Six strategies to improve operating account liquidity

Each of these strategies requires minimal resources and is often achievable within weeks.

1. Consolidate operating accounts

Closing redundant accounts gives you better visibility into your cash position—and can save time and reduce fees.

“Often, when we first take a look at a company’s account structure, we’ll find cash sitting idle or accounts that aren’t necessary, simply because the business grew in a slightly messy way and nobody got around to cleaning up accounts they don’t need,” Todesca said.

Excess accounts have a real cost—and not just in bank fees. They make it harder to track cash flow, identify discrepancies, reconcile accounts and spot idle cash that could be deployed more productively.

2. Use virtual accounts and pooling structures to simplify cash management

If your business needs to track payments by client, department or entity, you don’t necessarily need a separate account for each one. Virtual accounts—sub-ledger accounts linked to a single physical operating account—give you that granularity while keeping cash management centralized.

“You can achieve the same goal you achieved in the past with multiple accounts with a single physical operating account,” Todesca said.

Digital banking platforms also let you customize employee access and reporting within a single account structure. And when multiple accounts are necessary—for example, to manage cross-border operations in multiple currencies—notional pooling structures link balances across accounts and currencies, simplifying cash management by offsetting debit and credit balances across accounts without physically moving funds.

3. Evaluate your bank relationships

Consolidating accounts within a single bank is one thing—but if your business spreads operating accounts across multiple banks, the inefficiencies multiply. Each banking relationship adds its own reconciliation process, deposit workflow and servicing requirements.

“Sometimes fragmented banking does make sense because of your credit relationships,” Todesca said. “But often, it can cause inefficiencies, servicing issues and communication issues.”

Consider a business that handles high-volume cash payments. If it has operating accounts at four banks, the finance team must reconcile cash, prepare deposits and arrange armored carrier pickup at each one. With daily cash deposits, the additional time and fees add up fast. Even businesses that handle primarily digital payments can save time by working with a single bank portal and consistent reporting format.

4. Review operating account controls

Weak access controls don’t just create fraud risk—they can drain liquidity through unauthorized payments and slow your ability to establish an accurate cash position. To limit unauthorized payments, employees should only have the access needed for their role. For each account, consider:  

• Who can see and manage the account?
• Who can make payments?
• Do you need dual controls for high-value transactions, reconciliation or other sensitive tasks?

Access reviews are especially important after organizational changes. New hires, departures, role changes or restructurings can all create gaps in your controls. Consider reviewing access controls once or twice a year, depending on your level of turnover. 

“It’s a good idea to have an internal policy to do some housecleaning on a regular basis, because employees come and go,” Todesca said.

5. Create a liquidity management strategy

Once you have good cash visibility, you can start putting surplus cash to work.

“When you keep funds beyond the working capital you need for day-to-day operations in an operating account, you’re creating an opportunity cost,” Todesca said. Strategies for putting surplus cash to work include: 

• Sweep accounts which automatically transfer funds above a set threshold from your operating account to a higher-yielding account, generating income. When your operating account balance falls below the threshold, funds transfer back.
• Earnings credit rate that converts average balances into credits that can offset maintenance, transaction and other banking fees. It can potentially lead to significant savings, boosting cash flow efficiency and incentivizing optimal liquidity without taxable interest.

Start with two key steps: Identify your target operating balance and design an investment policy.

• Your target operating balance is the amount of cash your business needs to fund day-to-day operations. Everything above that threshold is surplus—and surplus cash should be working harder.
• Your investment policy determines how that surplus works. Not all cash has the same time horizon, so your policy should segment it into tiers based on when you’ll need it:

Finding the best rate for surplus cash matters, but it’s just one part of the strategy.

“The best rate is only one piece of the puzzle, and once you have it, what are you going to do with it? How much will you allocate to the investment layer, or the reserve layer? How liquid will that cash be?” Todesca said.

6. Use digital banking tools to strengthen cash positioning

Your account structure creates the foundation for liquidity management—but the platform you use to manage it, such as Connect or J.P. Morgan Access, determines how quickly and accurately you can act on your cash position. When evaluating digital banking tools, look for capabilities that directly support liquidity management:

• Real-time balance and transaction visibility so you can get accurate cash position information whenever you need it
• Built-in fraud detection and payment controls that help catch unauthorized transactions before they drain liquidity—not just after the fact
• Automated reconciliation and reporting to reduce the manual effort of month-end close and free your team to focus on cash deployment decisions

The right platform doesn’t just display your data; it helps you act on it.

When to reassess your operating account setup

Even after you’ve optimized your account structure, certain business changes can signal it’s time to take another look:

• Cash visibility challenges: If your account structure makes it difficult to establish a reliable cash position or forecast cash flows accurately, complexity may have outpaced your setup.
• Business structure changes: Forming a new legal entity requires new accounts. Mergers and acquisitions, on the other hand, create opportunities for consolidation.
• International expansion: If your business is built around domestic ACH payments, cross-border operations will likely require new payment rails or accounts in new markets. Updating your account structure can also help you navigate currency fluctuations that affect the value of cross-currency payments.
• Technology triggers: If manual processes are slowing your operations or your company is outgrowing technology tools, greater automation may streamline your processes.