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Businesses thrive when they can fluidly manage their cash flow and earnings. In a competitive market, every penny should be pulling its weight. Sweep accounts can help your business effortlessly optimize its cash management and investment and savings opportunities.

What Is a Sweep Account?

The goal of a sweep account is to minimize cash drag and maximize your returns, with minimal intervention or effort required on your part. It can help deliver a consistent investment stream that aligns with your business’s needs and doesn’t interfere with funds needed for operational expenses.

How Does a Sweep Account Work?

A sweep account is a dynamic financial tool that automates cash management.

  • You set account balance limits. First, you establish a minimum and maximum amount of funds that your primary cash account should hold at any time.

  • Excess funds are transferred out. If the primary account balance exceeds the maximum, the extra funds are transferred (or “swept”) into a secondary account.

  • Additional funds are pulled in. If the primary balance falls below the set minimum, funds are pulled from the secondary account to restore the primary account balance.

The secondary account is typically a type of money market account, or high-interest savings account. However, some sweep accounts can be set up to use excess funds from the primary cash account to pay down a line of credit or even cover overdrafts.

Why Would a Business Use One?

Once a necessity due to historical banking restrictions on commercial checking accounts, sweep accounts are now used as helpful tools for smart money management. They allow savvy businesses that rely on daily cash flow to make the most of their excess cash, without daily micromanagement.

Benefits of sweep accounts include:

  • Keeping your cash active. A sweep account ensures that excess funds never sit idle for long, so earnings constantly work for you. Many sweep accounts will check account balances and move funds daily, if needed.

  • Embracing automated efficiency. Sweep accounts essentially manage part of your finances for you, so you have more time and attention to devote to your business.

  • Amplifying your financial safety. Once you determine the minimum amount needed for your business’s daily operational expenses, the sweep account helps keep your balance from dropping below that number. Plus, a sweep account can help accelerate your returns and savings, widening your financial safety net.

Is a Sweep Account Right for Your Business?

Though they offer clear advantages for a wide range of businesses, sweep accounts aren’t always the right fit. For example:

  • Your returns don’t offset the costs. Most sweep accounts have a monthly fee, which can be a flat rate or a percentage of the account’s earnings, so make sure your investment returns will be able to offset these costs.

  • Your daily operational costs haven’t been established yet. Startups that are still hammering out their operational expenses might want to wait until their financial needs are clear before opening a sweep account.

  • Your revenue can be erratic. Sweep accounts are typically more beneficial for businesses with steady earnings and that consistently have excess cash.


Let Your Finances Shine with Citizens Bank

If your business has a steady cash flow with frequent excess, a sweep account could be the ideal solution for enhancing your cash management, so you can benefit from higher returns and more efficient operations.

Sweep accounts* from Citizens Bank allow you to effortlessly earn returns, pay down a line of credit, or cover overdrafts. Our Treasury team can help you determine if a sweep account is right for your needs. With comprehensive Treasury services, we’re committed to providing high-value solutions designed to optimize your business’s financial landscape. Reach out to our Treasury team today.

*Sweep accounts subject to eligibility and bank approval.