Cash pooling is a cash management technique aimed at optimizing the balances of the internal bank accounts held at one or several banks. It is usually performed on a daily basis.
To perform cash pooling, you need to define a cash pool and assign internal bank accounts to the cash pool.
A cash pool is a group of bank accounts with one or more concentration accounts and multiple sub accounts. You can create the following two types of cash pools:
Notional Cash Pool: A cash pool consisting of one concentration account and multiple sub accounts. This type of cash pool is used for cash leveling similar to zero balancing without the actual funds movement. The cash pool's closing balance for a day is calculated as a notional sum of the individual balances of the bank accounts included in the pool. The interest is calculated on the notional net balance of all accounts included in the pool and then paid out or charged to the concentration or lead account.
Physical Cash Pool: A cash pool consisting of one or two concentration accounts and multiple sub-accounts with funds transfer rules specified for each combination of concentration accounts and sub accounts. This type of cash pool is used for cash leveling wherein the user can initiate fund transfers or mirror cash transfers performed by the bank.
Before creating Physical Cash Pools, you have to decide how the physical fund transfers will be recorded in the system. If you are using Oracle Treasury, you can choose to create fund transfers in Oracle Treasury or Oracle Cash Management by choosing one or the other in the site-level system CE: Bank Account Transfers profile option. If you are using Oracle Cash Management only, you will only be able to create fund transfers in Oracle Cash Management.
Navigate to the Cash Pools Search and Results page.
Select Notional Cash Pool.
Select Go.
In the Create Notional Cash Pool: Header Information page, enter a unique Cash Pool name.
Select a concentration account for your cash pool. The Account Number, Bank Name, Legal Entity, and Cash Pool Currency default in based on the selected bank account.
Note: You can only select bank accounts that you have access to, that have not been assigned to other cash pools, and for which the Interest Rounding and Interest Includes options have been assigned as a part of the Interest Rate Schedule.
In the Effective Date From field, enter the first date that the notional cash pool is active, such as the first date the consolidated bank account balances will be displayed on the Bank Balances page or the first date the interest will be calculated on the consolidated balance.
In the Effective Date To field, enter the last date that the notional cash pool is active.
Click Next to assign sub accounts.
In the Create Notional Cash Pool: Sub Accounts page, select bank accounts to include as sub accounts for your cash pool.
In the Create Notional Cash Pool: Review page, review the information you have entered.
Click Finish to save the cash pool.
Navigate to the Cash Pools Search and Results page.
Select Physical Cash Pool.
Select Go.
In the Create Physical Cash Pool Header Information page, enter a unique name for your cash pool.
In the Concentration Type field, select either One Account or Two Accounts to indicate if the cash pool will have one or two concentration accounts.
If you select the One Account option, the Concentration Account field is displayed.
Select a Concentration Account. The Account Number, Bank Name, Company, and Cash Pool Currency default in.
If you select the Two Accounts option, the Investment Concentration Account field and the Funding Concentration Account field is displayed.
Select an Investment Concentration Account and a Funding Concentration Account for the cash pool. The Account Number, Bank Name, Legal Entity, and Cash Pool Currency default is based on the selected bank accounts. Both the investment and funding concentration accounts should belong to the same legal entity.
In the Effective Date From field, enter the first date that the physical cash pool is active, such as the first date the cash leveling transactions can be created.
In the Effective Date To field, enter the last date that the physical cash` pool is active.
In the Bank Initiated Sweeps field, select Yes if your bank initiates the cash leveling transactions. Select No if you want to use this cash pool to create transactions in the system and send payment instructions to the bank.
Select Next to assign sub accounts.
In the Create Physical Cash Pool: Sub Accounts page, select bank accounts to include as sub-accounts in the cash pool.
Select Next.
In the Create Physical Cash Pool: Target Balances page, define target balances and transfer amount calculation rules for each sub account . If target balances for sub accounts included in the cash pool have already been defined in the bank account setup, they will default here.
Select Next.
