What is a business sweep account and how do you use it?

A business sweep account automatically transfers excess cash from your operating account into higher yield destinations at the end of each business day, then returns those funds before the next morning. The account actually operates through two legally separate accounts working in tandem. Your transaction account handles daily operations while a separate investment account captures overnight interest on whatever you don't immediately need. The automation happens during end of day processing, so you never have to manually move money or worry about whether funds will be available for tomorrow's payroll.

The mechanics are straightforward. Each day after close of business, your bank calculates your operating account balance and compares it against a predetermined threshold you've set. Any amount exceeding that target automatically transfers to a higher yielding destination. By the start of the next business day, those funds return to your primary account with the full balance available for operations. This timing structure means you maintain access to your full operating balances for payroll, vendor payments, or unexpected expenses without any manual intervention.

Where your swept funds land matters for both yield and risk. They can flow into FDIC insured money market deposit accounts, money market mutual funds, or repurchase agreements. Swept funds that remain in FDIC insured bank deposits maintain insurance coverage up to $250,000 per depositor, per bank. If transferred to money market funds or repos, they are not FDIC insured. Each option carries different return profiles and the right sweep structure depends on your company's risk tolerance, balance levels, and how quickly you need access to funds.

Not all sweep accounts work the same way. The destination where your excess cash lands each night determines your yield, risk exposure, and insurance coverage. Choosing the right type depends on how much cash you're sweeping, whether you carry debt, and how much risk you're comfortable taking with operating funds.

Money market sweeps

Money market sweeps are the most common option for businesses looking to earn yield on idle cash. Your funds transfer into either a bank deposit account or a money market mutual fund. The distinction matters for insurance purposes. Bank deposit sweeps retain FDIC coverage, while money market mutual fund sweeps are not insured but are regulated under SEC Rule 2a-7, which requires government money market funds to invest 99.5% or more of total assets in cash, government securities, and/or government repurchase agreements collateralized fully. Both options typically provide next-business-day access.

Repurchase agreement (repo) sweeps

Repo sweep accounts involve short-term transactions, typically overnight, where your bank sells securities to you with an agreement to repurchase them the next business day. These are fully collateralized by U.S. Treasury or agency securities, typically with over-collateralization (called a "haircut") to protect the lender. Repo sweeps are not FDIC insured, but the collateral backing provides security. They work well for larger balances where FDIC limits become a constraint.

Loan sweeps

If your company carries revolving debt, a loan sweep might deliver better returns than any investment option. These accounts automatically apply excess funds to reduce outstanding credit line balances each night. If you're borrowing at 7% interest, sweeping excess cash to pay down that balance delivers a guaranteed return equal to your borrowing cost. When your borrowing rate exceeds available investment yields, reducing debt beats earning interest every time.

Multi-bank sweep networks

Companies with balances exceeding $250,000 USD face a coverage gap with standard sweep accounts. Multi bank sweep networks solve this problem by distributing deposits across multiple FDIC insured banks through programs like Insured Cash Sweep. Each participating bank holds up to the insurance limit, allowing you to protect millions of dollars while maintaining a single banking relationship. You deal with one institution while your money spreads across dozens of banks behind the scenes.

Sweep accounts aren't worth the setup for every company. The benefits depend on your balance levels, cash flow patterns, and whether the math on fees versus yield actually works in your favor. Here are the situations where implementation makes sense.

You consistently hold more cash than you need for daily operations

If your operating account regularly carries balances well above what you spend each day, those idle funds represent lost income. The spread between standard business checking and money market sweeps currently sits near 3.8 percentage points. Before implementing a sweep, analyze six to 12 months of cash flow data to confirm your excess balances are consistent rather than seasonal flukes.

Your balances are large enough to justify the complexity

Sweep programs come with fees and administrative overhead. The interest earned or debt costs saved must exceed those costs for the account to make sense. Most banks require businesses to maintain minimum balances ranging from $100,000 to $1 million to even qualify for sweep programs. Below those thresholds, the fees eat into your returns and the juice isn't worth the squeeze.

You're holding more than $250,000 in operating cash

Companies maintaining balances above FDIC limits in accounts that sweep to non deposit investment vehicles face uninsured exposure. If that risk concerns you, multi bank sweep programs can distribute your deposits across multiple insured institutions while you maintain a single banking relationship.

You need a framework for setting your target balance

Companies commonly set operational account target balances based on three to six months of operating expenses, with the specific amount varying by daily cash needs, payroll cycles, and vendor payment schedules. Businesses operating with consistent monthly costs typically calculate their target by multiplying average monthly business expenses by their desired reserve period. Companies with seasonal fluctuations may need larger buffers during high expense months and can sweep more aggressively during slower periods.

The interest earnings get most of the attention, but sweep accounts deliver value in several ways that compound over time.

