Cash pooling in cash flow management models in a group of companies

Within the framework of cash flow management of the group of companies, the most significant is the management of cash consolidation and the directions of use of consolidated funds. In a group of companies, it is possible to use cash flow management models based on cash pooling for these purposes. Modern financial management uses two basic cash flow management models based on physical and virtual cash pools. In the physical cash pooling model, subsidiaries solve the problem of allocating excess financial resources by issuing a loan to the head of the company, and the problem of covering cash gaps by sending an application for repayment. A commercial loan agreement is the basis for making transfers between the parent company and a subsidiary. In the virtual cash pooling model, the subsidiary receives financial resources in the form of a loan (overdraft) from a commercial bank, and places excess financial resources on a bank deposit.