If your system profile option CE: Bank Account Transfers is set to Treasury, in the Create Physical Cash Pool: Treasury Deal Attributes page, select the attributes that are required for creating transactions in Oracle Treasury during cash leveling for company-initiated transfers, or during sweep transaction generation for bank initiated sweeps. See: Reconciling Sweep Transactions.
If your system CE: Bank Account Transfers profile option is set to Cash Management, in the Create Physical Cash Pool: Bank Account Transfer Attributes page, select that attributes that are required for creating transactions in Oracle Cash Management during cash leveling for company-initiated transfers, or during sweep transaction generation for bank initiated sweeps. See: Reconciling Sweep Transactions
Select Next.
In the Create Physical Cash Pool: Review page, review the information you have entered.
Click Finish to save the cash pool.
Cash Pool Name: The name of the cash pool.
Concentration Type: (Physical Cash Pool only) The concentration type that determines whether the cash pool will have one or two concentration accounts. The following two options are available: One Account or Two Accounts.
Concentration Account: The concentration bank account for the cash pool.
Investment Concentration Account: (Physical Cash Pool only) The concentration account used for transferring surplus funds from sub-accounts.
Funding Concentration Account: (Physical Cash Pool only) The concentration account used for transferring funds to sub-accounts to cover the deficit.
Account Number: The account number corresponding to the selected concentration accounts.
Bank Name: The bank name corresponding to the selected concentration account.
Legal Entity: The name of the legal entity corresponding to the concentration accounts.
Cash Pool Currency: The currency of the selected concentration account. In case the physical cash pool has two concentration accounts, then both the concentration accounts must have the same currency.
Effective Date From: The first date that the cash pool is active.
In notional cash pool, this is the first date the consolidated bank account balances will be displayed in Bank Balances page and the first date the interest will be calculated on the consolidated balance. If this value is left null, all available balances prior to the Effective Date To will be consolidated.
In physical cash pool, this is the first date that the cash leveling or ZBA transactions can be created.
Effective Date To: The last date that the cash pool is active.
In notional cash pools, this is the last date the consolidated bank account balances will be displayed in the Bank Balances page and the last date the interest will be calculated on the consolidated balance. If this value is left null, all available balances after the Effective Date From will be consolidated.
In physical cash pools, this is the last date that the cash leveling or ZBA transactions can be created.
Bank Initiated Sweeps: (Physical Cash Pool only) This choice list indicates whether the cash leveling transfers are initiated by the bank or not.
If Yes, the system will not be generating transactions based on the cash position results. Instead, transactions will be generated when the bank statement is imported and the Sweep Transactions Generation program is run.
If No, the system can be used to initiate cash leveling transactions and send the payment instructions to the bank.
Cash Pool Currency: The currency of the concentration account of the cash pool.
Concentration Account: The concentration bank account for the cash pool.
Name: The bank account name.
Type: The type of the sub account. The type can be Account.
Account Number: The account number for the bank account.
Bank: The bank corresponding to the bank account number(s) shown in the Account Number column.
Legal Entity/Subsidiary: The legal entity or subsidiary corresponding to the account number(s) displayed in the Account Number column.
Cash Pool Currency: The currency of the concentration account of the cash pool.
Concentration Account: The cash pool concentration account.
Name: The bank account name.
Minimum Target Balance: The minimum target balance of the bank account used to determine the projected fund deficit during cash positioning. If the minimum target balance has been entered for the bank account in Oracle Treasury it is displayed in this field. You can overwrite the default value.
Maximum Target Balance: The maximum target balance of the bank account used to determine the projected fund surplus during cash positioning. If the maximum target balance has been entered for the bank account in the bank account setup is displayed in this field. You can overwrite the default value.
Minimum Payment Amount: The minimum payment amount used to determine if and how much of the projected fund surplus is transferred to the concentration account during cash leveling.
Minimum Receipt Amount: The minimum receipt amount used to determine if and how much of the projected fund deficit is transferred from the concentration account during cash leveling.
