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Cash Concentration

Former Member
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Hello Experts

Need your help in understanding the required functionality.

At our company we sweep all customer cash collections from our subsidiaries into Cash Account at Holding company. Due to this all the bank main accounts in subsidiaries have a zero balance at the end of day. But there will be in transit checks, wire transfers due to timing difference. These are residing in clearing accounts.

Based on payments required by subsidiaries, we transfer the required cash to subsidiary accounts from holding company.

As I researched this requirement, I thought that Cash Concentration is the correct functionality for this process. But at the same time I thought of checking with you all regarding use of In-House Cash (IHC). I did not think that IHC is correct solution since we do not handle payments at holding company level. They are still decentralized at subsidiary companies.

Can you please suggest how the business process requirement can be fulfilled? Is Cash Concentration the right tool?

Appreciate if you can share your knowledge and experience.

Thanks

Satya

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Answers (1)

Answers (1)

Former Member
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Hi,

For your requirement, cash concentration looks like proper solution. Let me in brief explain what In House cash is.

In IHC, there is a virtual bank in the head office and the subsidiaries and the head office hold an account in head office. The outgoing payment is generally centralized through the bank accounts of head office. There are other ways to configure the solution but in essence what it does is the cash is handled through a cash center. There is no physical movement of cash between head office and subsidiary.

But for your case, what I understand is based on the request from subsidiaries, the head office release funds to the local offices right. But in IHC the movement of cash is only virtual. For your current requirement can be met through cash and liquidity management to identify the actual location of funds in the sense whether in transit or check outgoing etc.

In case if your planning to streamline the payments centrally and also between the head office and subsidiary, then you can very well think about IHC as an effective solution.

Regards,

Ravi

Former Member
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Hi Ravi

Thanks for providing the clarification and suggestions.

Thanks

Satya