Foreign bank accounts, how to include them in your cash pool

| 21-06-2016 | Jan Meulendijks |

Significant balances on your foreign bank accounts which are really of better use in the country where your operation is? Include them in an automated cash pooling scheme so that all your funds are available in The Netherlands and no more unnecessary interest is paid!

There are a number of reasons why you maintain bank accounts in other countries (I will explain the advantages of that in my next paper), but once this is the case, you need to control them in the most efficient way and at minimum costs.

Dutch banks who offer international cash management solutions have several tools to achieve this:

1. International Balance Reporting

The banks where you hold your accounts report them daily automatically into your multi-bank internet banking tool (e.g. Access Online from ABN AMRO); balances as well as transactions. With this tool you can also initiate local or cross border payments from this account.

Most ERP-systems can reconcile this account information automatically into your general ledger.

2. Cross Border Zero Balancing (CBZB)

In case your foreign accounts are held with subsidiaries of your Dutch bank, the balances can be automatically swept (daily) to your central cash pooling account in The Netherlands or be supplied with funds in case of shortage.

3. Multi-Bank Cash Concentration (MBCC)

In case your accounts are held with foreign partner-banks of your Dutch bank the alternate MBCC system can be used to achieve the same effect.

Now, once you have the Balance Reporting part in place plus one or both options CBZB and MBCC, not only all account information is made available to you on a daily basis, but also the balances are swept automatically daily into your central cash pooling account in the Netherlands!

Results:

• Automated reconciliation of account-information in your General ledger; no more loss of time/personnel processing data

• Interest optimisation (your use of bank credit is reduced with the balances that otherwise are in your foreign accounts)

• No manual handling

Setting up such an international cash management scheme involves some paper work and time (most of that at your bank’s side) but once it has been set up it is a major cost and trouble saver which you wish you had had 10 years sooner!

 

 

Jan Meulendijks

Cash management, transaction banking and trade professional