Sweep Account

What is a sweep account?

A sweep account automatically transfers funds between accounts based on predetermined rules. Common sweeps move excess checking balances into interest-bearing accounts overnight, then return funds as needed. This allows businesses to earn interest on idle cash without manually managing transfers or risking insufficient funds for payments.

How business sweep accounts work

You set a target balance for your operating account. Each night, funds above the target sweep to an investment account. When the operating balance falls below a floor threshold, funds sweep back. The business earns interest on swept balances while maintaining liquidity. Sweep accounts work best with consistent, predictable cash flow patterns.

Evaluating sweep account benefits

Compare interest earned against any fees charged for the sweep service. With low interest rates, the benefit may be minimal. As your cash balances grow, the calculus changes. Some sweeps also provide FDIC insurance expansion by distributing funds across multiple institutions. Discuss options with your bank to find the right structure for your situation.