A helpful consultant at a local bank can help guide you through financial decisions. You have to wear a lot of hats as a small business owner, but you don’t have to be an expert in every aspect of management. If your income fluctuates so much that you don’t think you’ll be able to keep funds in an investment account often enough to earn much interest, it’s probably not time for a sweep account yet. If your business is pretty new and you don’t have a good sense of how much cash you need on hand to run your day-to-day operations effectively, it may be too soon to set up a sweep account. How to Know Whether a Sweep Account Is Right for Your Small Business Compare your outgoing expenses against your account growth and earned interest to be certain you’re benefiting from your sweep account. Others will take a percentage of the yield. Some brokers will charge you a monthly flat fee for account management, like First National Bank and Trust. You’ll want to make sure your account is earning you more money than it’s costing you. With this important guidance in place, if your checking account dips below your established minimum, funds from the interest investment account will be swept back into checking. This number is what you need to conduct your business on a daily basis. You set a minimum cash balance for your checking account. In a sweep account, your money is transferred to a better investment vehicle with minimal effort on your part. Earning added interest on your existing funds means you’re maximizing your overall earning potential. Under this arrangement, your business’s profits are working for you - earning interest - instead of sitting idle. What Are the Benefits of a Sweep Account? Your Money Works Harder. In the following article, we’ll answer basic questions like “What is a sweep account?” “What are the benefits?” and “What are the drawbacks?” By the end, you should have a clearer understanding of how this type of account can benefit your small business.Ī sweep account is a specialty bank account set up to retain a certain cash balance for immediate business expenses any excess funds are automatically swept daily into an interest-bearing account, such as savings, a money market account, or a different investment product. The right bank can offer you solutions you may not have known about. Some smart financial moves and optimized cash management can support that passion and help your business grow. Most owners and operators start their business out of passion. Running a small business is an intense, but rewarding undertaking. What Is a Sweep Account, and How Does It Help My Small Business?
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