What is cash pooling?
This is a cash pooling system, a financial management system that enables the management of financial flows from several subsidiaries within the same group to be pooled. The aim is to optimize the cash requirements or surpluses of the various entities within a group.
You reduce your level of indebtedness and benefit from more advantageous interest rates thanks to the volume processed. You'll be able to monitor cash flow more effectively, with the aim of self-financing the various entities within the group.
There are two cash pooling methods:
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Real cash pooling: this is the actual transfer of cash to the centralizing account. It consists in transferring funds from one entity to another, and can also be referred to as accounting leveling.
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Notional cash pooling: A simplified version of cash pooling, notional cash pooling implies that all the group's accounts operate independently and manage its credit lines. This type of cash pooling merges the accounts of each subsidiary, without any cash flow or accounting entries.
What are the benefits?
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Optimize management of cash requirements/surplus for each Group entity
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Improve cash flow and reduce borrowing ;
- Benefit from more attractive bank interest rates thanks to higher volumes
- Gain greater visibility over the cash position of each entity, consolidating your vision at group level and enabling you to make better decisions on financing/investment issues.
What about current legislation?
According to articles L312-2 and L511-7 authorizing intra-group credit transactions, it is essential to mention the centralization of financial flows on the legal status of all group companies.
