Cash concentration is the objective of bringing the liquidity dispersed across a group's entities and bank accounts under a single point of control. It is a treasury policy rather than a banking product: cash pooling and zero balancing are the techniques used to achieve it.
The problem it addresses is dispersion. A group operating twelve entities across four countries can easily hold forty bank accounts, none of which gives a group view. Cash sits idle in one place while another entity draws on an overdraft, and the consolidated position is only known several days after the fact, once statements have been collected and reconciled by hand.
Centralisation comes in degrees, and most groups climb them in order. The first is visibility: seeing every balance daily without owning any of them. The second is physical concentration: sweeping balances to a master account. The third is an in-house bank, where a treasury entity acts as banker to the subsidiaries, and a payment factory executes third-party payments centrally.
Each step raises the requirement on data rather than on banking. Visibility means reconciling bank flows against the ledger in every entity. Physical concentration creates intragroup positions that must balance in reciprocal accounts. An in-house bank means the treasury entity carries internal current accounts whose interest must be computed and justified.
The limiting factor is rarely the bank's platform. It is whether entity-level figures can be trusted on the day they are read. Consolidating data from multiple ERPs and validating reciprocal positions with the intercompany flow reconciliation agent are what make a consolidated cash position usable for decisions rather than merely available.
