Corporate Treasury Sweep Yield Gap
Use treasury sweeps only when they outperform idle balances after banking fees. Enter the average balance, quoted sweep yield, and any operating account yield to quantify annual earnings, net lift after fees, and the breakeven yield required to justify the sweep program.
Confirm sweep program documentation for settlement timing, counterparty risk, and fee structures before reallocating cash.
Examples
- $18,000,000 balance, 4.1% sweep yield, 0.35% operating yield, 0.08% fee ⇒ Annual sweep earnings: $738,000.00 • Net lift after base yield and fees: $660,600.00 • Breakeven sweep yield vs idle cash: 0.43% • Sweep net yield after fees: 4.02%
- $7,500,000 balance, 3.2% sweep yield, defaults for optional fields ⇒ Annual sweep earnings: $240,000.00 • Net lift after base yield and fees: $221,250.00 • Breakeven sweep yield vs idle cash: 0.25% • Sweep net yield after fees: 3.15%
FAQ
How do I include compensating balances or earnings credit rates?
Add the earnings credit rate to the operating account yield input so the breakeven hurdle reflects forgone earnings credits.
Can I compare multiple sweep vehicles?
Yes. Run the calculator for each sweep option with its quoted yield and fee schedule to identify the program with the highest net lift.
Does the tool account for FDIC or liquidity haircuts?
No. Adjust the sweep yield downward to reflect liquidity spreads or FDIC insurance charges before comparing to the breakeven yield.
What if balances fluctuate seasonally?
Use the weighted-average balance across the year or rerun the calculator for peak and trough periods to bookend potential earnings.
Additional Information
- Sweep earnings assume daily balances stay constant across the year.
- Breakeven yield equals the sum of your current account yield and the annualized fee rate.
- Net lift subtracts both the interest you already earn on idle cash and the sweep program fees.