Blog
10/12/2021
7 Ways Your Small Business Could Profit From Zero Balance Accounts
7 Ways Your Small Business Could Profit From Zero Balance Accounts
If your small or midsized business manages bank accounts for more than one location or business purpose, Zero Balance Accounts (ZBAs) may be able to help you simplify daily cash management.
With ZBAs, you can consolidate your checking accounts, save on clerical time, easily determine your cash position at a glance, and more.
The way it works is fairly simple. Your central operating account, known as the parent, master, or header, holds all of the money that your company receives. The parent is then linked to subsidiary checking accounts, known as subs. These subs can be dedicated to payroll, petty cash, and other everyday needs. They can also be earmarked for individual departments, business locations, or even short-term projects that require extra financial management. Exact disbursement amounts are automatically transferred from the parent to the subs as needed and any net balances are moved to the parent. Thus, each sub-account ends the day at a zero balance – hence the name.
Here’s a quick example:
At the beginning of the workday, Minerva Landscaping’s parent holds $10,000.
Minerva deposits a $2,000 check from a client into the company’s Turf Management sub.
Minerva writes a $10 check for petunia seeds from the company’s petty cash sub.
The bank automatically sweeps the $2,000 client check into the parent.
The seed check is presented and the bank transfers $10 from the parent to the petty cash sub.
At the end of the workday, Minerva Landscaping’s parent holds $11,990.
The Turf Management sub and petty cash sub are automatically reset to $0.
Here are seven benefits that ZBAs could deliver for your business:
1. Eliminate manual transfers and transfer fees. Because the ZBA process is fully automated, you can save on the time and expense of manually funding accounts and keeping track of balances.
2. Minimize your risk of overdraft charges. The exact amount needed to cover a check or other disbursement goes right into the applicable sub, so you can breathe easier when it comes to expensing.
3. Maximize investment and compensation. This process frees up funds normally needed to maintain balances and avoid overdrafts, so you have more cash to invest in your enterprise and your team.
4. Improve cash flow visibility and mobility. With all of your funds centralized at the end of the day, you’ll be able to see your cash position at a glance, rather than having to tally multiple account balances.
5. Increase interest-earning potential. By consolidating all your cash into one account, you may be able to access premium rates and perks, or easily sweep net balances into a different investment account.
6. Limit fraudulent or accidental charges. Because there aren’t any idle funds in a ZBA, it’s much harder to run an unapproved debit card transaction. This can be a good cost control mechanism and scam-buster.
7. Optimize your bookkeeping. With a streamlined cash management process where all transfers are automatically cross-referenced by account number on your statement, you can reduce human error.
If your business could benefit from minimizing costs associated with manual cash management, achieving greater transaction oversight, and making your surplus cash work harder for you, look into Zero Balance Accounts.
And when you’re ready to take your business to the next level, look into Nu Direction. Whether it’s a renovated storefront, a technology upgrade, or a new product rollout, Nu Direction is committed to supporting the dreams of Main Street entrepreneurs across the country. Eligible businesses can receive an instant offer and secure funding in as little as a week. Learn more and apply today.
The information contained herein is for general informational purposes only and does not constitute tax, legal, or business advice.
Brought to you by Nu Direction Lending, a digital-first business lender that was formed and is funded by credit unions. To learn more about term loans for your business, visit nudirectionlending.com or contact us by email at info@nudirectionlending.com or by phone at 866-354-7151.
© 2021 Nu Direction Lending. All rights reserved.
If your small or midsized business manages bank accounts for more than one location or business purpose, Zero Balance Accounts (ZBAs) may be able to help you simplify daily cash management.
With ZBAs, you can consolidate your checking accounts, save on clerical time, easily determine your cash position at a glance, and more.
The way it works is fairly simple. Your central operating account, known as the parent, master, or header, holds all of the money that your company receives. The parent is then linked to subsidiary checking accounts, known as subs. These subs can be dedicated to payroll, petty cash, and other everyday needs. They can also be earmarked for individual departments, business locations, or even short-term projects that require extra financial management. Exact disbursement amounts are automatically transferred from the parent to the subs as needed and any net balances are moved to the parent. Thus, each sub-account ends the day at a zero balance – hence the name.
Here’s a quick example:
At the beginning of the workday, Minerva Landscaping’s parent holds $10,000.
Minerva deposits a $2,000 check from a client into the company’s Turf Management sub.
Minerva writes a $10 check for petunia seeds from the company’s petty cash sub.
The bank automatically sweeps the $2,000 client check into the parent.
The seed check is presented and the bank transfers $10 from the parent to the petty cash sub.
At the end of the workday, Minerva Landscaping’s parent holds $11,990.
The Turf Management sub and petty cash sub are automatically reset to $0.
Here are seven benefits that ZBAs could deliver for your business:
1. Eliminate manual transfers and transfer fees. Because the ZBA process is fully automated, you can save on the time and expense of manually funding accounts and keeping track of balances.
2. Minimize your risk of overdraft charges. The exact amount needed to cover a check or other disbursement goes right into the applicable sub, so you can breathe easier when it comes to expensing.
3. Maximize investment and compensation. This process frees up funds normally needed to maintain balances and avoid overdrafts, so you have more cash to invest in your enterprise and your team.
4. Improve cash flow visibility and mobility. With all of your funds centralized at the end of the day, you’ll be able to see your cash position at a glance, rather than having to tally multiple account balances.
5. Increase interest-earning potential. By consolidating all your cash into one account, you may be able to access premium rates and perks, or easily sweep net balances into a different investment account.
6. Limit fraudulent or accidental charges. Because there aren’t any idle funds in a ZBA, it’s much harder to run an unapproved debit card transaction. This can be a good cost control mechanism and scam-buster.
7. Optimize your bookkeeping. With a streamlined cash management process where all transfers are automatically cross-referenced by account number on your statement, you can reduce human error.
If your business could benefit from minimizing costs associated with manual cash management, achieving greater transaction oversight, and making your surplus cash work harder for you, look into Zero Balance Accounts.
And when you’re ready to take your business to the next level, look into Nu Direction. Whether it’s a renovated storefront, a technology upgrade, or a new product rollout, Nu Direction is committed to supporting the dreams of Main Street entrepreneurs across the country. Eligible businesses can receive an instant offer and secure funding in as little as a week. Learn more and apply today.
The information contained herein is for general informational purposes only and does not constitute tax, legal, or business advice.
Brought to you by Nu Direction Lending, a digital-first business lender that was formed and is funded by credit unions. To learn more about term loans for your business, visit nudirectionlending.com or contact us by email at info@nudirectionlending.com or by phone at 866-354-7151.
© 2021 Nu Direction Lending. All rights reserved.
Lending Expert
Nu Direction LendingNu Direction Lending is a digital-first business lender that was formed and is funded by credit unions. We combine the speed and convenience of online lenders with the personalized touch of the local credit unions who help fuel our local economies.