{"id":30619,"date":"2024-04-09T14:48:34","date_gmt":"2024-04-09T14:48:34","guid":{"rendered":"https:\/\/swoopfunding.com\/ca\/uk\/business-glossary\/cash-sweep\/"},"modified":"2025-04-24T13:49:06","modified_gmt":"2025-04-24T13:49:06","slug":"cash-sweep","status":"publish","type":"business-glossary","link":"https:\/\/swoopfunding.com\/ca\/business-glossary\/cash-sweep\/","title":{"rendered":"Cash sweep"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><strong>Definition<\/strong><\/h3>\n\n\n\n<p>Cash sweep refers to the process by which excess funds in a bank account are automatically transferred into another account or investment that offers higher <a href=\"https:\/\/swoopfunding.com\/ca\/business-glossary\/interest-rate\/\">interest rates<\/a> or better returns.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What is a cash sweep?<\/strong><\/h3>\n\n\n\n<p>A cash sweep helps individuals or organisations optimise the use of their cash by ensuring that passive funds are not left sitting in low-interest accounts.<\/p>\n\n\n\n<p>There are several common types of cash sweep arrangements:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Money market sweep accounts<\/strong>: Funds from a <a href=\"https:\/\/swoopfunding.com\/ca\/business-glossary\/checking-account\/\">checking account<\/a> are moved into a money market account, known for its higher interest rates compared to regular checking or <a href=\"https:\/\/swoopfunding.com\/ca\/business-glossary\/savings-account\/\">savings accounts<\/a>.<\/li>\n\n\n\n<li><strong>Repurchase agreements (Repo sweep)<\/strong>: This involves transferring extra funds into short-term investments. Repos are <a href=\"https:\/\/swoopfunding.com\/ca\/business-loans\/short-term-loans\/\">short-term loans<\/a> backed by securities, offering a secure and liquid option for storing cash.<\/li>\n\n\n\n<li><strong>Investment sweep accounts<\/strong>: Some brokerages provide cash sweep options. This enables investors to earn returns on their unused cash while retaining <a href=\"https:\/\/swoopfunding.com\/ca\/business-glossary\/liquidity\/\">liquidity<\/a> for trading or investment opportunities.<\/li>\n\n\n\n<li><strong>Loan sweep accounts<\/strong>: Extra funds in a checking account are used to repay outstanding loan balances. This reduces interest costs while still allowing access to cash when required.<\/li>\n\n\n\n<li><strong>Automatic transfers to external accounts<\/strong>: Some banks provide cash sweep services, automatically moving extra funds to external accounts at other financial institutions, like high-yield savings or investment accounts.<\/li>\n<\/ol>\n\n\n\n<p>By automatically moving cash into higher-yielding accounts or investments, individuals and organisations can maximise their returns on cash balances. Furthermore, cash sweep arrangements can help manage risk by <a href=\"https:\/\/swoopfunding.com\/ca\/business-glossary\/diversification\/\">diversifying investments<\/a> or reducing exposure to counterparty risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Example of a cash sweep<\/strong><\/h3>\n\n\n\n<p>Suppose a corporation maintains $100,000 in its operating account, where it earns minimal interest. By establishing a cash sweep agreement, the bank automatically transfers any funds exceeding a predefined threshold, say $50,000, into a high-yield investment. Instead of earning minimal interest in the operating account, the excess $50,000 generates higher returns in the investment, enhancing the company&#8217;s overall cash management strategy while retaining $50,000 as a buffer for daily operational expenses.<\/p>\n","protected":false},"author":1,"template":"","class_list":["post-30619","business-glossary","type-business-glossary","status-publish","hentry"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_blog_full":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>Definition Cash sweep refers to the process by which excess funds in a bank account are automatically transferred into another account or investment that offers higher interest rates or better returns. What is a cash sweep? A cash sweep helps individuals or organisations optimise the use of their cash by ensuring that passive funds are not left sitting in low-interest accounts. There are several common types of cash sweep arrangements: Money market sweep accounts: Funds from a checking account are moved into a money market account, known for its higher interest rates compared to regular checking or savings accounts. Repurchase&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"root","url":"https:\/\/swoopfunding.com\/ca\/author\/root\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/30619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary"}],"about":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/types\/business-glossary"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"version-history":[{"count":1,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/30619\/revisions"}],"predecessor-version":[{"id":38848,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/business-glossary\/30619\/revisions\/38848"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/media?parent=30619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}