A Zero Balancing Cash pool is used to optimize the groups liquidity usage and optimize interest calculation.
In practices the sub accounts are swept or refilled daily to/from the top account. At the bank, the sub accounts has a balance of zero.
From an accounting perspective the Sub account owner has a deposit or liability with the top account owner.
In Treasury Systems the cash pool needs to be set up. Se articel How to set up a cash pool
The real bank accounts should be used as default bank accounts and used when entering a deal.
In order to be able to handle the fictive balances on the account, ie the balance on the account if it was not swept, you need to set up a fictive cash pool, that looks the same as the real one. Set up the pool in a fictive bank, for example IHB.
Import of Bank account statements
When importing the bank account statement and the account is set to Zero Balancing as cash pool type, Treasury Systems will not import the balance from the statement.
Depending on which information that is needed in the system regarding the account, the setup could vary:
1. Only the fictive balance and book asset/liability
If you are only interested to know the fictive balance. Not different type of bank fees or other transactions.
- Map the statement with the IHB account
- Statement entry rule should be set to an Adjustment and the entry type should be Sweep.
When choosing the entry type sweep, Treasury system will import the transaction with the opposite sign i.e. creating a positive balance if the a negative sweep.
2. Fictive balance, import other transactions and book asset/liability
If you are interested to know the fictive balance and also would like to import other transactions from the statement to the account in the cash pool such as charges and interest you need to
- Map the statement to the real bank account
- Statement entry rule should be a transfer and the entry type should NOT be a sweep, chose e.g. Zero balancing. The counterpart account should be the corresponding IHB account
The real bank account will have a balance of zero if reconciled. If the account does not include all transactions it will not show a correct balance. The balance of the IHB account should show the correct fictive balance.
Treasurys transaction account for reconciliation, no asset/liability booking
If Treasury has an own transaction account in a zero balancing cash pool and would like to do reconciliation on the account but no booking of asset/liability. They do not want to book an asset or liability to themselves.
- Map the statement with the real bank account
- Entry rule should be set as an adjustment and the entry type should NOT be a sweep, chose e.g. Zero balancing.
After reconciliation the balance will be zero.
If asset and liability bookings should be created on treasurys transaction accounts they need to be set up in the same way as option 2. above.
In reports when choosing the IHB account and also the shadow accounts (see picture below) Treasury systems will show the IHB account with the Legal entity of the subsidiary and the counterpart will be the top account owner. The shadow account will show the same but the legal entity will be the top account owner and the counterpart will be the subsidiary.
In Selecton lower part bank accout type choose shadow account
To book the asset liability you run the Accounting of unrealised Bank Revaluation & CP Asset and Liability and select the shadow account to book from the treasury point of view. Make same selection as in Reports (see picure above)
CP in Multiple level
Note, If you have a cash pool in more than one level you can chose if you would like to do the accounting on all levels - then do nothing or if you would like to do the accounting between the account and the highest level in the cash pool towards the cash pool owner. In master data bank account make a selection of the bank accounts to aply the setting and please mark Book to absolute top account.
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