2.3 Target Balance/Minimum Balance

This topic provides the information about the Target Balance/Minimum Balance method.

There are two different types of the target balance as follows:

• Constant Target Balance/Minimum Balance: The system ensures that a specific amount is present in the minor account by moving the balances from the sub accounts to the main account and vice versa. The balances in the sub accounts are constant and cannot be zero.
• Fixed Target Balance: The system ensures that a fixed target balance is present while moving funds from sub accounts to main account. When the sub accounts have a debit balance, the 2 way sweep from main account to the sub account is equal to the debit amount on sub account which brings the sub account to zero balance.

1 Way Scenario

If the child account balance is above the minimum balance, the system sweeps the positive difference between the child account balance and minimum balance to the major account (sweep balances above the minimum balance from the child account). If the child account balance is below or equal to the minimum balance, the system does not execute the sweep instruction.

2 Way Scenario

If the child account balance is below the Minimum\Target Balance, the system tries to bring the child account balance to the target amount (Constant Target).

If the child account balance is below the Target Balance, the system tries to bring the child account balance to zero (Constant Target).

If the minor balance is below the minimum balance or is overdrawn, and the major balance is negative or not sufficient to cover the OD + minimum balance the system does not execute any sweep instruction.

If the balance in the parent account is not sufficient to cover the overdraft in the child account either sweep is not executed or sweep is executed up to the balance available in the parent account.

If more than one child account is in negative balance, the transfer from the parent account is based on the priority set at the child account (Least numeric is given top priority) and the available balance on the major account.

When sweeping from major account to minor account, the major account balance cannot go below Zero if unlimited OD is not selected at the account level. If it is checked, sweeps can be executed without any limit to cover the child overdrafts till all the minor account balances are set to zero.