Trigger balance

A trigger balance is an account balance level above which excess funds are automatically shifted out of a sweep account and into an investment account. A trigger balance may reduce the number of sweeps from a less-active sweep account, perhaps to as little as once a week or month.

The cash level at which a trigger balance is set is based on the cost of foregone investment income on funds left in the account, as well as the bank fee for sweeping funds out of the account. When the interest rate on investment income is low, the trigger balance may be relatively high, since the business is not losing much money from foregone investment income. Conversely, if the interest rate is high, the trigger balance tends to be much lower.

Related Courses

Corporate Cash Management 
Treasurer's Guidebook