It stands for zero-balance account; a checking account (current account) that requires no balance. Rather, it is designed to help companies control and manage their payments. When checks are presented to the bank for payment, the bank automatically transfers money from another account held by the company, in the same amount required to pay the check’s amount. This technique allows a company to keep all funds in one centralized account, where it is more convenient to track and handle. All transactions related to this account are processed automatically. Collected funds are transferred by depository transfer check or automated clearing house debit from subsidiary accounts into a central concentration account so that the collecting account comes to a zero balance at the end of each business day.

The zero-balance account is mainly used for payroll checks. It is also used by companies to expedite collection of funds from subsidiaries or control funds disbursed to pay trade creditors.

The controlled disbursement account is a variation on this type of account (it is most commonly used for accounts payable checks). Banks usually charge a little monthly fee for maintaining such a zero-balance account, but this fee can be easily covered by the interest earned on funds that would otherwise have been locked up in the account.