Managing cash across borders

| 01-09-2016 | Olivier Werlingshoff |

virtualcash

ING has launched a tool for managing cash across borders. Dubbed Virtual Cash Management (VCM), the solution, announced on the 24th of August, provides an array of digital solutions for corporate treasurers, including internal transfers, reconciliation and invoice matching. It also supports payment-on-behalf-of subsidiaries transactions, as well as collection-on-behalf-of subsidiaries transactions. (pymnts.com)

ING about this new tool:

 

 

“Virtual Cash Management (VCM) is a next-generation digital cash management solution centred around treasurers’ current and future needs. Designed to help treasury functions reach the next level of optimisation, VCM facilitates centralised cash management, visibility and control – without the significant cost or complexity that is traditionally associated with such goals.

The Virtual Cash Management solution combines a cross-border Virtual Bank Account (VBA) structure with Virtual Ledger Accounts (VLA) displayed in an advanced multi-bank cash management dashboard, offering a group-wide view of all payments, collections and cash – as well as enhanced reporting functionalities.” (ingwb.com)

What do our experts think about this tool? Will this help treasury functions reach the next level of optimisation?

Olivier WerlingshoffOlivier Werlingshoff:

Banks are looking for alternatives for the notional pooling. Companies use notional pools to compensate the positive balances from one account with the negative balance from another without moving any balance. Another positive aspect of notional pools is that intercompany transactions are avoided.

By using virtual accounts companies can still keep all transactions related to one bank account. For banks, on the other hand, virtual account are only virtual and uses one and the same real bank account for all transactions.

This is one option to avoid notional pools.

1 reply
  1. Douwe Dijkstra says:

    The reason for introducing Virtual Cash Management is not “to help treasury functions reach the next level of optimisation” but Basel III making notional pooling less attractive. Banks always underestimate the challanges in international companies regarding (reconciliation of) intercompany balances and psychological factors like subsidiaries wanting to keep own money on their own bank account (notional pooling) instead of fysically on the bank account of a parent company. Beside the regular intercompany balances with Virtual Cash Management a new kind of financial intercompany relation is created. Most of my clients prefer a notional cash pool even against a higher cost.

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *