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In the current economic environment, liquidity management is a key function for multinational corporations. Many multinationals operate some form of group treasury structure, such as centralized or regional treasury centers; in-house banks; foreign exchange (FX) centers; and payment factories, which are central units that execute payments on behalf of one or more subsidiaries. Through these various treasury structures, multinationals undertake activities like centralized lending, payment management, risk management, and FX hedging.

For short-term cash management, cash pooling is often the most effective way to optimize both excess and deficit cash positions within a group of companies. By allocating internal funds, rather than depending entirely on external sources, a large business can minimize its interest costs overall. Moreover, cash pooling can lead to significant savings when the group marshals its combined market power in dealing with external banks and through centralization of cash management, which may lead to economies of scale.

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