The virtual cash management solution provided by ING is on example of how virtual account structures are already taking over for physical account setups.
Since the introduction in 2016, ING have seen a growing number of clients using the solution, but the mix of customers adopting the solution has been somewhat surprising. Whilst ING expected that large multinational corporations would be the most likely to be attracted to the solution, they have seen that there has been significant adoption amongst 1) domestic companies with some international sales activity and 2) companies that operate in a single market but with multiple outlets.
Even though the underlying factors triggering the implementation of the solution is not the same for all customers, most of them share the overall ambition of centralizing liquidity.
A virtual cash management solution provides a variety of benefits:
A simplified bank account structure where the clients avoid the complexity of domestic or cross-border cash pooling structures
Liquidity management is simplified since cash is concentrated at the central account at any point in time
Operational controls (e.g. authorizations) are more easily managed
The increased quality of payment information allows auto reconciliation and sophisticated data analytics
The solution simplifies the process of introducing payments on behalf of (POBO) and/or collections on behalf of (COBO) as the “local Virtual IBAN” works as a substitute for the previous local physical account
For more details please visit the article at treasury-management.com (external link)
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