What is a sweep account?

Introduction to sweep accounts

Sweep accounts are designed to ensure that cash never sits idle. They automatically move surplus funds from one account to another—typically from a checking or operational account into a higher-yield account or a central treasury account. This helps companies earn interest on excess cash, avoid overdrafts, and maintain liquidity where it’s needed.

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In treasury and corporate banking, sweep accounts play a key role in automating liquidity management. They eliminate the need for manual transfers, keeping balances in line with pre-set thresholds and giving treasurers more predictable control over cash positions.

How sweep accounts work

A sweep account operates on a set of predefined rules. At regular intervals—often daily at the end of the business day—the bank’s system reviews the balance of an operating account. If the balance exceeds or falls below a target threshold, funds are automatically “swept” to or from a designated account.

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There are two main types of sweeps:

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• Investment sweeps, which transfer surplus funds into interest-bearing or money market accounts to generate returns.
  
  
• Loan or credit sweeps, which use surplus cash to pay down outstanding credit lines, then draw funds back if needed to cover shortfalls.
  

These mechanisms ensure cash is always working efficiently without requiring manual oversight.

Sweep accounts in corporate treasury

For corporate treasury teams, sweep accounts are a fundamental tool for managing liquidity across multiple entities and accounts. They are often used alongside cash pooling and intercompany lending to concentrate group funds and minimize idle balances.

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Sweep accounts also support regulatory and operational needs by allowing companies to maintain specific account structures while still centralizing cash at the group level. In multi-entity environments, sweeps can be configured one-way or two-way depending on whether funds only move upward to a master account or can also flow back down to subsidiaries.

Benefits of using sweep accounts

Sweep accounts deliver both financial and operational benefits:

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• Optimized liquidity: Surplus cash is automatically deployed where it adds the most value.
  
  
• Reduced borrowing costs: Excess balances can pay down credit lines or fund accounts that would otherwise go overdrawn.
  
  
• Improved yield: Idle cash earns interest instead of remaining unused.
  
  
• Automation and accuracy: Funds move according to set thresholds, reducing manual intervention and errors.
  
  
• Better cash visibility: Consolidating balances across accounts gives treasurers a clear view of group liquidity.
  

Together, these benefits help finance teams operate more efficiently while maintaining strong control over daily cash positions.

Sweep accounts and bank connectivity

While banks typically operate sweep arrangements internally, modern treasury platforms allow companies to manage sweeps across multiple banks or currencies. Automated connectivity enables visibility into both the source and destination accounts, showing where and when sweeps occur.

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Integrating sweep data with ERP or treasury systems ensures that all movements are reflected immediately in forecasts and reconciliations, eliminating timing discrepancies between booked and available balances.

How Atlar can help with sweep accounts

Atlar automates sweeping between your connected accounts and entities to optimize cash. Users can define target balances and set up threshold-based rules that trigger fund movement: a top-up rule transfers funds into an account when the balance falls below a set limit, and a drawdown rule transfers excess funds out of an account when the balance exceeds a set limit. With real-time visibility over balances, Atlar allows you to review a detailed sweep history, minimizing manual work and ensuring cash is where it creates the most value. Sweep execution depends on the frequency setting (e.g., every 15 minutes, daily, weekly). To learn more, book a demo, and see how Atlar helps automate liquidity across your accounts.