What does a two-way sweep refer to?

A two-way sweep refers to the process of transferring excess funds from an operating account to a designated investment account (such as a savings or money market account) and subsequently moving them back to the operating account as needed. This process occurs at pre-agreed intervals or based on specific thresholds established by the account holder.

This mechanism enables businesses to efficiently manage their liquidity by making sure they have the necessary funds available in their operating accounts while also optimizing the returns on excess cash by transferring it to higher interest-earning accounts. The two-way sweep feature effectively balances the need for accessibility to funds with the desire to earn interest on surplus cash, making it a valuable tool in cash management strategies.