Subsidiaries and internationally-run companies in Germany
Idle treasury
€640,000 sitting in the Geschäftskonto of a profitable subsidiary. No one decided it would stay there, that’s simply what happened.
Written for German subsidiaries of foreign groups and for companies owned or run by internationals.
The real blockage
The problem isn’t the investment. It’s that no one holds the mandate
Ask around inside your own company and you’ll get three polite answers that don’t even contradict each other.
| Party | What it decides | What it doesn’t decide |
|---|---|---|
| Steuerberater | Accounting, filings, Jahresabschluss, tax treatment of financial products | The investment itself. The boundary is regulatory, not a question of competence. |
| Subsidiary’s bank | Accounts, payment services, credit lines, its own product range | What other institutions offer on the same term. It has no reason to point that out to you. |
| Group finance department | Treasury policy, financing, consolidation, reporting | Local German execution: opening a Firmendepot, deposit guarantee, a GmbH’s tax calendar. |
| You, locally | Day-to-day use of the account | Nothing written down on the investment. You carry the responsibility without holding the mandate. |
Four parties, and the question falls within none of their written remits. As long as that gap isn’t closed by a document, the only defensible decision is to do nothing. That’s exactly why the cash sits idle.
Calculator
What share of your balance has no function in the next twelve months
A subsidiary doesn’t have one cash position, it has four, with different time horizons. As long as they’re blended into a single balance, the only prudent decision is to leave everything in the current account. Separate them, and you get a number instead of a feeling.
Total of your German current accounts, the figure head office sees in consolidation.
Payroll, social charges, suppliers, rent.
The one you observe on statements, not the one in the contract.
Over twenty-four months. The reserve is sized to actual volatility.
A customer at 45% who delays a payment is your worst month, twice over.
Approved but undisbursed investments, leasing, shareholder current account, tax provision.
No identified function within twelve months. The only pocket that raises a genuine investment question.
The German statutory deposit guarantee covers €100,000 per depositor and per institution. A GmbH is a depositor in its own right. This is your current exposure to a single counterparty, before any investment.
Illustrative figure based on the free surplus, assuming 2% inflation. This line appears nowhere in the Jahresabschluss.
Indicative calculation meant to structure the conversation. It does not replace an analysis of your situation and is not an investment recommendation.
In practice
What I deliver, and what I don’t do
1
The split
The four pockets calculated on your actual figures, not textbook ratios. Output: a free surplus amount and its calculation method.
2
The policy document
A one-page note, in English and German, setting thresholds, horizons, approved counterparties, and who decides what. The missing piece in the head office file.
3
Implementation
Opening accounts, allocation across institutions, maturity calendar, follow-up. Documented at every step.
| I don’t replace | Your Steuerberater, your main bank, or the group’s finance department. I fill the gap none of the three occupies. |
| I don’t provide | Tax or legal advice in the regulatory sense, nor discretionary management of your assets. |
| I work | In English with you and head office, in German with local institutions and advisors. |
What head office asks for
Frequently asked questions
The group runs cash pooling. So this question doesn’t apply?
It applies differently. An upstream sweep to the parent company is an upstream loan: it exposes the subsidiary to counterparty risk on its own parent, and puts an ongoing duty of care on the Geschäftsführer to monitor the parent’s solvency. Add to that the arm’s-length rate requirement and Germany’s interest deduction rules. Pooling doesn’t remove the question of risk, it relocates it.
Our bank already offers us solutions.
It offers its own range, which is normal. It has no reason, however, to tell you that another institution offers better terms on the same duration, or to advise you to spread your deposits elsewhere.
At what amount does this start to make sense?
The relevant threshold isn’t an absolute amount, it’s the point at which the free surplus consistently exceeds €100,000 with a single institution. From there, the counterparty risk question stands on its own, independent of any return objective.
Who makes the final decision?
You, and head office according to your delegated authority. My role is to produce the document that makes that decision possible and defensible, not to make it on your behalf.
Required disclosure
Informative content intended for executives and finance departments. Does not constitute personalized investment advice, nor tax or legal advice. Every investment carries risk, including the risk of capital loss. Regulatory references are given for general information and should be validated with your existing advisors. More about my background is available on the About page.
A first conversation with your finance department
Thirty minutes, in English or German, with or without head office on the line.