Introduction to Coverdraft Sweeping

In Canadian market, banks will need the coverdrafting service to prevent the customer’s master account from getting overdrawn. The bank can set up the cash pool functionality to work automatically. It can also be manually set up by amending the cash pool. If there is any debit transaction making a master account overdrawn, the over drawn amount will get swept from the linked accounts according to their priority.

The following are the list of functionalities that are covered under the Coverdraft Sweeping module.

• When a customer opens a new account it will get added to the master account as a linked account automatically.
• Real-time coverdraft transfers will be done through transactions initiated from the FUNDS.TRANSFER, TELLER and TELLER.FINANCIAL.SERVICES modules.
• Coverdraft transfers can be triggered for the scheduled payments created through the STANDING.ORDER application.
• Coverdraft transfers can be setup to do the fixed multiple amounts.
• Coverdraft transfers shall happen after considering the limits available for the master account or linked account. (Setup in the AC.SWEEP.TYPE application).
• Charges exclusions for coverdraft transfers are based on customer sector or industry.
• Ability to create multiple cash pool entries.
• Ability to restrict the maximum number of linked account creation.
• Ability to restrict an account from coverdraft sweeping at account level.

LOC account and current account sweeping:

• A sweep account combines two or more accounts at a bank or a financial institution, moving funds between them in a predetermined manner.
• Financial institutions require sweeping to happen as mentioned below:
  • Ability to perform two-way sweep between account products and LOC products.
  • Ability to perform two-way sweep with multiple LOC products based on priority.
  • Ability to sweep interest, principal and both together for lending products from LOC.
  • Enquiries to reports for account sweeping details.