Cash management
Sweeping, pooling, zero balancing and cash forecasting for corporate customers
Cash management in banking: sweeping, pooling, zero balancing and cash forecasting for corporate customers.
What You Can Do After This Chapter
Learning objective. Learner explains the cash management services a bank offers a corporate treasurer, and distinguishes sweeping, pooling, zero balancing and notional pooling, including multi-currency and cross-border cases. Learner builds a cash forecast, and explains why cash management and bank liquidity management are two different jobs.
Practical assessment. Learner receives a case where a corporate group holds surplus cash in three subsidiaries in different currencies, then designs a sweeping and pooling structure, calculates the interest benefit, and builds a one-week cash forecast. Learner also explains the difference from the bank's own liquidity management.
Expected deliverables.
- Sweeping and pooling structure diagram
- Interest benefit calculation
- One-week cash forecast
- Note: cash management versus bank liquidity management
Completion criterion. Learner designs a correct sweeping and pooling structure, calculates the interest benefit, and builds a usable cash forecast.
- Cash management services: what a bank offers a corporate treasurer
- Sweeping: moving surplus cash to where it is needed
- Pooling: offsetting balances without moving money
- Zero balancing: sweeping every account to zero each day
- Notional pooling: offsetting without moving, across currencies and countries
- Cash forecasting: predicting the money before it moves
- Cash management versus bank liquidity management: two different jobs
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