Some businesses choose to scan all their funds into a scan account if they think the increase in revenue will offset more than the fees they would have reimbursed if they had left the money in the account. Other companies calculate the approximate amount needed to pay the fees and then only sweep away funds in excess of that amount. A sweep account is a bank or brokerage account that, at the end of each business day, automatically transfers amounts above or below a certain level into a higher-paying investment option. As a rule, excess cash is swept into an MMF. Sweep accounts were originally designed to circumvent a public regulation preventing banks from offering interest on commercial current accounts. The largest corporate bank accounts are charged for each of the services offered by the Bank (for example.B. a tax per check deposited), but the bank calculates these fees based on the company`s account balances in a process known as account analysis. If the first calculations are done correctly, the interest rates on cash and investment returns should generate a return high enough to increase the total value of the sweep account. Scan accounts, whether for business or personal use, offer the opportunity to ensure that money is not inactive in a low-interest account if it could earn higher interest rates in better liquid cash vehicles. These investment vehicles, which offer higher interest rates while offering liquidity, include MONEY MARKET FUNDS, high-yield investment or savings accounts, and even short-term certificates with a term of 30, 60 or 90 days for known investments. For example, at the end of each business day, a bank could sweep a business customer`s excess cash from a current account to a high-yield money market or savings account where money is paid overnight.
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