Answer
Cash pooling means treating several bank accounts as one liquidity position. Either cash is swept (physical cash pooling — ZBA, target balancing, concentration) or interest is calculated on a notional net (notional pooling).
Why the distinction matters
“Pooling” in a meeting can mean three different things. If the center must own cash for investing or for a payment factory, you need physical concentration. If the pain is interest leakage and you do not want sweeps, notional may fit — where available.
Physical sweeps generally create intercompany loans, so tax and legal join the design — including whether sweeps create taxable interest (do cash pool sweeps create taxable interest?). Cross-border designs need a country check; China is a common place global templates break.
Next
Decision: physical vs notional. Full stack: liquidity management.