Physical cash concentration
ING’s coverage and extensive scope of bilateral agreements allows you to:
- Consolidate or centralise cash balances for investment, deployment or loan repayment for your organisation.
- Reduce the organisation’s need for external debt and lower borrowing costs by facilitating intercompany lending.
- Restore an account balance to a pre-determined level to align with the business’ operational processes.
- Manage your cash efficiently and effectively.
- Centralise cash from all your bank accounts automatically.
- Create full visibility and control of your overall cash position.
- Optimise your interest and working capital.
- Perform transactions on the money market.
In physical cash concentration, the account balances are physically pooled (swept) into a so-called master (target or concentration) account, usually at the end of the day (and intra-day). This means that when accounts of multiple entities of the company are involved, the pooling of funds can create intercompany loans due to change of ownership.
Cash concentration can be structured so that all cash is concentrated from the underlying accounts (zero balancing) or so that underlying accounts hold a pre-set level of cash (target balancing). This allows liquidity to be consolidated from participating business units as well as from different banks. Interest is then calculated on the balance after concentration, whether credit or debit.
Physical cash concentration can be offered as a stand-alone solution or in combination with notional pooling to offer our customers the most customised cash management solution for their organisations’ needs.
ING’s proven track record demonstrates that we can offer customised cash and liquidity management solutions and flexibility tailored to the global 24/7 economy for any size company. We are continuously exploring new capabilities that make our services more complete and comprehensive for all the customers we serve.
See below an overview of the characteristics of notional pooling and physical cash concentration:
|Notional pooling||Physical concentration|
|Balances never move||Funds move physically|
|Credit facility may be used by all participating accounts||One concentration account per currency|
|Balances are offset notionally, preserving integrity of accounts||Cross-border transfers can be expensive|
|No concentration||Change of ownership may create intercompany lending issues|
|No commingling||Provides greater flexibility as to how funds are used|
|Treated as bank lending||Can be manual or automated|
|Debit and credit interest compensation||Also used as a zero balance function to fund business units|
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