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Business cash management accounts are a hybrid business checking, savings and investment account. This combination lets business owners earn above-average interest while maintaining easy access to their funds.
These accounts typically leverage sweep networks, which distribute your funds across a number of Federal Deposit Insurance Corp. members. This allows you to maximize FDIC insurance coverage without juggling multiple business banks.
Cash management accounts can be a good solution if your business has a lot of idle cash to invest — think startups with seed funding or companies with large operating budgets. But if your margins are thinner, a high-yield business checking or savings account will likely meet your needs.
Business cash management accounts
Brex’s business account has no monthly fees or minimum opening deposit. You can open up to eight accounts under one employer identification number, allowing you to have separate operating accounts for different business functions, like payroll and accounts payable.
Account holders can designate a portion of their balance to be invested in a business money market account that earns 4.92% annual percentage yield (APY), as of this writing. Funds deposited in a Brex business account are held across a network of FDIC-insured banks, providing up to $6 million in coverage.
You cannot deposit or withdraw cash from a Brex business account. Instead, you can add or move funds via check, ACH or wire transfer. Read our full review.
Mercury’s free business checking and savings accounts are eligible for up to $5 million in FDIC coverage through its partner banks, which participate in sweep networks to maximize coverage. These accounts do not earn interest, but eligible businesses can apply for a Mercury Treasury account to unlock the higher yields characteristic of a cash management account.
Mercury Treasury accounts tap into low-risk investments, like Treasury bills and money market accounts, and earn up to 5.43% APY as of this writing. Investments made through your Treasury account are insured by the Securities Investor Protection Corp. (SIPC) for up to $500,000 — not the $5 million in FDIC insurance.
You need at least $500,000 in your Mercury Checking and savings accounts to open a Mercury Treasury account. Monthly fees for Mercury Treasury start at 0.05% of your deposits across all Mercury accounts. Read our full review.
Arc’s cash management account is comprised of three accounts: Operating, Reserve and Treasury. There’s no monthly fee for operating and reserve accounts; treasury accounts have a monthly fee that starts at 0.02% of your account's value annually.
Arc’s reserve account earns up to 4.00% APY and its treasury account boasts an APY of up to 5.26%, as of this writing. The actual yield on Arc Treasury accounts will depend on how you divvy up funds between money market and Treasury bills.
Money held in Arc Treasury accounts is FDIC insured up to $5 million through sweep networks and partner banks. Operating and Reserve accounts are FDIC insured up to the standard $250,000 per depositor, per account.
Rho offers business checking and treasury accounts, as well as corporate cards and accounts payable services, for incorporated businesses with at least $1 million in annual revenue or equity capital.
Treasury accounts earn up to 5.06% APY, as of this writing, and offer up to $75 million in FDIC insurance via a partner network. Checking accounts do not earn interest and are FDIC-insured up to $250,000. Rho accounts do not include ATM access, so you can’t withdraw cash, but there are no fees for ACH or wire transfers.
All Rho account holders are paired with a dedicated support specialist, plus general customer support (via phone or live chat) from 8 a.m. to 9 p.m. ET, seven days a week.
What is a business cash management account?
Business cash management accounts are a combination of multiple business bank accounts offered by one financial institution, allowing you to easily manage and move funds between accounts. Most business cash management accounts include the following:
Operating account: Used for day-to-day operating expenses, this account functions similar to a business checking account. Some cash management accounts allow for multiple operating accounts, so you may have one for payroll and another for vendor payments, for instance.
Reserve account: This is essentially a savings account, and it may or may not earn interest, depending on the financial institution. At Mercury, for example, savings accounts do not earn interest, but Mercury Treasury accounts earn up to 5.43% APY. Arc’s reserve accounts do earn interest — up to 4.00% APY — but Arc’s Treasury account earns up to 5.27% APY, as of this writing.
Treasury account: Most business cash management accounts let you allocate funds in your treasury account across high-yield savings, business money market accounts and treasury bills. Money in treasury accounts can earn 5% APY or more, depending on the account and where you allot your money.
Personal cash management accounts are usually offered by brokerages. However, business cash accounts are typically available through fintech companies like Brex and Arc, which offer business banking services through an FDIC-insured bank or investment broker. And most leverage sweep networks to offer FDIC insurance well beyond the standard limit ($250,000 per depositor, per account type).
Benefits of a business cash management account
Potentially high APY. The best business cash management accounts advertise rates of 5.00% APY or higher. But what you actually earn depends on the account you choose and how you allocate your funds.
Streamlined money management. Business cash management accounts may consist of multiple accounts, with funds spread across varying investments. But you can easily view and manage everything from one dashboard.
No transaction limits. Brick-and-mortar business banks typically limit how many transactions you can process each month. And most business savings accounts only allow six transfers or withdrawals per month. But business cash accounts have no such limits. Account holders can move money in and out of accounts as needed, though some withdrawals may be delayed — more on that below.
Increased FDIC coverage. Deposit accounts are typically insured by the FDIC for up to $250,000 per depositor, per account. But business cash management accounts often partner with a network of banks to spread funds across multiple institutions. These “sweep” networks allow you to unlock greater FDIC insurance coverage while only dealing with one financial institution.
That extended FDIC coverage may not apply to all of the funds in your cash management account, though. With Arc, for example, funds allocated to the Treasury account are FDIC insured up to $5 million, but money held in your operating or reserve accounts is subject to the standard FDIC coverage limit.
Drawbacks of a business cash management account
Substantial cash flow needed. While some business cash management accounts don’t have a minimum balance requirement, you do need a large operating budget and a chunk of idle cash to reap the benefits of this type of account. Companies with smaller cash reserves can achieve similar benefits with separate business checking and high-yield business savings accounts.
Limited access to cash. Cash management accounts are generous with free ACH and wire transfers, but cash is less accessible. Most business cash accounts don’t allow cash deposits, and some, like Brex, do not allow you to withdraw money at an ATM.
Lack of banking diversity. While business cash management accounts do leverage a network of banks to extend FDIC insurance coverage, you’re still dealing with a singular entity — typically a financial technology company. Should the fintech or its banking partner fail, your funds, while insured, may be unavailable for a time. Using separate accounts across multiple business banks can help minimize the disruption to your operations should any one of those banks collapse.
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