Cash pooling and internally-generated funding are attractive because they eliminate the banker’s spread and the risk of interest rate fluctuations. The regulatory environment has a major impact on corporates’ cash management practices. The latter will be impacted, for example, by the various regional and countryspecific interpretations of Basel II. If externally-generated liquidity is required at some points in the working capital cycle, it is better to rely on a range of providers. Corporates should always retain responsibility for their ‘risk appetite’ and not let their service providers decide on suitable investments.
