Banking · Cash Management Services
A corporate treasurer is evaluating a bank's liquidity management products to ensure that multiple subsidiary accounts maintain a minimum balance for operational purposes while the surplus funds are automatically moved to a master account to maximize interest income. The treasurer wants a system where the subsidiary accounts show a specific balance at the end of every business day, and any deficit is covered by the master account, while any excess is swept up. Identify the cash management mechanism used here.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Electronic Data Interchange for the synchronization of financial messages
- 2Positive Pay System for the prevention of fraudulent check alterations
- 3Controlled Disbursement Account with delayed notification systems
- 4Target Balance Account involving sweep-out and sweep-in facilities✓
Correct answer
Target Balance Account involving sweep-out and sweep-in facilities
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