Most companies now use internal accounts instead of costly bank accounts wherever possible. Where intercompany financing is not to be provided in the form of a loan agreement with a repayment schedule, but rather as overdraft facilities or through cash pool facilities, interest-bearing internal accounts are used.
More favourable, while always remaining at arm’s length, terms offered to subsidiaries through the in-house bank provide benefits for all parties involved and promote acceptance of a globally deployed Treasury Management System. By consolidating worldwide financing and investment requirements, the central finance department achieves economies of scale with its small number of relationship banks. These benefits can then be passed on to the subsidiaries, taking local benchmark offers and, where applicable, internally assigned ratings into account.
Within predefined limits, the participating entities can obtain financing directly from central treasury without time-consuming research or comparisons of competing offers, thereby saving both time and costs. They can access up-to-date information on their account activities online at any time. Dedicated contacts are available to answer questions and provide support where clarification is required. All activities are carried out in the interests of the group as a whole and are therefore not subject to external influence.
Depending on the company’s preferences and requirements, all cash flows arising from any type of transaction can be recorded either in a single intercompany account or across several internal accounts. In all cases, it is ensured that account holders can view only their own accounts and not those of other entities.
