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Smart cash pool
 
I. Description

With CMB’s smart cash pool, enterprises can invest in monetary funds flexibly and intelligently to generate profits from both their current funds and the temporarily unused scattered funds used for business operations.

II. Advantages and Features

To understand how the smart cash pool utilizes your current funds to yield high returns, check out the features of our smart cash pool and the advantages of investing in monetary funds.

Intelligent cash pool – smart investment, simple operations, easy management

1. Do you feel it’s hard to make smart investments because you’re too busy to fully understand the available products? The smart cash pool helps you select high-quality monetary funds to save you the trouble. 

2. Do you lack the time to visit banks or invest your money? The smart cash pool features a user friendly, online intelligent fund investment function that can design flexible investment plans based on changes in your funds for periodic investments and redemptions.

3. If your company’s balance fluctuates, the periodic investment plan designed by the smart cash pool enables you to invest when your balance is high and redeem when your balance is low. The investment plan is implemented by period to fully utilize idle funds.

4. If your company’s funds are stable and high and your payment times are regular, the smart cash pool enables you to invest the portion above the minimum balance to utilize your scattered funds and then redeem when required.

Seven advantages of monetary funds

1. High liquidity: T+1 receipt of funds, no required holding time;
2. Low risk: investment in short-term monetary tools, no loss history;
3. Low cost: commission free, zero charge for subscription, purchases or redemption;
4. Corporate income tax exempted on bonuses;
5. Yield counted on a daily basis, compound interest earned;
6. High and stable yield: annual yield is higher than a 6-month time deposit;
7. Low threshold: investments as low as CNY1,000 yuan available.

Making money out of current funds

1. Investment in monetary funds through the smart cash pool is highly secure, liquid, and profitable;
2. Daily working capital can generate high yields without affecting liquidity;
3. Low investment threshold allows small enterprises to earn high profits easily at low costs.
4. Scattered funds are utilized for added value.

III. Application Cases

Enterprise A is growing well and has a stable cash flow; its funds are usually adequate, except during month-end outflow.

The enterprise wants to use its working capital for short-term, high-yield investments, while still covering daily expenditures and resisting risk. Enterprise A has two requirements when selecting investment tools: (1) Secure; (2) Maximally short-term and flexible enough to ensure availability.

Before the smart cash pool is utilized:

The cash pool adds value by purchasing short-term wealth management products or 7-day notice deposits. However, changes to China’s regulatory policy at the end of 2011 prohibited banks from issuing short-term wealth management products with less than a one month term. As a result, enterprise requirements for investment terms were longer be satisfied. The 7-day notice deposit has two disadvantages: (1) Low yield; and (2) 7-day’s prior notice is required - this necessitates accurate liquidity forecasts, which is difficult.

After the smart cash pool is utilized:

The enterprise uses the smart balance function in the smart cash pool to design an investment plan for daily execution, and to set the target reserve amount in its account to CNY 500,000. Then, each day, the smart cash pool system invests any amount above CNY 500,000 in CMB-selected monetary funds. This significantly benefits an enterprise’s accountants in several ways: First, they don’t need to worry about the lack of short-term wealth management products. The monetary funds have a comparable yield and risk level to banks’ wealth management products, but higher liquidity. Moreover, the invested fund can be redeemed at any time. Second, by improving yields from scattered funds, the accountants create extra value for the enterprises and receive management recognition. Third, as the system can automatically and periodically execute investment instructions, accountants can easily operate an investment without visiting a bank or shouldering extra financial loads. Finally, they can redeem the invested funds via the fund trading function in CMB’s online corporate banking system to improve liquidity, ensure fund availability, and manage funds easily.

Note:
All the contents stated above are for your reference only. Please consult the local branch of China Merchants Bank for further information. China Merchants Bank reserves the ultimate right of interpretation for the contents in this page.