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Protecting Your Commercial Deposits with Insured Cash Sweep

November 7, 2023

With the current state of the economy, individuals and businesses are paying close attention to the health of the banking system. This is, of course, sensible — with serious banking failures as recently as a few months ago, all of us must protect our hard-earned deposits.

Fortunately, the state of our banking system remains extremely healthy, and by using appropriate tools and conducting due diligence, anyone can safeguard their deposits. One such tool is an insured cash sweep, which allows businesses to use the ICS banking system and place their deposits into banks that FDIC insurance will cover. By using this system, individuals and businesses can protect their deposits and ensure the safety of their money. 

What is an Insured Cash Sweep?

An insured cash sweep is a system that protects bank deposits by using the FDIC insurance system. 

As you may know, the Federal Deposit Insurance Corporation is an independent agency that protects the banking deposit system. In the event of a banking failure, deposits are insured up to $250,000. However, there are no guarantees that any deposit more than this amount is protected. This can create real problems for wealthy individuals or businesses that deposit more than $250,000.

The ICS banking system and ICS insurance provide a stable workaround for businesses that want to protect their deposits. With this system, your regular deposits are swept into different checking accounts. The balance of these accounts never breaks $250,000. As such, your finances are always protected. 

Once enrolled in the program, you can use this system at any time and set it up to run at regular intervals. You can use this system for personal or business banking, thus protecting your financial assets. 

How Does an Insured Cash Sweep Work?

The process itself is relatively simple. A series of participating banks and bank accounts participate in the ICS banking system. One bank account – in our case, First Western Trust – serves as the main custodian of the account. Once you sign up for the service, we will begin regular sweeps of your bank accounts. We will automatically take over $250,000 and place it in a new account. Doing so protects your finances in case of a bank failure. This allows your entire financial portfolio to benefit from comprehensive FDIS insurance protection.

An Insured Cash Sweep is essentially one-stop shopping for your wallet. By engaging in this service, you authorize one bank to protect all of your accounts and diversify them appropriately. This service allows you to gain all the benefits and convenience of placing your money into numerous bank accounts but only requires working with one bank. At First Western Trust, we handle everything, depositing your money regularly with appropriately insured banks. 

This has massive and positive ramifications for you and your accounting. You will no longer need to engage in the time-consuming process of researching banks, ensuring they are FDIC-insured, and tracking your deposits to keep them below the $250,000 threshold. Simply put, we handle everything. 

What Else Do I Need to Know About an Insured Cash Sweep?

There are a few other considerations to keep in mind with the insured cash sweep program:

  • ICS-participating banks are not everywhere. Fortunately, enrolling in our ICS program means you don’t have to worry about finding a participating bank.
  • You can customize your specific ICS program to match your needs and even earn interest on your funds by depositing them into a check or savings account. By speaking with one of our trusted financial advisors, you can determine the best method of using the ICS program.
  • This program keeps your flexibility and liquidity in mind. As such, you can customize your ICS program to always access your money and move it into a different account.
  • You can always know where your money is using your First Western Trust online access. You will never question where your money is or how you can access it, and it is impossible for your money to ever get “lost.” 

Final Thoughts

An ICS investment can be critical for any business or wealthy individual. By using ICS participating banks when making your business deposits, you can ensure that every cent of your banking deposits are protected against bank failures or crashes. This system can provide your business additional peace of mind and ensure you never have to worry about losing money due to bank crashes.

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