Rounding Factor: A funds transfer rule used to determine how to round amounts when calculating the projected fund surplus or deficit for transfer to or from the concentration account during cash leveling. The default is Unit.
Rounding Rule: A funds transfer rule used to determine how to round amounts when calculating the projected fund surplus or deficit for transfer to or from the concentration account during cash leveling. The options are: Nearest, Round Down and Round Up. The default is Nearest.
General Details Region
Transaction Subtype: Default portfolio of the company of the concentration account. The list displays all non-external portfolios belonging to the legal entity.
Bank Account Transfer Authorization: Default a bank transfer creation rule used to determine if the transfer requires manual authorization or if is automatically authorized. The options are: Not Required and Required. The default is Not Required.
Payment Details Region
Bank Account Name: Bank account name.
Payment Method: Payment method for this bank account.
Bank Charge Bearer: The options are: Payee, Payer, Pays Express Charges, and Shared.
Payment Reason: The reason for the payment.
Payment Reason Comments: Comments.
Remittance Message 1: Remittance message.
Remittance Message 2: Remittance message.
Remittance Message 3: Remittance message.
Inter-Account Transfers Region
Portfolio: Default portfolio of the company of the concentration account. The list displays all non-external portfolios belonging to the company.
Product Type: The product type authorized for Inter-Account Transfers in Oracle Treasury.
Intercompany Funding Region: Company Attributes
Company: The company of the concentration account.
Portfolio: Default portfolio of the company of the concentration account. The list displays all non-external portfolios belonging to the company.
Product Type: The product types for Intercompany Funding deal type.
Intercompany Attributes
Intercompany Party: The name of the company or subsidiary to which the sub accounts included in the cash pool belong.
(Company Details) Funding Limit: The authorized funding and foreign exchange type limit for the company of the concentration account(s). This is used for determining the rules for creating intercompany transactions in Oracle Treasury for transfers between the concentration account and the sub account when they belong to different companies.
(Company Details) Investment Limit: The authorized investment and foreign exchange type limit for the company of the concentration account(s). This is used for determining the rules for creating intercompany transactions in Oracle Treasury for transfers between the concentration account and the sub account when they belong to different companies.
(Intercompany Party Details) Portfolio: A list of all non-external portfolios belonging to the company displayed in the Company field in the table row. This field is disabled for all subsidiaries included in the cash pool. If no default portfolio is defined in Oracle treasury, then this field does not display a value.
(Intercompany Party Details) Product Type: The product type authorized for Intercompany Funding transactions for the company displayed in the Company field of the table. This field is disabled for all subsidiaries included in the cash pool.
(Intercompany Party Details) Funding Limit: The authorized funding and foreign exchange type limit for the company displayed in the Company field of the table. This is used for determining the rules for creating intercompany transactions in Oracle Treasury for transfers between the concentration account and the sub account when they belong to different companies. This field is disabled for all subsidiaries in the cash pool.
(Intercompany Party Details) Investment Limit: The authorized investment and foreign exchange type limit for the company displayed in the Company field of the table. This is used for determining the rules for creating intercompany transactions in Oracle Treasury for transfers between the concentration account and the sub account when they belong to different companies. This field is disabled for all subsidiaries in the cash pool.
(Intercompany Party Details) Pricing Model: The authorized pricing model for Intercompany Funding deal type. This field is disabled for all subsidiaries in the cash pool. The default value is No Revaluation.
Interest Rounding: The default value for rounding of interest amount as set up in the company profile in Oracle Treasury. The options are: Nearest, Round Down, and Round Up. The default is Nearest.
Interest Includes: The default value for calculation of interest amount as set up in the company profile in Oracle Treasury. The options are: Last Day, First Day, and Both Days. The default is Last Day.
Company Pricing Model: The authorized pricing model for Intercompany Funding deal type. The default value is No Revaluation.
Note: For additional information, please refer to the Oracle Treasury User Guide.
You can view cash pool information by searching for the cash pool name and clicking on the cash pool name in the Search and Results page. If you have the appropriate user security, you can update the cash pool.