Under the right circumstances, sweep accounts can benefit your company’s cash flow strategy in several ways:

1. Optimizing liquidity. Cash that isn’t where you need it when you need it doesn’t help you, but the goal of a sweep account is to keep the right amount accessible at all times. The account holder can set certain thresholds and balance limits to control the movement of funds to maximize returns while keeping cash available.
2. Reducing manual processes. The automated nature of sweeps means staff can spend less time determining daily cash needs, transferring funds, maintaining target balances and reconciling accounts. That time can then be spent on more strategic functions.
3. Reducing costs. In addition to potential labor costs, some types of sweeps, such as Credit Line Sweeps, are designed to reduce interest costs on outstanding balances.
4. Increasing control and scalability. Real-time visibility and automation provide for improved forecasting, and the variety of sweep solutions available allows for adjustments based on transaction volume, account balances, and other factors.

Every company is different, but some simple calculations can illustrate the potential financial impact of implementing a sweep solution. A manufacturing company with $50 million in annual revenue, for example, might keep an average cash balance of $5 million on hand in an operating account that is easily accessed but doesn’t generate interest.

If the company wants to keep 30% of its average cash balance immediately liquid while sweeping 70%, that would make $3.5 million available for a sweep. At a yield of 3%, the interest income benefit would be $105,000 annually.

That calculation is easy, but here’s where close consultation with your Truist relationship manager is important. Interest rates can vary widely based not just on current Federal Reserve policy, but also on factors such as balance tier, the type of vehicle the sweep program invests in, and how often interest is compounded (daily, monthly, etc.). Also, different sweep programs offer different levels of FDIC insurance, from no coverage on a Credit Line Sweep to expanded coverage on an Insured Cash Sweep, where the client determines the distribution of funds to multiple institutions to qualify for FDIC coverage.

In addition to helping you decide if a sweep solution is right for your company, your relationship manager can also get the ball rolling on implementation. The first step will likely be an assessment of your business’s cash flow needs based on sales patterns, seasonality, and other requirements.

With that analysis in hand, you and your treasury consultant or relationship manager will review the features of the various sweep options Truist offers, keeping in mind your objectives and requirements. Depending on the solution, you’ll be able to customize various parameters, such as target balances and investment preferences, to tailor the program to your particular business.

While one goal of the program will be to automate various treasury processes, there will be some setup steps involved. Truist will work with you to ensure your company’s treasury management system is compatible and that any needed templates and integrations with your reporting software are functioning.

Sweep solutions are a straightforward but sophisticated way to turn idle cash into a productive asset for your company. Automated processes preserve needed liquidity for business. Smart use of the available options helps optimize cash flow, increase earnings, and improve overall financial stability.