Invisible cash: Can virtual cash management fully solve the corporate cash visibility question?

If the past few years have taught treasurers one thing, it is that cash visibility is crucial to making informed treasury decisions. The ability to have account information at your fingertips whenever you want it was until recently a dream for many companies.

Traditionally treasuries have found efficiencies of managing and controlling their bank accounts in conjunction with their existing banks by reducing bank accounts and possibly bank relationships too. Often this involves considerable time and expense. A Virtual Account Management (VAM) structure is a much simpler alternative. Virtual accounts are self-servicing which means that treasury departments can open, close, amend, create hierarchical structures to suit their needs with minimal effort and requirements to consult their bank. This has advantages for the corporate of course but also for banks because they don’t have to devote as much effort to corporate back-office administration and have in effect outsourced this process to their customer. Control is handed to the corporate and with that, account visibility.




Visibility of course means different things to different people. Corporates are used to and have built their treasuries around visibility of their bank information which is at least a day old. The world is changing and as payments become real time in nature so too must visibility of bank balances and transaction data. Virtual account management not only supports real-time reporting but also real-time reconciliation.




The ability to view up to the minute bank balances means that treasurers can react to events when they happen rather than sometime later. Real-time Ddecisions based on up the minute data are now possible and this is especially important during turbulent times such as those we are currently living through.




Being able to create virtual accounts on-line and without involving the bank means that corporates can create account structures that mirror their organisation and the way they run their business. In addition, the data can be sliced and diced in any way providing central treasuries with a means of sharing real-time account information with selected entities or groups in their organisation. Those entities can see information which is relevant only to them.




Real-time visibility of a treasury account structure using virtual accounts is good, but it brings additional benefits:

• Improved account reconciliation

• Automated and real-time cash positioning

• Improved ability for cash forecasting

• Less reliance on manual processes and therefore reduced error rates

• Reduction in the number of “real” bank accounts but still achieving accurate overviews of cash liquidity, FX currency exposures etc

• Supports the concept of becoming bank agnostic

Real time cash visibility, which was once a dream is now a reality thanks to virtual cash management. So, to answer question raised at the start – Yes, we do believe that virtual account cash management is a solution to the problem of cash visibility. 




For more on the topic, please see here