Cash Pooling Options In PRC

What is Cash Pooling?

Cash pooling program is a treasury tool which enables a corporate group to concentrate and utilize cash among its group members for better cash flow management and intra-group financing. With increasing globalization, multinational companies sometimes find themselves in need of managing their cash in a more efficient manner globally and regionally. With gradual liberation of the PRC foreign exchange control, not only on domestic level but also the launch of cross-border cash pooling arrangements under the supervision of the State Administration of Foreign Exchange and its local counterparts (SAFE) or the People’s Bank of China (PBOC), have become available in China.

Why do we need Cash Pooling arrangements?

Among group companies, some members may need to manage their cash surplus while some members face deficiencies and require for leverage. Cash pooling arrangements help better centralize cash management and reduce unnecessary financing cost. Under foreign exchange restrictions in China, certain cash pooling arrangements help further optimize liquidity for cross-border multiple-currency funds within a multinational group, and reduce tedious foreign exchange supervisions by functions such as consolidation for foreign debt quota, netting of inbound and outbound foreign exchange payment, etc.