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Financial management analysis and use of the cash pool


									Financial management: analysis and application of the cash pool
Financial management: analysis and application of the cash pool
"Cash pool" business is a medium-sized enterprises to finance
the Group's high-end centralized cash management products. Enterprise
Group, parent to the "cash pool", can not affect the daily
operations of the subsidiary case, Yi Wei Tuo lending approach will
Suoyou the regional and inter-regional Zigong Si Jin Xing unified
deployment of resources to achieve the same city Jikuadiqu Automated
centralized management of funds.
"Cash pool" business is a medium-sized enterprises to finance
the Group's high-end centralized cash management products. Parent Company
through the "cash pool", can not affect the daily business is a
subsidiary, to entrust the form of loans, all subsidiaries of the region
and inter-regional allocation of funds for unity to achieve the same city
and across regions Automated centralized management of funds. In
particular, by relying on bank's online banking platform for advanced,
set automatic transfer of funds, target balance management, entrusted
loan pricing, online interest rates to maintain interest automatic
allocation, account overdraft set, large two-way transfer, recycling end
of the day on many occasions, online information inquiry, the standard
data interface and other functions in one, through well-designed
structure and function account arrangements, so that does not affect the
subsidiary enterprise groups in the normal course of business cases, to
achieve the same city Ji regional management of capital concentration.

If an enterprise group has six member companies, the enterprise group set
up a parent account, each member of the parent company accounts opened
under the sub-account, each member of the company have a certain amount
of overdraft, fixed time every day (usually 16:00), a subsidiary bank
account automatically scan and cleared all the subsidiary accounts,
subsidiary accounts that when there is surplus, it was placed under the
parent company accounts, as the Enterprise Group of loans and collect
interest, subsidiary account overdraft, the parent company accounts
allocated to return, as a business loan and pay interest on the Group,
the parent company accounts is the "cash pool."

With the continuous rise of enterprise groups, business groups on how to
strengthen the financial management of member enterprises, particularly
financial management, financial management has become a field of
enterprise groups in a core subject.

Cash flow is the business of blood, "cash Supreme" is a modern
enterprise financial management of the basic idea. However, many large
enterprise groups as members of the enterprise, a broad geographical
distribution, concentrated in the financial management problems in
particular. Such as the lack of centralized Enterprise Group's cash
management system, member companies of the financial flows of the lack of
effective management and supervision, Touzi risk is relatively large;
Enterprise Group Bu Neng Shishidiaozheng surplus and deficiency fund,
members of corporate funds Chuxian Bufen gap to bank ´û¿î, while others
members of the enterprise fund balance is there, leading to increased
cost of capital of enterprise groups, inefficient use of funds.
Therefore, in order to achieve the effective supervision of the member
companies, Baozhengzijin security, realization of Zi Yuan's
Youxiaopeizhi, improve fund use efficiency, enterprise Jituanwulun is
Caiqu centralized system or decentralized system, the organizational
structure and management system, Financial and capital management are
growing more and more highly concentrated.

At present, China's enterprise groups with a centralized fund Guan Li
model are: establishment of a finance company, internal settlement
center, a line revenue and expenditure and balance the two lines, and a
variety of financial management Duyou Qi applicability He advantages and
disadvantages. One financial company is the subsidiary enterprise group,
the People's Bank approved non-bank financial institutions, enterprise
group mainly engaged in the intermediation of funds, and unified
management, its establishment requires necessary conditions and through
certain procedures, only a few have set up enterprise groups conditions
for financial companies. Settlement center is usually set up in business
within the group to handle its member companies within the Group cash and
settlement operations between the specialized agencies, funds the
operation of a functional department. Income and expenditure and revenue
and expenditure line is the member enterprises to open bank accounts-one
can take the form of balance of payments, you can also take the form of
income and expenditure separately, the expenditure of funds by the
enterprise group member companies according to the application or funding
plan uniform allocation, the funds received by automatic case by case
basis or daily planning time on the program to the corporate group
accounts, zero balance on the existing plan, there are fixed on the plan,
but the establishment of the internal settlement of accounts and
accounting mechanism remains unchanged.

No matter what kind of financial management, business must be by means of
external commercial banks can perform their duties, therefore, whether
from the management level or technical level, the "cash pool"
business This is their current use of centralized management of various
funds further optimization. "Cash pool" business of the
enterprise group with universal applicability, its clear advantages.

First, the enterprise groups through the "cash pool" set up a
centralized cash management system, easy to grasp the dynamic members of
the enterprise funds, effective supervision, reduce investment risks.

