What is the primary advantage of notional pooling for corporations?

Notional pooling is primarily advantageous for corporations because it enables surplus balances in various accounts to offset overdrafts in other accounts. This means that if one subsidiary or account has excess funds, those funds can effectively reduce the borrowing needs of another account that might be in deficit. The key benefit here is that it optimizes the overall cash management strategy by reducing interest costs and improving liquidity without requiring the physical transfer of funds between accounts.

This approach allows companies to achieve more efficient cash utilization across their accounts without the complexities that often arise from intercompany transfers. It supports businesses in managing their cash flow more effectively, ensuring that funds are available where they are needed most.

The other options do not align with the primary strategic benefits of notional pooling: the physical movement of cash is not a feature of notional pooling; increasing tax liability is generally a drawback, not an advantage; and while accounting simplification may occur, the primary value lies in liquidity management, not through intercompany loans.