Definition of zero-balance account

checking account used by corporations to accelerate collection of funds from subsidiaries, or control funds disbursed to pay trade creditors. In a zero-balance collection account, collected balances are transferred by Depository Transfer Check or automated clearing house debit from subsidiary accounts into a central concentration account, bringing the collecting account to a zero balance at the end of each business day. Zero-balance concentration accounts are generally used by companies wanting centralized control of cash receipts. In a zero-balance disbursing account, corporate funds are transferred out of a central account to subsidiary accounts for payment to trading partners. Funds to cover the payment are transferred from a control account whenever a payment is made from the zero-balance account. Zero-balance disbursement accounts are typically used by companies that want centralized cash control but decentralized funds disbursement.