Cash Pooling Exploration-One New Method Of Corporation Group Cash Centralized Management

Capital is the key point of financial management, which is the key point of corporation group management. It seems like the blood of body, in order to realize the positive cycle, achieve maximal and sustainable development, establishing a set of reasonable corporation group cash centralized management pattern, is not only the objective request of operational mechanism about financial management, but also the powerful safeguard of modern corporation system.As a matured technical and manageable tool, cash centralized management (CCM) has been widely applied in international corporation groups. In the 1980′s, cash pooling was put into practice. This new method which combines the corporation group especially the multinational corporation group with the commercial bank plays an important role in saving the fund cost.In China, along with the increasing international exchange, especially the impetus of commercial bank on financial product, in recent years, some corporation groups started to implement cash pooling, and gradually formed their own characteristics. For example, in 1999, TCL group has promoted the CNY cash pooling; In October of 2004, the Foreign Exchange Administrative Bureau released the"The notice of related problems about interior foreign exchange fund operation in multinational corporations"(It is also called as the 104th article). According to this document, multinational corporation groups can use the loan way to borrow and loan foreign exchange fund, which cleaned up the foreign currency cash management barriers. In 2005, US General Electric (GE) and China Merchant Bank (CMB) came to an agreement that CMB will provide US dollar cash pooling service for GE. Although cash pooling has been utilized in China gradually, related research in this new mode of CCM is limited. This article altogether is divided into four parts:PartⅠ: Firstly, summary the theories about the corporation group cash centralized management, point out that in order to solve the difficult problems, such as, its complex organizational structure, long management chain, etc. CCM is an effective way.According to the need of centralization and decentralization, CCM may be divided approximately into following five different patterns: account centre, balance centre, internal bank, finance company and cash pooling. On the basis of comparing their characteristics, superiorities and shortcomings, it points out that as an new mode of corporation group centralized management, cash pooling can ultimately reduce the cash cost of the group. It becomes more and more popular in multinational corporations.PartⅡ: Analyze the reasons, the characteristics and the applicable scope of cash polling. The birth of cash pooling had the profound academic and practical background. Cash pooling is not absolutely opposite with other four modes, one corporation group can implement financial company or balance centre at the meantime of cash pooling.Cash pooling is suitable for large corporation group especially multinational companies, and the effect lies in the company's controlling ability and the information development degree.PartⅢ: This article sets TCL group as an example to implement the foreign currency cash pooling. By designing and analyzing the operation mode of cash pooling between TCL group and Standard Chartered Bank, emphasizes the function of save the cost especially the fund impropriating cost.PartⅣ: As a new method of CCM, although cash pooling has many unique superiorities, it also needs to be carried on by many aspects, so that we can avoid its shortcomings, and exert the positive functions as possible as we can.There are three innovative aspects of this thesis:First of all, on the basis of foreign experiences, propose a feasible and improved measure of CCM in accordance with our large-scale multinational group's reality.Second, analyze deeply the theory of cash pooling from angles of view about economics, management science and finance. Third, compare six different methods of CCM, point out that the more suitable for the corporation group, the more effective of the method.In the research technique, this article combines the theory with reality, which makes the thesis more persuasive.