Physical Sweeping

Physical sweeping is a liquidity structure where cash is actually transferred between bank accounts, usually into or out of a central account.

Unlike notional pooling, sweeping changes real balances by moving money.

How a sweep usually works

At a defined time, often end of day, surplus balances are moved from participating accounts into a central account. If some accounts are short, the structure may also fund them from the center.

Why companies use it

Physical sweeping helps centralize cash, reduce external borrowing, and improve group-level control over liquidity.

It is often used when treasury wants a more direct and visible way to concentrate funds than notional pooling provides.

What treasury has to watch carefully

Because funds are actually moving, sweeping can create intercompany balances that need to be tracked properly. Tax treatment, accounting treatment, legal constraints, and documentation all matter.

When the structure becomes more powerful

Physical sweeping often becomes more valuable when combined with broader liquidity centralization, intercompany lending, or even an in house bank approach.