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account.


When used in the right way, the potential benefits of VBAs include the ability to centralise incoming and outgoing transactions and achieve cash concentration – which is precisely why they are being seen as an alternative to pooling. Easily set up, they also offer treasurers benefits such as straight-through reconciliation and reduced manual post-processing of unmatched items. Since physical account structures can be rationalised and no balance is held on a VBA, bank account costs and administration burdens will be significantly reduced.


RK: Rather like global pooling though, some misconceptions still exist around VBAs. This means they don’t always get the attention or credit they deserve.


IBS Journal: Can you give a few examples?


RK: A common misconception is that VBAs are only suited to non-bank financial institutions for allocating client monies or large collections businesses, like utilities, as a means for improving complex reconciliation processes. Although these sectors were certainly early-adopters, VBAs are just as suitable for multinationals in other industries too.


DO: And VBAs don’t just work for corporates with multi-currency cash flows coming in from different legal entities and geographies. They can also benefit corporates with purely domestic cash flows, helping them to streamline their cash management


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processes, potentially reducing the drain on experienced staff and minimising future investment in sophisticated ERP/TMS systems.


Another common myth surrounding VBAs is that they cannot be used cross-border. At ING, VBAs can be held in another country from the master account, as long as the accounts are in the same currency.


IBS Journal: What else makes ING’s VBAs unique?


DO: We are combining VBAs with an allocated sub-account hierarchy called Virtual Ledger Accounts (VLAs), which populate a multi- bank reporting dashboard to deliver a complete Virtual Cash Management solution. It allows full cash concentration and visibility to be realised right across the group. Importantly, this is possible regardless of how centralised or decentralised the company’s treasury function is, or how sophisticated and harmonised its technology infrastructure may be.


IBS Journal: And how do VLAs work in the context of Virtual Cash Management?


DO: VLAs are administrative ‘subaccounts’ of a single current account. Under the current account, the treasurer can open, close and modify as many VLAs as required, and organise account hierarchies as appropriate. Funds and transactions can also be earmarked as belonging to a VLA, allowing treasury to allocate funds without physically dividing them.


Through VLAs, treasurers can reap the benefits of a structure that mimics physical bank accounts whilst harnessing the power of near real-time multi-bank data and reporting. Moreover, by facilitating the set-up of in-house bank and payments-on-behalf-of (POBO) and collections-on-behalf-of (COBO) structures, treasuries can reach a greater level of cash centralisation.


Although components of Virtual Cash Management already exist in the marketplace, the combination of the VBA and VLA capabilities is currently unique to ING. It is precisely this integration which makes Virtual Cash Management such a powerful solution.


IBS Journal: Can corporate treasurers obtain the best of both worlds?


DO: The layering of our global Cash Pool and Virtual Cash Management offerings can be extremely compelling from a treasury perspective. Perhaps even more so today because treasurers are under continuous pressure to ensure that their cash management solutions are aligned with ever-changing tax, accounting and regulatory laws.


RK: The economic benefits of integrating these two solutions can be easily determined via an in-depth analysis of a corporate’s global footprint and specific requirements – which the bank can facilitate. So, yes, the best of both worlds is certainly achievable.


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