“The landscape of transaction banking is evolving.” While this is a statement that has certainly made the rounds in the last few years, it hasn’t been until recently that it’s become truly apparent. By now, it is impossible not to feel the impacts of the digital revolution—and the mounting pressures that come with it.
Given the challenges of a more competitive globalized market, corporate clients now demand innovation from the banks they transact with, and want products and services that can reinforce their business strategies, support their growth, and enable them to keep up with the rapidly changing times.
Regulatory bodies have similarly high expectations from today’s financial institutions, especially with regard to how they manage risk and prevent criminals from carrying out illegal activities through them.
Finally, shareholders are looking to maintain profitability, despite the rising costs of doing business.
Fortunately, financial institutions can rise to these challenges—provided that they’re suitably equipped for them. There is a way to address all of these matters without increasing operational costs or making things more complex for their corporate customers: virtual account management solutions.
What are Virtual Accounts?
The concept of virtual accounts has been around for at least two decades. Historically, they have been offered to corporate clients, small and mid-size enterprises, and other targeted segments of the customer base as situation-specific solutions designed to cater to specialized needs. They are also known as ‘shadow accounts’, but don’t worry—there’s nothing remotely sinister about them.
“The term ‘virtual accounts’ simply refers to non-physical accounts that customers can use to streamline the processes they use to distribute working capital within their organization.”
Corporates typically operate a large number of bank accounts: mid-to-large size corporations, in particular, may be managing upwards of 300 bank accounts at any given time. This poses various challenges when it comes to tracking and reconciling their collections and payments. Opening, maintaining, and closing these accounts manually can also be a drain on a company’s resources.
Virtual accounts are an excellent solution to many of these issues. Provided to companies by their partner banks, they are linked to the business’s physical bank account and allow the company to segregate cash within it, thus eliminating the administrative workload, cost, and complexity that comes with holding separate physical accounts for different business lines or functions.
How Virtual Account Management Can Benefit Your Business
Make Better Business Decisions with a Complete View of Available Cash and Liquidity
Are you looking to take your company to the next level? Do your goals include diversifying and becoming more global? Expanding your business also means having to deal with increased complexity. With virtual account management, you’ll have a more complete view of your global cash and liquidity position—in real-time.
You’ll be able to rationalize a number of real accounts while also effectively managing a hybrid liquidity structure. Additionally, solutions of this nature can help you centralize your available cash and liquidity that is trapped within complex bank account structures, enabling you to consolidate funds and use them as you see fit.
Transform Your Approach to Cash Management
Virtual account management solutions also give you the power to conduct all of your business transactions seamlessly. You can use virtual accounts to make payments on behalf of (POBO) and receive collections on behalf of (COBO) from all of your organization’s entities and locations. Furthermore, they can help simplify fund segregation as cash flows into and out of the business.
More Efficient, Less Expensive Account Reconciliation
With the ability to set up and manage your own account structures across all business units regardless of the geographic location or currency that you’re working with, a virtual account management solution allows your business to reconcile multiple accounts with ease. This, in turn, significantly reduces the time, effort, and cost of performing administrative tasks as opposed to doing the same processes manually.
A virtual account management system also enables auto-reconciliation and facilitates simpler segregation of inflow and outflow of funds for your company. Thus, optimizing your working capital couldn’t be easier.
Creates a More Consistent and Personalized Experience for Clients
Virtual account management solutions offer functionalities that corporate banks can deploy so that their clients can define, manage, and customize their banking account structures whenever they want to, wherever they want to, using modern channels that are as fast as they are secure.
This creates a friction less banking experience that is nothing short of an absolute joy to use. Instantly open, close, and modify all virtual accounts under your purview, create and amend account structures, view your complete transaction history and perform transactions on virtual accounts through a mobile device such as your phone or tablet, on your computer, or any other electronic device.
Virtual account management solutions have the potential to revolutionize the way you experience corporate banking. Partner up with a trusted provider today to reap its benefits.
