Virtual Accounts, Which Companies Should Implement Them?

Global Treasurers are continually striving to streamline account structures and centralize transaction processing. Increasingly, they are turning to virtual accounts as a key tool to provide this comprehensive view of their cash position and improve their decision-making process. However, in spite of certain advantages, virtual accounts have some difficulties when being integrated into the landscape of companies.

What can virtual accounts offer?

Virtual Accounts have evolved through technological innovation, offering businesses the advantage of streamlining account structures and enabling true end-to-end solutions that are fluid, accessible, and integrated. Virtual Accounts provide broad functionality and facilitate interconnectivity between debt, receivables, and liquidity solutions through a better view and control of the activity. They also support localization strategies and global treasury operations. The primary benefit of virtual accounts is the concentration of all activity into a single physical account, while maintaining the ability to reconcile transactions at a more granular level (e.g. by entity or customer).

Advantages of virtual accounts

For many international businesses, global banking is time-consuming, frustrating, and costly. Without a resident bank account in Europe, international payments can take nearly a week to post. In addition, because of the sprawling systems and thousands of employees of traditional banks, the costs are high.

With virtual accounts, you do not need to be a resident to open an account. This is not the case with opening traditional bank accounts where you have to be a permanent resident. Virtual bank accounts are a solution for global entrepreneurs who do not have European residency, for example. This avoids the complexity and costs associated with traditional international cash pooling.

Virtual bank accounts can also facilitate the centralization of cash activities and daily cash management. They add agility in the structure of payments and receipts with the ability to open, close, or modify as many virtual accounts as needed and organize account hierarchies at your convenience without the need for heavy KYC documentation.

In addition, virtual accounts maintain the traditional bank reporting functionality with Swift, Camt, and other methods available. Undertaking digitization as part of the virtual accounts project allows for centralizing of the cash flow and achieving economies of scale. For professionals, it guarantees better visibility and control of transaction volumes......

03/22/2022 | INSIGHTS

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Cash Management & Payment Trends:

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  • The Global Resurgence of QR Codes
  • Choosing the Right Payment Terminal in an Ever-Changing Environment
  • The Rise of Buy Now, Pay Later
  • PCI Compliance in an E-Commerce World
  • Where Do Banks Stand in the Race for Digital?
  • Virtual Accounts, Which Companies Should Implement Them?
  • The Future & Alternatives to SWIFT GPI
  • Global Digitization in the Depository Space
  • “Switching Banks Was the Right Decision”: An Interview with Olivier Bouillaud from Albéa

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Redbridge Debt & Treasury Advisory is a leading financial management partner to corporate treasurers and CFOs around the globe.

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