Second, the enterprise group to adjust in time enterprises and enterprise
groups and members of the member companies of funds between surplus and
deficiency, the use of funds and reasonable arrangements to improve the
efficiency of fund use.

Third, the members of the fund management business in their own way, the
are alone with bank transactions, each of the difference between lending
and deposit interest rates will increase the financial cost of enterprise
groups, but in the "cash pool" in spite of the burden of
enterprises and the banking group to between the fees, but with the
deposit and loan spreads compared to enterprise groups, business groups
handling expenses well below the sum of the deposit and loan spreads, so
the "cash pool" can reduce the cost of funds.
Fourth, in the "cash pool" business, members of the business in
the cash pool to pay interest on overdraft, whereas, in the cash pool
deposits to be charged interest, help to mobilize members of the rational
use of corporate funds to reduce the amount of funds used to improve the
efficiency of fund use enthusiasm, but also conducive to enterprise
groups, the performance of the member companies of the assessment and

However, the "cash pool" as a high-end business, and its
specific application, the following problems still exist.

First, the enterprise groups into the "cash pool", are included
in the framework of the cash pool of member enterprises and enterprise
groups will inevitably exist between the relationship between deposits
and loans. In accordance with the provisions of our present, between the
enterprise legal person does not allow direct loans, can only be
commissioned by commercial banks to raise funds through loans and pay
certain fees, the current "cash pool" business is built based
on the principal loan . Therefore, the introduction of the "cash
pool", the enterprise groups and members of the corporate interest
expense and interest income are present, which necessarily involves the
taxation of all corporate entities, interest income and interest expense
related to corporate income tax payment or tax credit, which affect
taxable income, so as soon as possible supporting the development of
financial regulations and tax laws and regulations (or the introduction
of the corresponding implementation details), to facilitate the smooth
conduct of the business. Prepared to use "cash pool" of
companies as a group, the funds should reduce costs and increase the
trade-off between the tax burden, their pros and cons very carefully.

Second, the "foreign currency cash pool" has its inherent
complexity, to meet multinational companies to introduce "foreign
currency cash pool" requirement, the State Administration of Foreign
Exchange in October 2004 formally launched the internal operation of
multinational financial management of foreign exchange regulations ,
qualified first in the territory of multinational corporations among its
members by way of funds entrusted to save the operation, while allowing
multinational companies to eligible members to outside lenders, so to
regulate the functions of the regional capital. This policy is the use of
multinational corporations to improve the efficiency of foreign exchange
and reduce the financial cost to play a direct role in further improving
the foreign investment environment, attract more multinational companies
setting up regional headquarters in China mainland, and increase,
increase in capital Kuaguo the international competitive edge the company
has played a role in Jiji, but meanwhile should see TNCs Zijinjizhong
management is ever increasing about current foreign exchange management
system is a tough challenge, Thus, in order to adapt to economic systems
and environmental development of foreign exchange settlement system, the
premise of effective risk prevention, the need to further reform the
current foreign exchange management system.

Third, in the "cash pool" during the operation of the business,
and many details of the deal also will directly affect the successful
introduction of the business group Nengfou. First, members of the
business to open accounts in the parent sub-account, the bank will give a
certain sub-account overdraft limit, banks give members of the corporate
uniform or differentiated overdraft limit? Either unity or difference,
and how to determine the amount? Second, the sub-account overdraft limit
has been established, the parent bank to ensure that the "cash
pool" does not advance? Does the parent bank to "cash
pool" a certain amount of overdraft, how to determine the amount?
These are that banks and the introduction of the cash pool must be
addressed. In specific operations, the enterprise groups, the member
companies of the funds to do the budget, its capital budget needs and
circumstances must be consistent with a high degree of agreement would be
difficult to sub-account and bank overdraft limit, in the business
carried out, the enterprise income and expenditure of funds is difficult
and the banks to match the amount caused by the "cash pool"
business generated obstacles in the specific application. For the banks,
in ensuring the safety of their own funds and businesses to successfully
use the premise of the cash pool, into the cash pool needed on the
framework of Nei's business Jinxing full of credit µ÷²é, we must
establish Xindaizhengce Yiji and businesses to sign Yi Jilie measures of
credit lines and guarantee the legal instrument.

In short, the "cash pool" business enterprises, not only is the
fund management of the carrier, more is providing a management philosophy
and management principles, concepts Ru Zhe Zhong Bing put into practice
the expected results, needed around the state finance, taxation improve
regulations and foreign exchange management system reform, and
rationalize the business groups, members of the complex between
enterprises and banks the funds allocation and control relationships, and
make the overall design and careful organization.

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