If you are in India and you are doing business with clients in Europe, then you need a payment system that will allow you to receive your payments quickly. That might seem impossible when you are on one continent and your clients are another. The good news is that thanks to technology, it is possible to operate a bank account from virtually anywhere. This is made possible by virtual accounts.
Benefits of virtual accounts and virtual IBANs
Virtual accounts have the structure of physical bank accounts but without the costs of opening and managing accounts. As a business owner, you can have one centralized virtual account instead of managing both your local bank account and other accounts where your clients are located for depositing payments. A single central account optimizes working capital and decreases the cost of administration.
Recent developments have made having a central virtual accounts much easier both in Europe (including SEPA) and the rest of the world. Banks have responded to the demand for this service with Virtual IBAN and Virtual Account propositions.
Virtual IBANS are dummy international bank account numbers issued by a bank. They are used to route payments to another actual IBAN. To clients, virtual IBANs resemble and function just like actual IBANs. When they pay into a virtual IBAN, the funds appear into the client's physical bank account. In Central and Eastern Europe, there are significant straight-through reconciliation rate gains to be made owing to the limited tradition with Direct Debit products in the region.
Virtual IBANs help companies to increase their reconciliation rates. This increases the working capital at hand and enhances the Days Sales Outstanding. Manual reconciliation is also eliminated and companies can rationalize the accounts receivable bank accounts they hold.
Apart from Virtual IBANs, there are Virtual Accounts. These don't have IBANs because all transactions are done on a Master Account. Virtual accounts are administrative subaccounts of a single physical bank account and are often known as the Master Account. This Master Account is part of the ledger of a bank and all of a company's cash goes into this account. With a Master Account, companies can open, close or make adjustments to as many virtual accounts as they need and create account hierarchies as they wish. It is possible to earmark cash to a virtual account making it possible for a company to allocated funds without physically separating them.
Leave it to us
If you are a company in India and you are serving clients in the EU, leave it to us to create a Virtual IBANs or Virtual Accounts so you can trade and streamline your payments. Your administrative costs and duties will go down and your bottom line will improve.