Payments and Cash Management
Balance management, deciding
with full knowledge of the facts
WHOLESALE BANKING
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Balance management.
What are your main criteria?
Each decision must be based on factual and accurate
information, a global and detailed vision of working capital
management.
Account structure is of the most importance. Direct access to in-
Time management
formation is crucial. A clear overview of the account situation is a
The efficient management of incoming and out-
priority. Let us take a closer look at the different objectives.
going flows is an absolute necessity. It is possible
by making payments from the account as late as
Account structure
possible, and by putting incoming cash to work
The target of financial directors is simple: the fewer the accounts to
earning interest as fast as possible. And such time
be managed, the easier it is to curb the administrative charges they
management is only efficient if you have access to
generate. From theory to practice: traditionally it is recommended
real-time information you can consult whenever
to multiply accounts opened abroad to cut the cost of cross-border
you need. All decisions depend on such manage-
transactions. This is a paradox which requires a delicate balancing
ment.
act to be solved.
Accurate data
How fast can your company keep track of its foreign positions? What should you do if a foreign
customer asks to pay in a currency other than the euro? What is the balance on your accounts
abroad today? How can you avoid paying debit interest on an account when you have money
available on other accounts? How to operate: to centralise or to decentralise?
Foremost objective: optimising the return of the interest rates on
Correctly formulated payment instructions are
the various accounts, in other words minimising the interest rate
another prerequisite to allow automatic and cost-
paid and maximising the interest rate earned on deposits. Work-
effective reconciliation. Along the same line of
ing capital can be enhanced in various ways: through deposits and
thinking, electronic processing of transfers, with-
medium-term investments to avoid leaving unproductive cash on
out any manual intervention, significantly cuts
the current account; taking out a fixed-term deposit rather than
costs (STP1 reference). To manage your balances
negotiating an overdraft. Optimal management means avoiding
efficiently you need correct information.
leaving cash on one account while taking out a loan over another.
Collating and circulating information
A matter of commonsense? Of course, but not just that.
It is up to the company to choose the appropri-
Account information
ate system: intra-day reporting or end-of-day
All questions which show the need for access to real-time central-
A company’s balance management can be de-
From day-to-day monitoring and reconciliation, the management
reporting. The security of information is highly
ised information. Cash management must be implemented con-
fined in straightforward terms: taking a tight
of bank accounts takes up a lot of time. Opening accounts abroad
protected, especially with regard to signatures.
scientiously and efficiently and electronic banking is an essential
control of the account structure and finding high-
makes it possible to benefit from local – cheaper – rates on trans-
tool for that purpose.
yield investment solutions for available balances.
actions, yet the administrative charges surge. Furthermore, it is
Payments are carried out via global management
A company’s financial director must compile a
easier to manage a single account than several on a daily basis.
software (ERP) or through a direct connection to
Telelink@Isabel.
Financial flows within a company and between the company and
check-list.
its suppliers create cash balances which are often spread out over
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To balance debit and credit accounts
A global and correct overview of the account situation is essential,
different bank accounts. The healthy and responsible manage-
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To ensure that interest rates on such accounts
as is also the information relating to it. It is the only way to opti-
optimise the amounts deposited
mise the return on available balances. In addition you can integrate
To avoid surplus cash in relation to require-
the information for reporting within the company or towards the
ments
parent company.
ment of such balances optimises daily book surpluses or overdrafts, as well as value date balances. A zero balance is the ideal
position on a current account. When an account is overdrawn,
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credit is needed; conversely a positive balance can be invested at
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good conditions.
STP: Straight Through Processing, ability of a company to carry out
electronic transfers without any manual intervention on the part of the
bank.
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Balance management.
Efficient instruments, offered by ING
Account information
As an ING partner you will benefit from perfectly reliable, user-
ING Reporting+, to keep a close track of
what’s going on in your company
friendly balance management instruments for collating and
You want to keep a close track of the transactions
exploiting financial information.
carried out over your accounts, compile reports,
make searches without wasting any time, and
Telelink@Isabel,
preferential access to electronic banking
optimise the management of your accountancy.
Isabel is an interbank communication platform which helps you
analyse, report and manage your balances in a
to electronically manage your accounts with the utmost secu-
more cutting-edge and more profitable manner.
rity. The additional services, grouped together under the name
The diversity of the services provided covers more
Telelink@Isabel are free for ING customers. These services give you
than your main requirements:
access to real-time, secured and simplified transactions, as well as
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Time is saved and investigations simplified,
a global and detailed overview of your account situation.
