X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Years ago, Microsoft was a pioneer in zero-balance account (ZBA) structures, which automatically sweep an organization’s cash from multiple accounts at the same bank into a consolidated header account. “We were one of the first corporates to have a fully automated ZBA structure that went cross-country, cross–legal entity, with 100 percent account automation in our SAP ERP [enterprise resource planning] system,” says Jim Scurlock, head of cash management for Microsoft.

Then, the company began encouraging its banks to support multi-bank target balance agreement (MBTBA) arrangements, which provide similar cash-pooling functionality but among accounts held in different banks. For both ZBA and MBTBA structures, participating banks ensure that the accounts can support the requisite cash flows by providing Microsoft with intraday credit facilities.

For example, Scurlock says, consider a bank account in Paris that’s used to handle Microsoft’s accounts payable (A/P) across France. Because it’s part of a ZBA, the account’s balance every morning is zero. Now, suppose a tax payment in the amount of 100 million euros will be paid from that account on September 1. By that date, the account will need access to an intraday overdraft facility of at least 100 million euros. The facility will fund the account to cover the tax payment, and at the end of the day, the ZBA process will settle up by transferring 100 million euros from the associated ZBA header account.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.

More from this author

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.