What is Cash Concentration?

Cash concentration is the aggregation of the cash in multiple bank accounts into a single master account. This is done so that the funds can be more efficiently invested or used for payments from a centralized account. For example, a retailer might use cash concentration to aggregate the funds accumulating in the bank accounts associated with each of its retail locations.

Advantages of Cash Concentration

The use of cash concentration makes it less likely that cash will sit unused in an account that does not earn interest, and also allows for investments in securities that require a minimum investment.