Pooling

The purpose of Physical Pooling is to offset credit and debit balances of your subsidiary accounts. Balances on these accounts are moved automatically to a master account, thus creating one liquidity position for a group of companies. In this way, you can easily monitor your working capital.

Zero Balancing

Zero Balancing aggregates (credit and debit) balances for predefined accounts held by your company and your subsidiaries in different banks and countries. Funds will be physically transferred to a master account. This master account can be operated in any UniCredit bank. Zero Balancing is the most advanced “Cross-Border Cash Pooling” solution: daily execution, respect of value dates, and availability of intraday limits are ensured by a range of agreements and operational processes created between the banks by using reciprocal bank accounts.

Target Balancing

Target Balancing is the “younger brother” of Zero Balance Cash Pooling. The results produced are almost the same, in terms of concentration of funds held in different countries and banks. It is less complex in terms of implementation and project management and available for a much larger number of banks, countries, and currencies than Zero Balancing. However, the performance in terms of efficiency of the transfer of funds is lower, particularly with regard to value dates, intraday/overnight limits and credit facilities. Target balancing moves funds automatically by exchange of SWIFT messages (executing: MT101; reporting MT940/942) instead of using reciprocal bank accounts quoted under Zero Balancing.

Proportional Pooling

Proportional pooling is a sub-variation of the Target Balancing. The standard Target Balancing solution, normally consisting of the Participating Accounts and the master Account, has been enhanced with the capability of managing the multiple Master accounts, which are now being booked the pooling movements (both sweepings and toppings) with the use of their constant, percentage share.
Thanks to this, the solution allows a relative distribution of balances between the Participating Accounts and Multiple Master Accounts.

Non-Physical Pooling

Non-physical pooling does not involve any transfers of funds in order to create a unique liquidity position.

Notional Pooling

Debit and credit balances of the participating accounts – in the same currency – are virtually offset against each other within a single bank (“interest compensation”). This allows the “real” balances to remain unchanged, while a theoretical consolidation is obtained on a virtual pooling account. Interest is paid/received on the virtually aggregated balance. With Notional Pooling, funds are not actually, but just virtually, netted. Therefore, the bank incurs capital and minimum reserve costs on the participating accounts; this results in a reduction of interest yields.

What’s in it for you?

Setting off the balances on the various accounts reduces interest costs and raises interest income. Cash Pooling thereby creates real-time visibility on the short-term liquidity position of the group. This gives you the option of efficiently forecasting and managing your working capital cycles from a group perspective instead of a “single company” point of view.

Additional information