Introduction to Cash Pooling
Cash Management or Cash Pooling
The companies employ a cash management technique to hold funds at financial institutions. Cash pooling allows companies to combine their credit and debit positions in various accounts into one account, and includes techniques, such as notional cash pooling and cash concentration. is a financial management strategy that allows companies to maximise both the current credit and debit positions, so that a corporation receives the most benefit from those positions.
The cash pooling module in Temenos Transact supports both physical and notional pooling.
- Physical pooling brings together the balances in nominated accounts to a target account. This allows companies to manage the surplus The amount of an asset or resource that exceeds the portion that is utilised. A surplus is used to describe many excess assets including income, profits, capital and goods. It often occurs in a budget (when expenses are less than the income taken in) or inventory (when fewer supplies are used than retained). cash more efficiently. It gives the customer the ability to internally finance any deficit thereby avoiding additional expenses.
- Notional Pooling Notional cash pooling lets the company combine the balances of several accounts in order to limit low balance or transaction fees. Cash concentration or zero balancing lets the company physically combine various accounts into one single account. allows banks to offer corporate customers the ability to pool funds from various accounts without any physical movement of funds between the accounts. The balances are brought together notionally into a single pool account to calculate the interest. The interest earned in this pool account is redistributed amongst the customers' accounts.
Configuring Cash Pooling
Cash Pooling has no specific configuration to be set up at the parameter level.
Illustrating Model Parameters
The following parameter tables are available in Model Bank:
| S.No. | Parameters | Description |
|---|---|---|
| 1. | AC.SWEEP.TYPE
|
This parameter table is used to create rules for various sweep types. Multiple AC.SWEEP.TYPE records can be created with many combinations of rules for each sweep type. |
| 2. | ACCOUNT.CLASS
|
To set up Notional Pooling, the ACCOUNT.CLASS records such as ICASUSPCR and ICASUSPDR must exist in the system.
|
| 3. | ICA.HIERARCHY.PARAMETER
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This must be setup before building any hierarchy in the system. Here, the record ID is the COMPANY code. This record contains the category and transaction codes for all possible types of Notional Pooling interest postings. |
Illustrating Model Products
Cash Management is a financial management strategy that allows companies to maximise both the current credit and debit positions so that a corporation receives the most benefit from those positions. PO Module supports the below products:
| S.No. | Product Name | Features |
|---|---|---|
| 1. | Balance Netting Pool |
|
| 2. | Notional Pooling | Allows banks to offer corporate customers the ability to pool funds from different accounts without physical movement of funds. The balances are brought together notionally into a single pool account to calculate the interest. The interest earned in this pool account is redistributed among the customers' accounts. |
| 3. | Transactional Pooling |
|
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