3.1 Benefits of Notional Pooling

This topic describes the information about the benefits of Notional Pooling.

The benefits of Notional Pooling are as follows:

• Minimizes interest expense and improves balance sheet for corporate by off-setting debit and credit positions.
• Single liquidity position without commingling of funds.
• Allows each subsidiary company to take advantage of a single, centralized liquidity position, while still retaining daily cash management privileges.
• Preserves autonomy, control and record-keeping.
• Benefit from off-setting without movement of funds and saving on administrative costs by avoiding foreign exchange costs.
• Avoids inter-company loans by avoiding the use of cash transfers to a central pooling account.
• Automation of interest reallocation.
• Reduction in operating expenses by reducing short term borrowings.
• Concentration of balances.
• Largely eliminates the need to arrange overdraft lines with local banks.