Achieve virtual cash pooling and earn more interest
This technique involves the virtual offsetting of debit balances by credit balances, in order to reduce the interest paid on debit balances and increase the interest received on credit balances.
Credit and debit interest is recalculated monthly on the basis of the virtual daily net balance of accounts. Each account in the pool receives an amount of interest depending on its contribution to the offsetting process.
You always have a clear overview of your treasury position and of the credit and debit interests before and after notional pooling. That way, you know exactly what gains you have made on each account during the previous month.
You can easily set off accounts in different currencies. If you’re short in GBP in London and long in EUR in Brussels, we can consolidate the situation without having to sell your EUR and buy GBP or transfer balances between accounts. That means less work and expense, and increased flexibility.
Notional pooling does have its limits, however:
- You need other instruments to manage the group’s net balance;
- Each account requires an adequate credit line, as it may show a debit balance