If your business manages payment accounts for more than one location or business purpose, Zero Balance Accounts (ZBAs) may be able to help you simplify daily cash management.

With ZBAs, you can consolidate your checking accounts, save on clerical time, easily determine your cash position at a glance, and more.

With all of your funds centralized at the end of each business day, you’ll be able to see your cash position at a glance.

The way it works is fairly simple. Your central operating account, known as the parent or master, holds all of the money that your company receives. The parent is then linked to the Zero Balance Accounts, known as child accounts or subs. These child accounts can be dedicated to payroll, petty cash, and other everyday needs. They can also be earmarked for individual departments, business locations, or even short-term projects that require extra financial management. Exact disbursement amounts are automatically transferred from the parent to the child accounts as needed and any net balances are moved to the parent. Thus, each child account ends the day at a zero balance – hence the name.

Here’s a quick example:

• At the beginning of the workday, Buckingham Plumbing parent account holds $20,000.
• Buckingham deposits a $4,000 check from a client into the company’s Plumbing child account.
• Buckingham writes a $50 check for postage stamps from the company’s petty cash child account.
• The financial institution automatically sweeps the $4,000 client check into the parent account.
• The seed check is presented and the financial institution transfers $10 from the parent to the petty cash child account.
• At the end of the workday, Buckingham Landscaping’s parent account holds $19,950.
• The Plumbing and perry cash child accounts are automatically reset to $0.

Here are seven benefits that ZBAs could deliver for your business:

1. Eliminate manual transfers and transfer fees. Because the ZBA process is fully automated, you can save on the time and expense of manually funding your payment accounts and keeping track of balances from day to day.
2. Minimize your risk of overdraft charges. The exact dollar amount needed to cover a check or other disbursement goes right into the applicable child account, so you can breathe easier when it comes to routine expensing.
3. Maximize investment and compensation. This process frees up liquid funds normally needed to maintain balances and avoid overdrafts, so you have more available cash to invest in your enterprise and your team.
4. Improve cash flow visibility and mobility. With all of your funds centralized at the end of each business day, you’ll be able to see your cash position at a glance, rather than having to tally up multiple account balances.
5. Increase interest-earning potential. By consolidating all your cash into one account, you may be able to access premium interest rate tiers and other perks, or easily sweep net balances into a different investment account.
6. Limit fraudulent or accidental charges. Because there aren’t any idle funds in a ZBA, it’s much harder to run an unapproved debit card transaction. This can be a good cost control mechanism as well as a scam-busting tool.
7. Optimize your bookkeeping. With a streamlined cash management process where all transfers are automatically cross-referenced by account number on your statement, you can reduce human effort and error.

Other Treasury Solutions

Depending on your business’s specific operational objectives, ZBAs might be one of several financial tools you can put to use. Other treasury services to consider include:

• Bill payment services that allow you to schedule and initiate payments from a secure online interface
• Billing services that enable you to expedite the collection of your business’s receivables
• Merchant services that give your customers the choice of paying by credit card or digital wallet
• Remote deposit capture services that can save you time, mileage, and paper when processing checks
• Security services like account reconciliation tools and Positive Pay that can help you deter fraud

Get Started Today

If your business could benefit from minimizing costs associated with manual cash management, achieving greater transaction oversight, and making your surplus cash work harder for you, consult your financial institution.