What is a zero balance account?

Keeping track of expenses and maintaining a comprehensive logbook can sound daunting to many aspiring business owners. On top of the daily activities and errands you have to remember to do, who has the time to keep track of how much money you spend and where it goes? If you own or work for a business and are looking for a more efficient way of maintaining your budget and expenses, a zero balance account may be the solution.

Zero balance account defined

A zero balance account is a special type of checking account in which a balance of zero is maintained. Funds are automatically transferred from a master account in an amount that exactly covers checks and other specific expenditures. It’s an automated system that handles the manual task of transferring money between accounts, saving you time every day.

What does it do and how does it work?

This type of checking account functions through multiple accounts: the main account and its disbursement accounts. Disbursement accounts serve as repositories for funds aimed at various kinds of expenses. These expenses can include payroll, office supplies, rent, and more, depending on the type of business. At the end of each day, there is an automatic sweep of all the disbursement accounts that concentrates your cash into one main account.

Why would I need a zero balance account?

A zero balance account is an efficient way for corporate businesses with multiple locations to organize all of their expenses in one place while simultaneously keeping a record of their spending habits. This can help businesses answer questions like “What does most of the budget go towards?,” “How much are we spending?,” “How often?,” and more. In this way, a zero balance account can help avoid overdrafts and reduce over-funding. It also assists in the organization of multiple accounts by giving an overall picture of the business, budget and cash flow.

I’m a small, local business with only one location. Would this sort of account benefit me?

Regardless of how many locations you have or what the reach of your business is, a zero balance account can still benefit you in keeping track of your budget and spending habits. After the automatic sweep of the disbursement accounts into one main account at the end of the day, you can monitor all of the account activity through Internet Banking on a daily basis. In addition, monthly statements will list detailed transactions for all accounts. So whether your prefer daily or monthly overviews, both will be available for you to review with ease.

I think this would work for my business. Who do I talk to?

That’s great! A representative at CNB can help. Give us a call at (865) 429-7568 to talk to a Cash Management professional. Our representatives can help you learn more about the process and assist you in setting up a Zero Balance Account. For additional information, visit our website