Cash Concentration
Short definition
Cash concentration is sweeping group account balances daily into a central account. It is the operational engine of cash pooling; it is not the same as legal set-off.
Detailed explanation
Physical pooling moves the balance; notional pooling nets interest and may not move cash. Tax, central-bank and bank rules bound it.
Trapped cash breaks concentration: country, collateral or a covenant locks the balance. Concentration also enlarges counterparty risk at one bank.
Why it matters for the CFO
Scattered cash hides a 13-week trough while the group balance looks high. Concentration makes usable cash visible.
How to read it
A concentrated balance is not liquidity until trapped and encumbered cash is taken out.
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Definitions are educational. They are not investment, credit or tax advice.