How Virtual Accounts Streamline the Treasurer’s Daily Operations

What is a virtual account? Uncover the advantages for treasury management. Explore how virtual accounts simplify the treasurer’s daily tasks and enhance risk management.

A virtual account is a digital extension of a physical bank account, identified by a unique number known as VIBAN (Virtual International Bank Account Number). Despite its virtual nature, it enables the same financial transactions as a traditional account. Its ‘virtual’ aspect simply means it does not exist physically.

The establishment of virtual accounts is done through banking partners that offer such financial services.

Creating a virtual account offers numerous advantages:

1. Simplified Reconciliation

Virtual accounts facilitate linking specific transactions to particular accounts, streamlining the reconciliation of payments and receipts. This reduces reconciliation errors and enhances the efficiency of treasury and accounting processes.

2. Operational Optimization

For businesses managing a large number of bank accounts, administrative costs and efforts related to their management can be significant. Virtual accounts streamline this complexity by consolidating specific transactions into dedicated accounts, thereby enhancing operational efficiency.

3. Simplified Banking Management

Implementing a centralized payment system, or ‘payment factory,’ allows for consolidating transfers to a primary physical account, incorporating POBO (Payment On Behalf Of) / COBO (Collection On Behalf Of) mechanisms.

4. Cost Reduction

Virtual accounts may incur lower fees compared to traditional bank accounts. By minimizing the costs associated with managing multiple accounts, businesses can achieve significant financial savings.

5. Enhanced Treasury Management

Virtual accounts enable more accurate tracking of financial flows, fostering improved treasury management and informed decision-making regarding liquidity.

6. Enhanced Security

Virtual accounts can contribute to reinforcing financial security by restricting access to physical accounts and mitigating the risks of fraud.

7. Integration with Treasury Management Tools

Virtual accounts seamlessly integrate with TMS and can be incorporated into ERP systems, simplifying accounting management and financial flow analysis.

In summary, leveraging virtual accounts provides substantial benefits, including streamlined reconciliation, optimized banking operations, and increased centralization of financial flows. This approach aims to maximize operational efficiency while minimizing costs associated with physical bank accounts.

As mentioned earlier, virtual accounts are sub-accounts linked to a main account, streamlining the management of financial operations. They enhance visibility into balances and cash movements, simplify bank reconciliation, and reduce administrative and banking costs.

A Treasury Management System (TMS) software assists businesses in efficiently managing their treasury by automating processes, integrating data from various sources (banks, accounting, ERP…), and providing dashboards and key indicators for steering and controlling their operations.

Therefore, a treasury management software can be a valuable ally in managing virtual accounts, allowing to:

• Easily create and configure virtual accounts according to the company’s needs (by subsidiary, project, client, supplier, etc.).
• Monitor real-time balances and transactions of virtual accounts, consolidating them at the main account level.
• Perform internal transfers between virtual accounts or to the main account without involving the bank.
• Generate customized financial statements for each virtual account or group of virtual accounts (balance sheet, income statement, cash flow, etc.).
• Analyze the financial performance of virtual accounts and identify opportunities for optimization or savings.

In conclusion, utilizing treasury management software for virtual account management is an effective solution to optimize the company’s financial management, gaining simplicity, visibility, and security.

The configuration of a virtual account within the myDiapason treasury solution is simple and intuitive.

A checkbox is all it takes to indicate that a bank account is virtual. These virtual accounts are automatically associated with physical accounts, creating an automatic connection between the two.

Account statement management occurs in two distinct ways: first, the bank sends statements for each IBAN, which myDiapason integrates to simplify reconciliation at the virtual account level. Then, for the physical bank account, you receive a separate statement consolidating all transactions not linked to virtual IBANs.

It’s important to note that many ERPs are not yet equipped to handle virtual accounts. However, banks provide an alternative. The bank sends a consolidated statement combining all individual IBAN statements, which myDiapason integrates for simplified accounting reconciliation, reducing administrative tasks. This consolidated statement is then sent back to the ERP, streamlining the reconciliation process.

In conclusion, the integration of virtual accounts into myDiapason offers a simple and effective solution for corporate treasury management. This feature streamlines reconciliation, optimizes operations, and centralizes banking transactions. This integration reflects the commitment of the Diapason teams to simplify treasury processes and support companies in their growth.