noun_Email_707352 noun_917542_cc Map point Play Untitled Retweet Group 3 Fill 1

Automation of Accounts Receivables – a Step Too Far?

The key driver for virtual account adoption is the ability to automatically reconcile accounts receivables. Saving time is saving money but being able to reduce error rates is just as important.

Torill H. Larsen / December 30, 2022

On top of many treasuries wish lists is the ability to fully automate receivables reconciliation.

Virtual accounts, by their nature already automate the process of categorizing various transactions and cashflows, and by the time transaction data arrives in an ERP or other back-office system, it has already been organized and sifted and can be reconciled automatically. In our recent survey, “The future of corporate cash management”, 57% of respondents cited that improved reconciliation was a driving factor for choosing a virtual account structure.

Time savings and error reduction

While many automated receivables applications deal with automated invoice generation and follow-up, virtual accounts solve reconciliation challenges by allocating “published” (clearing recognizable) identifiers at the virtual account level as part of an on-behalf-of relationship. Thus, while funds are received into a single physical account, incoming funds are also automatically allocated to individual virtual accounts or sub-ledgers.

It is also possible to assign multiple published account references to a single virtual account. Together with itemized ERP reporting, these features promote higher rates of straight through ERP reconciliation, reduced levels of ledger inaccuracies, improved visibility of payment data leading to more informed decision making. All the above lead to time savings and reduced errors which result in cost savings, itself a major factor identified in our survey. Corporates are looking to their banks to help reduce costs and by offering such products banks are fulfilling this requirement.

Another finding that came from the survey is that corporates expect their banking partners to step up their technology development. Covid-19 and the Ukraine war have highlighted the need for better and quicker information to be available. "A key challenge for banks is to provide near real-time reporting to VAM from legacy systems. API’s are enablers which provide integration capabilities ensuring timely delivery and visibility of transactional data", says Alexandra Helen Larsen.

Virtual Accounts are an important tool for corporates that are seeking

Improved reconciliation rates. Account Receivables reconciliation is still often a manual process. This is both time consuming and error prone and eliminating this has become a key challenge for many corporations.

Trackable and transparent payment data. Incoming receipts can be hard to identify, as they often come from bank accounts that do not clearly identify the company that was invoiced, have missing or incorrect reference to the invoice or combine several invoices into single money transfer. A virtual account number per customer or even per invoice serves as a unique identifier in this case.

Rationalization and simplification of physical bank accounts and banking relationships.

Improved efficiencies and levels of automation in incoming funds allocation processes.

Enhanced reporting to ERP and associated improvements in levels of straight-through reconciliation.

Higher returns on working capital - complete overview of funds for sound investment decisions.

Example: Automation of accounts receivables


Torill H. Larsen
Lead product manager, cash management at Tietoevry

Torill has extensive banking and finance background with focus towards cash management, payments and trade finance working close to customer and developing solutions for the bank’s customers. In her current position, Torill works with strategy for cash management area and liquidity management solutions and services. 


Torill H. Larsen

Lead product manager, cash management at Tietoevry

Share on Facebook Tweet Share on LinkedIn