Investor's wiki

Zero Balance Account (ZBA)

Zero Balance Account (ZBA)

What Is a Zero Balance Account (ZBA)?

A zero balance account (ZBA) is precisely very thing it seems like: a checking account in which a balance of $0 is kept up with. At the point when funds are required in the ZBA, the specific amount of money required is automatically moved from a central or master account. Also, deposits are cleared into the master account daily.

Corporations in some cases utilize zero balance accounts to guarantee funds are promptly accessible all through various departments, to wipe out excess balances in separate accounts, and to keep up with greater control over the disbursement of funds. These accounts frequently handle things like payroll, petty cash and other comparable requirements.

How Zero Balance Accounts (ZBAs) Work

The master account gives a centralized place to deal with an organization's funds. At the point when funds are required in the ZBA checking account to cover a charge or transaction, money is moved from the master account in the specific amount required. There is no requirement for an employee to do this physically, as the cycle is completely automated.

The ZBA's activity is limited to the processing of payments and isn't utilized to keep a running balance.

Utilizing a ZBA to fund debit cards issued by the organization guarantees that the activity on the cards is all pre-supported. Since idle funds are absent inside the ZBA, it is preposterous to expect to run a debit card transaction until funds are supplied to the account.

The utilization of a ZBA as a spending control mechanism is especially useful while overseeing incidental charges across a large organization. By limiting quick access to funds by means of debit cards, almost certainly, legitimate endorsement procedures will be followed prior to the completion of a purchase. This permits simple tracking of transfers and reconciliation across accounts.

Benefits and Disadvantages of ZBAs

Transactions from ZBAs are independent, frequently saving the account holder time for having to physically rebalance or fund transactions. ZBAs may likewise be simpler to accommodate, audit, or receive department-level reporting on spending.

Since such a large amount ZBAs is automated, many companies find there are less clerical errors or transaction failures due to human blunder. This saves money on overdraft fees. ZBAs are additionally great control mechanisms to monitor spending. In the event that a company has one fundamental account rather than many accounts with bank balances, a company can relieve the chance of their bank account being undermined by unapproved or fraudulent transactions.

By gathering funds in the master account, more money is accessible for investments as opposed to having small dollar amounts idle inside an assortment of subaccounts. The master account frequently has extra benefits, for example, a higher interest rate on balances. Subsequently, ZBAs boost funds accessible for investment and limit the risk of overdraft fees.

There are a few disadvantages to ZBAs. However sweeping and transfers are automatic, the business must in any case accommodate bank statements and monitor for failed transactions. Should a transaction fail to process or be canceled, money moved into that account may automatically cleared back bringing about various pointless transactions. Last, however planned to ease administrative weights, ZBAs proliferate the number of bank accounts a company claims and may result in higher administrator requests.

Requirements to Open ZBAs

Not every person can meet all requirements for a ZBA. Banks will frequently not offer this product to general consumers and will just offer this solution to companies. Likewise, banks may not give ZBAs to small, unestablished businesses.

By its inclination, ZBAs must have a linked master account, and the bank offering the ZBA will probably require the master account be held at their institution. The bank might require transaction history evidence, historical average bank balances, estimated spend projections, and applicable credit history data prior to opening the account.

FDIC Insured

In spite of the fact that ZBAs don't frequently have cash balances, those balances are many times insured (up to certain limits) by both the FDIC and NCUA.

Special Considerations

An organization might have numerous zero balance accounts to further develop budget management and make the method involved with allotting funds more efficient. This can incorporate making a separate ZBA for every department or function as a method for monitoring daily, month to month, or yearly charges.

Different purposes behind making separate ZBAs could include the financial management of specific short-term projects or those at specific risk for surprising overages. The utilization of zero balance accounts assists with forestalling excess charges without appropriate notice and endorsement.


  • ZBAs are not consumer products but rather are utilized by larger businesses.
  • An organization might have different zero balance subaccounts to monitor and track spending by department or project.
  • ZBAs advance risk moderation, as a company has greater control over where it cash balances are and what unauthorized spending might happen.
  • A zero balance account (ZBA) is an account wherein a balance of zero is kept up with by transferring funds to and from a master account.
  • ZBAs are additionally commonly intensely automated. However this limits clerical errors and impels operational effectiveness here and there, a business must in any case monitor and accommodate its bank statements.


What Is a Zero Balance Account?

A zero balance account is a bank account that intentionally carried $0. A company possibly funds the account when things should be paid, and any leftover cash after deposits is frequently cleared toward the night's end. A zero balance account depends intensely on a master account to sweep money.

What Are the Benefits of a Zero Balance Account?

A zero balance account automatically sweeps funds from a master account to pay obligations or sweeps unused funds into a master account. The account is expected to increase productivity of how cash is utilized, limit risk and fraud, and streamline the banking system.

Is a Zero Balance Account Bad?

With regards to the financial product, a zero balance account isn't terrible. A company intentionally holds $0 in the account and possibly puts money into the account when a transaction will happen. A company does this to strategically oversee cash and safeguard its assets.

How Might I Open a Zero Balance Account?

Zero balance accounts are frequently simply offered to businesses. Likewise, a business must frequently have been operating for quite a while with credit history, banking history, and proof of future cash flow prior to opening a ZBA.