What is Cash Pooling?
Cash pooling is a financial management strategy that allows companies to maximize both the current credit and debit positions so that the corporation receives the most benefit from those positions. In addition, cash pooling can help the company to avoid a number of costly bank fees, as well as help reduce the opportunity of damaging the reputation of the corporation because of negative balances on an bank account. In effect, cash pooling helps the make the most of the resources that are available. There are a few different approaches to cash pooling that will aid in cash management for both small and large companies. One basic approach to cash pooling involves the application of a cash management technique known as notional cash pooling. This approach involves transferring sufficient funds into one of the companies more active bank accounts to maintain a balance that will preclude the expenses of monthly finance charges or insufficient funds charges. From this perspective, the company