Maximizing returns on idle cash

Every dollar sitting in a standard business checking account is a dollar earning almost nothing. Sweep accounts fix this by automatically moving surplus funds into higher yield vehicles at the end of each day. A company with $3 million in operating cash that only needs $1 million for daily operations could generate roughly $78,000 in annual interest income on that $2 million surplus. The transfer happens without anyone on your team lifting a finger, and the money returns before the next business day begins.

Maintaining liquidity while avoiding overdrafts

The fear with any cash optimization strategy is getting caught short when you need funds. Sweep accounts address this by working in both directions. Yes, excess cash moves out to earn interest overnight. But if your checking account balance dips below your preset threshold, the system automatically transfers money back in to cover the shortfall. You avoid bounced payments, overdraft fees, and the embarrassment of a failed vendor payment. The sweep vehicles themselves are chosen specifically for quick accessibility. You're not locking money into a 12 month CD that penalizes early withdrawal.

Automating cash management decisions

Before sweep accounts, optimizing cash required someone to log into banking portals, assess balances, calculate what could safely be moved, and initiate transfers. That's tedious daily work that competes with everything else on your finance team's plate. With a sweep arrangement, you set your threshold once and the system handles everything from there. All transactions funnel through one master account, simplifying reconciliation and reporting. The automation also removes human error from the equation. No one forgets to make the transfer on a busy Friday afternoon.

Extending FDIC protection for large balances

If your company holds more than $250,000 in operating cash, the excess sits uninsured in a standard account. That felt like an acceptable risk until 2023, when several high profile bank failures reminded everyone that deposit insurance exists for a reason. Multi bank sweep networks distribute your funds across multiple partner banks in increments below the insurance limit. A company with $5 million in cash can keep every dollar protected while still dealing with a single primary banking relationship.

Reducing debt costs automatically

For companies carrying revolving debt, loan sweeps can deliver better returns than any interest bearing option. The math is compelling. Why earn 3.86% on idle cash when you're paying 7% on a line of credit? Sweeping excess funds to reduce your outstanding balance delivers a guaranteed return equal to your borrowing cost. As your principal decreases, so does the interest accruing on it. If you need cash later, you simply draw on the credit line again.

Sweep accounts aren't a perfect fit for every company. Before implementing one, you should understand the costs and practical complexities that might make this the wrong choice for your situation.

Fees can erode your earnings

Most banks charge for sweep account services, and those fees can eat into or even eliminate the extra interest you're earning. The charges might be a flat monthly fee, a percentage of your swept balance, or a cut of the interest itself. If your sweep account generates $50 in monthly interest but carries a $75 service fee, you're actually losing money by using it. This scenario is more common than you'd think, especially when balances are modest or rates are low. Some sweep arrangements also impose penalties if funds get tied up in longer term instruments like CDs and you need to withdraw early.

Ongoing monitoring is still required

Sweep accounts automate transfers, but they don't eliminate the need for oversight. Someone on your team still needs to verify that funds are moving correctly and that your thresholds remain appropriate as your business changes. If the sweep fails on a given day or your threshold is set too low, you could accidentally overdraft your checking account or leave money sitting idle. Technical glitches happen. Setup errors occur. A threshold that made sense six months ago might not reflect your current cash needs. Plan to review your bank statements regularly to confirm the system is working as expected.

Small balances may not justify the complexity

Sweep accounts deliver the most value when you're moving meaningful amounts of money. If your surplus rarely exceeds a few thousand dollars, the hassle of setup and maintenance probably isn't worth the handful of dollars you'll earn in interest. Some banks won't even offer sweep services below certain balance thresholds. For a company with modest operating cash, a regular interest bearing business account or occasional manual transfers might accomplish the same goal with less overhead.

The provider you choose directly impacts your returns, risk exposure, and how much time your finance team spends managing the account. A difference of 0.15% in net yield might seem trivial, but on $5 million in swept balances that's $7,500 annually. Multiply that by hidden fees or clunky integrations that eat up staff time, and the wrong provider becomes an expensive mistake.

FDIC insurance strategy

For companies sweeping amounts above the $250,000 insurance limit, provider selection determines how much of your cash sits uninsured each night. A company sweeping $300,000 nightly to a money market fund has $50,000 in uninsured exposure every single night. If that risk concerns you, look for providers offering multi bank sweep networks that distribute deposits across multiple insured institutions. You can confirm each participating bank's FDIC certificate number using the FDIC BankFind tool.

Net yield after fees

The advertised yield rarely tells the full story. A provider touting 3.86% APY might charge $75 monthly plus 0.20% annually on swept balances. On $2 million in average swept funds, that's $4,900 in annual fees eating into your returns.

