Sweeping: moving surplus cash to where it is needed

Sweeping is the cash management service that moves surplus cash from a subsidiary account to a header account, automatically, at the end of each day, so that the money is concentrated where it can be used or invested, instead of sitting idle in accounts that do not need it. A sweep is a physical movement of money: the funds leave the subsidiary account and arrive in the header account, and the subsidiary account balance falls, while the header account balance rises, by the same amount. Source: Bank for International Settlements, payment system glossaries; ISO 20022 camt.052 and camt.053 for balance reporting. Why sweeping exists is that cash left in a subsidiary account earns nothing, or earns less than the header account, while the group as a whole may be borrowing elsewhere at a higher rate. A subsidiary with EUR 1.5 million that it does not need until next month, and a header account that is overdrawn by EUR 1 million, is a group that pays interest on EUR 1 million it does not need to borrow, because its own cash is sitting in the subsidiary. Sweeping answers by moving the EUR 1.5 million to the header, covering the overdraft, leaving EUR 500,000 to invest, and saving the interest on EUR 1 million, which at 6 percent is EUR 60,000 a year, or about EUR 164 a day, which is the measurable value of the service. The parties are the treasurer, who sets the sweep rules, the subsidiary, whose cash is swept, the bank, which executes the sweep, and the header account holder, usually the parent company, which receives the cash. The sweep rule is the agreement: it names the accounts, the target balance to leave in each subsidiary, the sweep time, and the frequency, daily, weekly or on demand. The subsidiary must agree to the sweep, because its cash is being moved, and the agreement must say what happens if the subsidiary needs the cash back, because a sweep that cannot be reversed is a loan, not a service, and the tax treatment is different. How a sweep works is shown by a worked example with real numbers. The sweep moves EUR 2,200,000 from the first, EUR 850,000 from the second and EUR 70,000 from the third, a total of EUR 3,120,000, into the header account, leaving each subsidiary with its target. The header account, which was overdrawn by EUR 1,000,000, is now in credit by EUR 2,120,000, and the treasurer invests EUR 2,000,000 overnight at 3 percent, earning about EUR 167 for the night. The next morning the subsidiaries receive their operating cash back if they need it, by a reverse sweep, or they operate on their target balances until the next sweep. On success the cash is concentrated, the overdraft is covered, the surplus is invested, and the interest saved is measurable. On failure the sweep can move too much, leaving a subsidiary unable to pay a supplier on Tuesday morning, because the sweep ran at 17:00 on Monday and the supplier payment was due at 09:00 on Tuesday, and the target balance was not enough. The recovery is a reverse sweep, moving the cash back, but the reverse sweep takes time, and the supplier payment may already be late, so the sweep rule must account for known future payments, not just the current balance, and the treasurer must be able to stop a sweep on a day when a large payment is due. The data in a sweep is the account balances, the target balances, the sweep amounts, the sweep time, and the value dates. The value date is the field that matters most, because a balance that is reported on Monday but has a value date of Tuesday is not available to sweep on Monday, and a sweep that moves it on Monday will leave the header account overdrawn on Tuesday. A BA must specify the balance source, intraday camt.052 or end-of-day camt.053, the value-date handling, the target balances, the sweep timing, the reverse sweep process and the stop mechanism, because each of those is a customer promise and a source of errors. Edge cases show the depth. A sweep across currencies needs an FX conversion, and the rate must be agreed, because a sweep that converts EUR 1 million to USD at a poor rate loses more than the interest it saves. A sweep from a subsidiary in a country with exchange controls may be illegal, and the service must block it, not execute it. A sweep that runs on a public holiday in one country but not in another must account for the different business days, because the subsidiary may be closed while the header account is open, and the sweep may move money that the subsidiary cannot use until the next business day. The effect on the bank is a service that moves money every day, earns fees, and deepens the corporate relationship. The effect on the customer is interest saved, which is measurable, and a single pool of cash that can be invested, which is the commercial value. The effect on operations is a daily sweep run that must execute on time, with a failure queue for sweeps that did not run, and a manager who can see which sweeps failed and why, because a sweep that fails on Monday and is not noticed until Wednesday has cost the customer three days of interest. What a BA, PO or SME must understand is that sweeping is a physical movement of money, governed by a rule, and the rule must account for value dates, future payments and target balances. The requirement must name the balance source, the value-date handling, the targets, the timing, the reverse sweep and the stop mechanism. The test is to take three subsidiaries with known balances and targets, calculate the sweep amounts, and state the interest saved, because if the sweep amounts cannot be calculated, the rule is not defined. Further reading: Bank for International Settlements, payment system glossaries; ISO 20022 camt.052 and camt.053. Last reviewed 7 November 2026.