A zero balance account is a financial mechanism that is utilized to make payments, but does not maintain any type of running balance. An example of a zero balance account would be a business checking account that is used to pay vendors of the company, but only contains enough funds to cover the checks that are issued. Generally, the funding for a zero balance account is obtained from another financial account under the control of the business.

The concept of a zero balance account may be utilized for several reasons. One of the most common advantages of maintaining a balance of zero in the checking account is that the resources of the business or organization can be housed in other financial accounts that are interest bearing. This means that funds can earn more interest, only being moved into the checking account just before the checks are due to be presented for payment. As a result, the company may achieve a significant amount of interest income over the course of the calendar year.

Another reason for maintaining a zero balance account is that it is much easier to track the transactions associated with the account. In an age where debit cards are often tied to checking accounts, a zero balance approach helps to ensure that any use of debit cards is done only with authorization ahead of time, and when funds are available to be transferred into the account to cover the usage. This level of money management can minimize the potential for incidental purchases that may use funds that are needed to cover other operational expenses.

The zero balance account, or ZBA, is a great tool for managing resources when the amount of income is running close to the amount of debt that needs to be discharged in the short term. However, it is important to maintain the zero balance account at the same institution as the master interest bearing account. This ensures that funds can be transferred real time or at least on the same business day. Keep in mind that funds transfers between accounts are subject to the terms of usage in effect for the particular financial institution.