A transfer product that can automatically finance payment accounts from a main operating account or transfer deposits to a primary operating account to maintain a zero balance or a pre-defined target balance. Zero compensation may have the disadvantage of not leaving sufficient independence to financial subsidiaries, since overdraft limits and choice options of establishments are generally dealt with by the parent company in such institutions and may depend on its solvency in times of crisis. Therefore, this is generally done for 100% subsidiaries and less often for joint ventures and other subsidiaries less than 100%. Other reasons could be the financial management of certain short-term projects or projects with a particular risk of unexpected overruns. The use of zero balance accounts avoids excessive fees without proper notification and authorization. process/functionality of a zero cash-pooling account or participants` objective can be regulated in two ways, both automatic, a) zero compensation: all participating accounts, with the exception of the head count, are set at 0 (zero) at the end of a day; Excess balances are burdened, negative balances are credited to the head account and b) clearing objectives: this is basically the same procedure as zero clearing, only with a series of extended parameters for the end of the day`s balance. Like what. B a pre-pre-pre balance. B can be used for leasing guarantee, etc. Due to technical constraints, all transfers can be booked the next day, but they are always executed with the appropriate value date. Zero clearing, also known as cash concentration or sweeping, is the easiest way to introduce cash pooling in this form.
Depending on the surplus or lack of money, all cash funds in the pool (pool participant) are automatically transferred daily to or from the highest parent account (Pool-Leader). One of the main positive effects is the reduction of the balance, which improves the debt ratio. But there are also some drawbacks, for example. B liability issues in case of rapid fall of the pool leader.