For finance teams that run a cash pool and calculate internal interest in spreadsheets.
How to calculate cash pool interest: debit and credit rates, day by day
Cash pool interest is the interest a group charges on a debit balance with the pool leader and pays on a credit balance. This guide shows the calculation with a worked example, and how TreasuryView runs it on daily balances.
- Secure sign-up in under a minute. No payment method required.
- The trial ends automatically. Monthly SaaS plans from €250, cancel anytime. See pricing.
Physical and notional cash pools
In a physical cash pool, the bank sweeps balances to the leader's account, usually every day, so each sweep changes a receivable or payable between the company and the leader. Interest is calculated on that balance. In a notional cash pool, no cash moves: the bank offsets the balances only for its own interest calculation, and internal interest between the companies arises only if the group agrees it.
How the internal rates are set
Cash pool rates are usually set as a reference rate, for example 1-month EURIBOR for euro balances, plus a markup for debit balances or minus a markdown for credit balances (Deloitte). The spread between the two rates decides who keeps the benefit of the pool: the companies that borrow, the companies that deposit or the pool leader (HMRC INTM503130).
The rates follow the arm's length principle, as for an intercompany loan. Rates are usually set so that each participant is at least as well off as with a local bank, and the method behind them is documented. Balances that stay in the pool for a long time can be treated as a longer-term loan, priced accordingly (Zanders). Set the rates with your tax adviser. The intercompany loan audit checklist shows what to document.
How to calculate cash pool interest in five steps
-
Take the balance at the end of each day
Start from the opening balance and apply each day's movements. Interest runs on the balance after that day's movements.
-
Pick the rate that applies to the balance
A debit balance takes the debit rate, a credit balance the credit rate. Each rate is the reference rate fixing plus or minus its margin, reset at the agreed frequency. A floor stops a negative reference rate from reversing the direction of interest.
-
Apply the day count convention
Daily interest = balance × rate × days ÷ 365 for ACT/365, or ÷ 360 for ACT/360. The cash pool agreement decides which convention applies.
-
Add up the interest for the period
Sum the daily interest up to the settlement date, for example month end.
-
Settle or capitalise
Either the interest is paid at the settlement date, or it is added to the balance and earns interest from then on.
Worked example: one euro cash pool account in January
A company starts the year with a debit balance of EUR 2,000,000 in the group cash pool. The debit rate is 1-month EURIBOR plus a margin of 1.25%, reset monthly. With a fixing of 2.00%, the debit rate for January is 3.25%. Day count is ACT/365.
| Day | Movement (EUR) | Debit balance at end of day (EUR) | Debit rate | Interest for the day (EUR) |
|---|---|---|---|---|
| 1 Jan | Opening balance | 2,000,000.00 | 3.25% | 178.08 |
| 2 Jan | 50,000.00 paid in | 1,950,000.00 | 3.25% | 173.63 |
| 3 Jan | none | 1,950,000.00 | 3.25% | 173.63 |
| 4 Jan | 120,000.00 drawn | 2,070,000.00 | 3.25% | 184.32 |
| 5 Jan | none | 2,070,000.00 | 3.25% | 184.32 |
The first line: 2,000,000.00 × 3.25% ÷ 365 = 178.08. On 1 February the rate resets to the new fixing, for example 2.05% plus a margin of 1.25% = 3.30%, and the calculation continues on the new rate. Figures are illustrative.
Where spreadsheet calculations go wrong
-
Daily movements
One missed or late movement shifts every daily balance after it, and with it the interest.
-
Rate resets
Each reset needs the right fixing on the right date. A copied rate from the wrong day changes the whole month.
-
Debit and credit switch
When a balance changes sign, the rate has to switch too. A spreadsheet with one rate column per account misses this.
-
Day count and month end
ACT/360 against ACT/365, settlement against capitalisation. Small differences add up across companies and months.
