Annual Clean-Up

DEFINITION of 'Annual Clean-Up'

A banking practice that requires a borrower to pay off all balances of any renewable lines of credit and keep them at zero for 30 to 60 days or so. Although the annual clean up is a long-time tradition, it's becoming less common nowadays. Clean-ups aren't usually required on secured credit lines.

Also known as the clean-up requirement.

BREAKING DOWN 'Annual Clean-Up'

The annual clean up usually takes place when the customer is flush with cash. For instance, after a peak sales period when receivables have mostly been collected and cash needs for replenishing inventory are low. The clean-up shows that credit lines are being used only during periods of peak cash requirements and are not needed for the normal financing of the business.

RELATED TERMS
  1. Clean-Up Requirement

    A requirement that is often written into the contracts of annually ...
  2. Cleanup Fund

    An insurance term referring to the final expenses associated ...
  3. Bank Credit

    The amount of credit available to a company or individual from ...
  4. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  5. Credit Limit

    The amount of credit that a financial institution extends to ...
  6. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
Related Articles
  1. Personal Finance

    The Basics Of Lines Of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  2. Markets

    Small Business Loan Vs Line of Credit: How They Differ

    Understand the differences between a small business loan and a line of credit, and learn some of the most appropriate uses for each form of financing.
  3. Markets

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  4. Personal Finance

    Revolving Credit vs. Line of Credit

    Revolving credit and a line of credit are arrangements made between a lending institution and a business or individual.
  5. Investing

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  6. Investing

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  7. Investing

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  8. Investing

    Analyzing A Career In Credit Analysis

    If you're a number-cruncher and responsibility doesn't scare you, this could be the job for you.
  9. Investing

    Understanding Credit

    Credit has three common meanings in the financial world.
  10. Investing

    How To Establish A Credit History

    Can't get a credit card without a credit history, and can't get a history without a card? Break the Catch-22.
RELATED FAQS
  1. We are considering a personal loan to pay off our credit card debt. Will this hurt ...

    We have approximately $35K in credit card debt. We are considering taking out a personal loan to conso... Read Answer >>
  2. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ... Read Answer >>
  3. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  4. How is interest charged on most lines of credit?

    Learn how most financial institutions calculate interest on lines of credit by using the average daily balance method and ... Read Answer >>
  5. What's the difference between a secured line of credit and an unsecured line of credit?

    Discover the differences between a secured line of credit and an unsecured line of credit, and why lenders treat the two ... Read Answer >>
  6. What is the difference between available credit and credit limit?

    Explore the difference between available credit and credit limit and the implications different account balances have on ... Read Answer >>
Trading Center