Boston-based BayBanks Inc. has introduced a cash-management product to let business customers efficiently funnel overnight funds into a mutual fund.
The product, known as a precision sweep account, automatically invests in a BayBanks mutual fund any end-of-day operating funds that exceed a set minimum balance for that account.
Businesses would earn a return on money that would ordinarily be idle overnight. The swept funds are returned to a company's operating account each morning.
"Since the sweep account is based on exact clearings and activity, it can maximize investment income by putting every available dollar to work," said Joseph V. Roller, managing director at the $9.6 billion-asset bank.
A number of financial institutions offer similar products that sweep funds into time-deposit accounts or repurchase agreements, But BayBanks officials said few banks are using mutual funds as their overnight-deposit vehicle of choice.