Why virtual IBANs? How virtual IBANs help treasurers to face their challenges

Cash flow management is at the heart of each company's success, which makes treasury management a central and strategic activity. Managing incoming and outgoing flows while monitoring costs and margins, debt, and exchange rates, and providing companies with cash flow forecasts can quickly become very challenging, especially if you are not equipped with the right tools.

For companies managing high payment volumes (incoming and outgoing), it is vital to be able to automatise payment reconciliations. It means identifying incoming and outgoing payments by associating them with an invoice, a credit instalment, or any type of service that would be provided in exchange for a payment.

Let’s take as an example a BNPL (Buy Now, Pay Later) company that offers its clients the possibility to pay in instalments. When providing thousands of small credits, they face many challenges:

• Improve visibility: the company needs to have clear visibility over its cash flows by reconciling everyday outgoing payments to merchants using their BNPL services, and incoming payments from the merchants’ clients who are paying the purchased goods or services in instalments. Every payment (incoming or outgoing) should automatically be linked to a specific deal, its conditions, and the current deal status.

• Optimise working capital: quickly identifying unpaid invoices to merchants, or instalments from customers, allows to take action to correct the situation rapidly. It reduces the time to cash and thus improves companies’ working capital.

• Reduce manual tasks: automating reconciliations reduces manual tasks and their risk.

• Preserve banking confidentiality: when dealing with hundreds or thousands of customers, company account coordinates are circulating a lot, and therefore the possibilities of fraud are increased. Monitoring and identifying account misuse by potential fraudsters can be challenging.

Enter virtual IBANs.

Virtual IBANs address the challenges described above as follows:

• Improve visibility: by allocating one IBAN per counterparty, you can instantly identify where the payment comes from or to whom the payments are made.

• Optimise working capital: identify the missing payments automatically and take action without losing time.

• Reduce manual tasks: allocating one IBAN per counterparty allows you to automatize payment reconciliation instead of doing it manually, which reduces mistakes linked to manual tasks.