What is a Concentration Account?

A concentration account is a deposit account into which funds are shifted from other locations. This type of account is used by businesses to aggregate cash for investment or supplier payment purposes. It is most useful from an investment perspective, since a business can use it to aggregate large amounts of cash from multiple accounts, allowing the treasury staff to place funds in investments that generate higher rates of return than would otherwise be possible.

A concentration account is also used by banks for the same-day settlement of internal transactions.