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Automatic reporting to the National Bank,
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Automatic management of inter-company
ING has designed ING Reporting+ to inform,
With Telelink@Isabel you can remotely consult your accounts from
loans (an attractive pooling instrument).
a range of countries. Direct information guaranteed. Reporting
occurs either at the end of the day via Isabel or during the daytime
Balance Management
(intra-day via Telelink).
Your company’s subsidiaries each have one or
several accounts. How can you manage at best
What is the purpose of a specific Telelink access in addition to the
all the balances? ING can again offer solutions
Isabel platform? For reasons of efficiency. Isabel is a joint platform
tailored to the size of your company, its needs
shared by all banks established in Belgium. At ING, we believe that
and its objectives.
many of our customers have individual needs which are better
First and foremost, deciding with full knowledge of the facts
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Imprecision with your account management
satisfied through a direct relationship with ING. The added value
Automatic transfers, simplicity itself
of Telelink is appreciable:
You set a ceiling for the balances and once it is
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A broad raft of cash management instruments,
reached, the liquidities will be transferred to
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The polyvalence of a multinational platform specific to the
another account where a predetermined amount
will always remain available.
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Without correct information, you could take an unwise decision.
can lead to an increase in your credit line,
group ING with direct access to many countries in addition to
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A poorly structured payment procedure inevitably means time
taking out an overdraft facility or an advance
Belgium: the Netherlands, France, Germany, Luxembourg, the
wasted in research, extra work, and extra administrative costs.
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Paying bills late implies the payment of additional interest and
with a negative impact on your financial ratios.
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The bottom line (if you will excuse the pun): a
collateral damage to your relationship with suppliers. Close and
company’s instinctive ambition is to expand.
attentive management of your payments avoids this type of
Development requires an unrelenting strive to-
waste.
wards organisation, starting with efficient cash
If you let your customers pay late, then your incomings arrive
management. Electronic banking will save you
late. Approximate management of your collections is also detrimental to the payment reminders you send to your bad payers.
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United Kingdom, Ireland, Italy, etc.,
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The reduction of the risk of errors resulting in a high ratio of
STP (Straight Through Processing), and therefore the costs are
cut,
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The possibility to monitor payments uninterruptedly during
the course of the day by means of intra-day reporting,
from costly inconvenience. Now is the time to
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Services available both on-line and off-line,
switch, if you do not already bank electronically.
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Access to local transactions.
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European payments. Domestic rates for transactions to
and from other countries
In this form of pooling, centralised management
This arrangement relates to cross-border transfers in euros which
every day. This method avoids booking credit or
are governed by the European directive 2560/2001. Its immediate
debit interest to individual accounts. The company
advantage is that the rate applied to a European payment is the
mandates ING to carry out these transactions on
same as the domestic rate. Each transaction is limited to 50,000
a daily basis. Physical pooling actually transfers
euros. The transactions must be accompanied by instructions to
funds to another account. The daily transfer of
share costs SHA (shares costs) and meet the STP criteria (IBAN &
funds is considered as a loan between the differ-
BIC codes). Here is another attractive solution to avoid opening
ent entities of the company (or group) and must
multiple accounts across Europe.
be processed in accounting. Therefore, it entails
makes real transfers of funds to the main account
administration costs. Is there an alternative?
Pooling, efficiency expressed in two formulas
Pooling can be implemented either ‘physically’ or structured into
notional pooling.
Notional, virtual
but efficient Cash Pooling
Contrary to physical cash pooling, with notional
Physical Cash Pooling or Cash Balancing
cash pooling there is no question of physically
With cash balancing a main account is selected for a group of
batching funds or physical fund transfers. The
accounts. It is a centralised method of cash management. At the
debit and credit balances of the participant
end of the day, the (value date) balances recorded over the accounts
accounts (a company or group) are included in a
participating in the pooling system are transferred or debited to
«Notional Pooling», a virtual yet very functional
the main account by automatic transfer. Each participant account is
structure. The advantages of this solution are
zeroed. The advantages are obvious. It is a way to optimise liquidity
manifold.
surpluses and shortages.
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The management is limited to a single account which provides
a day-to-day overview of all the company’s or group’s balances.
Positions in different currencies can be arbitraged.
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Guaranteed autonomy for the subsidiaries
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Certainty that not a single cent will remain unproductive.
who keep their freedom for day-to-day trans-
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You can benefit from more attractive interest rates, as the in-
actions. The liquidities remain in each entity
terest is calculated on the total net balance, in value dates, on
the main account.
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but earn a more attractive rate of interest.
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Spare liquidities can easily be invested and any shortfalls will be
No administration for transfers between entities, unlike the ‘physical pooling’ formula.
easier to fund via the main account.
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