To calculate total annual cost use this formula:

Total Annual Cost = (Monthly Fees × 12) + (Swept Balance × Basis Point Fee %) + Transaction Fees minus Interest Earned

Sometimes a provider offering 3.65% with minimal fees outperforms one advertising 3.86% with a complex fee structure. Run this calculation with your actual projected balances before signing anything.

Liquidity and access timing

Swept funds should return to your operating account by the next business day at the latest. But next business day might not cut it for every situation. If you run payroll on Mondays and occasionally face last minute funding adjustments, you need to know exactly when those swept funds become available. A program that processes returns by 9 AM works very differently than one that settles at 4 PM. Confirm the specific timing and make sure it aligns with your highest stakes disbursements.

Treasury management system integration

Your sweep account generates data your finance team needs to see. The question is how much manual work sits between that data and your forecasting models. Providers with API access and compatibility with standard formats like BAI2 and MT940 let sweep activity flow directly into your treasury management system. Real time visibility means your team can monitor liquidity positions throughout the day rather than waiting for end of day reports. Automated threshold alerts notify you when operating balances approach minimum levels, giving you time to react before a shortfall hits.

Several modern treasury platforms address these integration gaps through native accounting software connections. Brex, a modern corporate finance platform, offers API-based integrations that eliminate manual data transfer between sweep accounts and accounting systems.

Automation and threshold flexibility

Static thresholds work fine if your cash flows are perfectly predictable month to month. Most businesses don't operate that way. If you're a retailer with holiday surges or a manufacturer with seasonal inventory builds, you'll want a provider that lets you adjust thresholds throughout the year without calling your account manager or submitting paperwork. The best programs let you set rules that automatically shift targets based on time of year or account activity patterns.

The obvious benefit of a sweep account is earning interest on idle cash. But the real value extends into how your finance team thinks about and manages liquidity across the organization.

Automate daily idle cash optimization

Investment sweeps ensure idle cash works overnight and returns for daily operations without manual intervention.

Configure daily sweep timing to maximize overnight earnings while maintaining liquidity.

Integrate sweep activity into cash flow forecasting

Sweep accounts generate a daily record of your excess cash levels. Over time, that data reveals patterns your team can use to sharpen cash flow projections. If your swept balances consistently spike in the second week of each month, that tells you something about receivables timing. If they drop predictably around payroll dates, you can model that rhythm more accurately. Use automated data feeds from your sweep account to update forecasts in real time rather than relying on month old assumptions. Aligning sweep activity with operational cycles like accounts receivable, accounts payable, and inventory timing gives your treasury team deeper visibility into available liquidity for more accurate cash flow projections.

Use concentration accounts for multi-entity structures

Scaling companies with multiple business units or geographic locations benefit from aggregating cash from various entities into a central master account before applying sweep functionality. This cash pooling approach eliminates idle balances sitting in subsidiary accounts while providing consolidated visibility across the organization.

Zero-balance accounts (ZBAs) at each subsidiary automatically transfer funds to the master concentration account daily, which then executes the sweep to higher-yield destinations. Companies with three or more legal entities typically see the greatest benefit from this structure, as manual inter-company transfers become impractical at scale.

Extend startup runway through passive interest income

Startup finance leaders reporting startup runway to boards can use sweep account returns to provide a meaningful offset to burn rate. At current rates, $10 million in reserves generates roughly $386,000 annually in passive interest income. A startup burning $500,000 monthly would extend runway by approximately three weeks through sweep optimization alone. When reporting to your board, frame sweep returns as a direct reduction to net burn. If gross burn is $500,000 and monthly sweep income averages $32,000, net burn becomes $468,000. That's a material contribution to capital efficiency that investors increasingly expect finance teams to capture.

Leaving cash idle in a standard checking account costs your business thousands annually in forgone interest. At current rates, the 3.79-point difference between basic checking (0.07% APY) and money market sweeps (3.86% APY) means a company with $2 million in operating balances sacrifices over $75,000 per year by not implementing sweep optimization.

Traditional sweep implementation requires separate vendor relationships, weeks of technical integration, and ongoing management overhead. Most finance teams don't have time for that complexity on top of everything else they're managing. Brex eliminates this gap with treasury accounts that earn up to 3.74%† yield while maintaining same-hour liquidity. Your cash earns competitive returns overnight and flows back instantly when you need it for payroll, vendor payments, or unexpected expenses. No manual transfers, no waiting until next business day, no calling your account manager to unlock funds. In contrast, Brex combines treasury management with corporate cards and expense automation in a single platform, your finance team isn't juggling multiple banking relationships just to capture yield on idle cash.

"With almost every other bank that I've used over the years, there's been a dedicated treasury role specifically for that reason," says Parker Schlank, Chief Operating Officer at ILT Academy. "With Brex, I don't have to think about banking or treasury."

Sign up for Brex today to start earning on idle cash while maintaining full operational liquidity.