How TreasuryView calculates cash pool interest
TreasuryView treats a cash pool account as its own instrument, with separate terms for the debit and the credit side. Each step of the calculation above maps to a field you set once.
| Calculation step | In TreasuryView |
|---|---|
| Daily balance | Opening balance plus daily movements, entered, uploaded as a spreadsheet (for example from your bank portal export) or sent via REST API |
| Debit and credit rate | Fixed or floating for each side: reference rate (EURIBOR, €STR, SARON, SONIA and others), margin, cap and floor, reset frequency, fixing in advance or in arrears with a fixing lag |
| Reference rate fixings | Taken from the market data hub for each reset date |
| Day count and calendar | ACT/360, ACT/365, 30/360 and others; holiday calendar and business day convention per account |
| Settlement | Interest settlement frequency, or capitalised interest |
| Result | Schedule per period with rate, fixing, margin, days, balance, interest and accrued interest, for any reporting date |
Results go out via Excel or CSV or the REST API. Forward curves project future floating interest for planning. Cash pools are included from the START plan. See also how TreasuryView automates monthly interest calculations for loans.
What TreasuryView does not do
TreasuryView calculates and reports internal interest on cash pool balances. The pooling itself stays with your bank: TreasuryView does not sweep cash, connect to bank accounts, make payments or create postings in your accounting software. Daily balances come from your bank portal export, uploaded as a spreadsheet, or via API. See the feature overview for what TreasuryView includes and leaves out.
FAQ: cash pool interest calculation
How is cash pool interest calculated?
Cash pool interest is calculated each day on the balance at the end of the day: balance × rate × days ÷ day count basis. A debit balance takes the debit rate, a credit balance the credit rate. The daily amounts are added up and settled at the agreed date, usually month end, or capitalised.
Which interest rate should a cash pool use?
A common approach is a short-term reference rate for the currency, such as EURIBOR or €STR, plus a markup for debit balances and minus a markdown for credit balances. The rates must be at arm's length and documented. Set them with your tax adviser; the intercompany loan audit checklist shows what to keep on file.
What is the difference between the debit rate and the credit rate?
The debit rate is what a company pays on money it draws from the pool. The credit rate is what it earns on surplus cash it leaves in the pool. The spread between them decides how the benefit of the pool is shared between borrowers, depositors and the pool leader.
Is cash pool interest calculated daily or monthly?
Daily, because the balance changes daily. Settlement is usually monthly or quarterly. Between settlement dates the interest is accrued, which matters for month-end and year-end closing.
How are negative reference rates handled in a cash pool?
With a floor on the rate. A floor of 0% on the credit rate, for example, stops a negative reference rate from turning credit interest into a charge. In TreasuryView, cap and floor are set separately for the debit and the credit side.
Does TreasuryView do cash pooling?
No. TreasuryView does not sweep cash or connect to bank accounts. It calculates the internal interest on cash pool balances that you load, and reports interest and accruals for any reporting date.
Can I import daily cash pool balances from my bank?
Yes. Copy the dates and movements from your bank portal export into the upload spreadsheet, or send them via the REST API. TreasuryView then calculates interest on each daily balance.
Sources and further reading
Sources last checked on 11 November 2026. They are external and not written by TreasuryView.
- Cash Pooling und Transfer Pricing by Deloitte: how cash pool rates are built from a reference rate and a spread, and typical audit topics (in German)
- INTM503130: setting interest rates for participants on an arm's length basis by HMRC: how internal rates allocate the benefit of a cash pool
- How to set cash pool and in-house bank interest rates by Zanders: participant benefit, structural balances and documentation
- OECD transfer pricing: the OECD Transfer Pricing Guidelines, chapter X covers financial transactions including cash pooling
This page is for general information and does not replace tax or legal advice for your situation. As of November 2026.
Calculate cash pool interest without the month-end spreadsheet
Load your daily balances into TreasuryView and see interest and accruals for every cash pool account and reporting date.