A virtual account is a non-physical bank account that businesses can use to manage their payments digitally. They function in a similar way to traditional, physical bank accounts, and streamline the process of sending a receiving payments from a single, centralized, digital location.
How does a virtual account work?
Each customer will be given a unique VAN, a Virtual Account Number which will be used to identify their account, similar to a traditional physical bank account. This number is a secure way to mask your actual account number, generated automatically and expiable. Some VANs are only used once, making them a very secure way to make transactions.
They can also expire at a regular cadence, which can help with ending subscriptions or direct debits, for example. This is very different from a traditional bank account number, which remains the same for as long as the account is open, and provides criminals with access to your funds if stolen.
Without the manual work of using a physical bank branch, a virtual account can be a lot more flexible, reconciling payments automatically, tracking incoming payments against invoices, and reducing the operating costs of managing multiple different bank accounts.
Instead of using multiple systems and processes for tracking and managing payments, everything can be completed in a consolidated and centralized way.
What businesses would benefit from using a virtual account?
Any enterprise who has a complex network of funds would benefit from being able to use a virtual account to consolidate payments and transactions. By channeling all the different streams into a single bank account, being able to track individual transactions, and automatically reconciling payments, businesses can save many manual hours of work, and also add accuracy and control.
As virtual accounts function in real-time, businesses will have a continuously accurate balance of accounts, with no margin for error. Manual effort removed, staff are freed up to work on more strategic tasks than simply managing accounts.
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