Physical Cash Pooling

How does it work?

1. You define a pooling account (also called a ‘master’ or ‘leader account’).
2. You identify the secondary accounts (also known as ‘slave accounts’) associated with the pooling account and denominated in the same currency. These accounts can be held at BNP Paribas Fortis or at another bank – with which we have agreements – in Belgium or abroad.
3. You define the pooling parameters such as the amount and the timing, and set the floor below which the balance of the slave accounts is not permitted to fall: either zero (‘zero balancing’) or another amount (‘target balancing’).
4. Depending on the parameters you have defined, the amounts in all the accounts are automatically centralised in the master account.

Advantages

• Flexibility: you set all the parameters yourself: which accounts to include, the threshold and pooling frequency.
• Visibility: detailed reporting provides you with real-time information so that you can forecast your future cash requirements with greater precision.
• Simplification: you can manage your accounts straightforwardly and effectively, even at international level, as you only have one account to deal with.
• Reduced costs: reduce the cost of your working capital, optimise your operational processes and reduce – possibly even eliminate – overdraft costs.
• Profitable: you maximise your interest receipts, thereby enhancing your overall financial result.
• Tailored solution: setting up your physical cash pooling is not a standard solution, and so we will help you to personalise your requirements.

Good to know

• A contract is required for each currency.
• You no longer require an overdraft facility on the secondary accounts that are pooled at the end of the day.
• An intraday limit has to be set so that payments can continue to be authorised automatically within a certain limit. An overdraft facility must be agreed for the master account.
• Cash pooling is subject to processing costs.
• Intragroup transfers are viewed as loans in certain countries, which can have legal and tax implications.
• Cash pooling reduces the management autonomy of the sub-accounts.
• You can combine Notional Cash Pooling and Physical Cash Pooling.