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Money Movement

Insured Cash Sweeps: Don't Overlook this Financial Security Key

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    • Joe Jensen

      Director, Product Management
      Aug 07 2023

Insured Cash Sweeps: One Key to Financial Security Your Business May Be Overlooking

By Joe Jensen, Director, Product Management

While most businesses understand that money placed with an FDIC-insured financial institution is government backed, many don’t realize how easy it is to pass the coverage threshold.

In the unlikely event of a bank failure, the Federal Deposit Insurance Corporation ensures depositors can recover their money up to the coverage limit of $250,000 per account holder and category. But what happens when a business bank account exceeds this balance? How can an organization protect its funds and critical investments?

Enter Insured Cash Sweeps, a powerful tool that provides maximum security for businesses' hard-earned assets.

How Do Insured Cash Sweeps Protect Business Funds?

Insured Cash Sweeps (ICS) help protect company funds by breaking up cash deposits that surpass the standard FDIC coverage limits. Excess money is “swept” into FDIC-insured accounts at multiple financial institutions.

The process is simple. The business’ primary financial institution opens an ICS account for the company. This is where money that exceed the FDIC limits will be placed.

From there, assets are transferred to partner banks through a third-party network managed by IntraFi. IntraFi's ICS platform allocates funds across a series of participating FDIC-insured banks and makes certain that each account balance remains within the FDIC limit at every institution. Businesses can use Insured Cash Sweeps to protect checking accounts up to $135 million and savings account balances up to $100 million.

To help ensure security, IntraFi sets stringent standards for its nearly 3,000 participating banks, mandating that each financial institution is FDIC backed and demonstrates strong financial health as well as compliance with regulatory standards. By thoroughly vetting and continuously monitoring banks within the network, IntraFi can uphold the integrity of Insured Cash Sweeps, helping to protect funds against undue risk.

What Are the Advantages of Insured Cash Sweeps?

The main advantage of placing your funds in an ICS account is gaining FDIC coverage on balances that surpass the government-established threshold. But the automation capabilities of the IntraFi platform provide additional benefits. Because the platform automatically sweeps funds into new accounts any time the balance extends beyond the $250,000 threshold, businesses gain peace of mind knowing their money is continuously protected without having to manually monitor balances and make transfers between financial institutions or accounts.

Companies can realize other benefits beyond security and convenience. The interest offered through an ICS account can allow customers to earn interest on idle cash. By leveraging FDIC-insured banks, network accounts can receive interest rates or investment options that provide potential growth, often surpassing the returns offered by traditional checking or savings accounts.

To ensure business owners are always ready to deal with emerging financial situations, sweep accounts are also easy to manage. Even though deposits reside across multiple accounts, companies maintain simplified access through their primary bank’s online banking portal. From there, they can easily make deposits or withdrawals and transfer money between institutions. Just as important, funds held in a sweep account can be accessed quickly, ensuring consistent cash flow and liquidity when needed.

Realizing the Security of Insured Cash Sweeps

With Insured Cash Sweeps, companies can efficiently safeguard their funds while maintaining easy access to cash. You can learn more by talking to your business banker, but keep in mind you need to bank with an IntraFi network financial institution, such as FNBO, to take advantage of Insured Cash Sweep accounts.

About the Author

Joe Jensen is a member of the FNBO Commercial Payments team specializing in business deposit products and liquidity management services.   

The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.