Virtual IBAN: the essential ally of accounting departments

Services
Written by CentralPay
13 July 2022
3 min

In a company, the accounting and finance department is constantly under pressure. Responsible for invoicing and ensuring the timely collection of customer payments, then informing other links in the chain (sales, logistics, etc.), their daily work is punctuated by tasks repeated for each client. This increases the risk of errors, which impact the company's business and financial health (cash flow, operational costs, customer satisfaction, internal communication issues, etc.).

Proper management of customer collection flows is a key challenge for financial departments. When the volume of incoming transfers is high, it becomes time-consuming and complex to correctly identify the sender, manually match the payment to the correct invoice, and ensure proper processing, if necessary (customer communication, refund management, etc.).

So, how can we improve the collection and processing of bank transfer payments without disrupting the habits of customers who are accustomed to this payment method? In this article, discover how virtual IBANs ease the burden on financial services while maintaining the simplicity of customer payments.

Tool for the identification and processing of financial flows

In France, 91% of intercompany payments are made by bank transfer.¹ Yet, 60% of accounting and finance departments believe that processing these payments is hampered by insufficiently digitized processes.² The widespread adoption of virtual IBANs therefore appears ideal for addressing this organizational concern.

What is a virtual IBAN?

Dans sa forme, un IBAN virtuel (virtual IBAN ou vIBAN) est en tout point identique à un IBAN classique : une série de 25 chiffres. Ce numéro de compte virtuel, associé à un compte principal, permet la réception de paiements par virements ou prélèvements clients.

In its form, a virtual IBAN (vIBAN) is in every way identical to a traditional IBAN: a series of 25 digits. This virtual account number, associated with a main account, allows the receipt of payments by transfer or customer debit.

Also read: A complete guide to paying by transfer ➜

What are the advantages of getting paid using a virtual IBAN?

In business, using virtual IBANs offers several advantages:

Segments incoming payments and automates their reconciliation

Virtual IBANs are particularly useful for companies processing high volumes of incoming transfers, as they provide a clear classification tailored to each company’s organizational needs (by customer, invoice, payment link, currency, point of sale, geographic area, etc.). Furthermore, even in the event of a different amount, missing, or incorrect reference (caused by the customer or their bank’s system), each transfer is automatically reconciled in the accounting and invoicing solutions. The finance department therefore no longer manually reconciles payments; they remain only a backup, allowing them to focus on other, more strategic tasks.

Automates communication related to the receipt of transfer payments

The use of virtual IBANs provides complete traceability of customer transfers, as well as 360-degree digitalization of their processing. This not only automates the sending of alerts to financial teams (real-time information on receipt, actions to be taken, etc.), but also allows for the configuration of customer notifications and reminders as needed.

Improves risk management

By limiting the exposure of their real IBAN and through more granular control of financial flows, companies reduce the risk of fraud and errors when making payments by wire transfer. In the event of suspicion, they can react immediately by simply deactivating the virtual IBAN(s) concerned.

Also read: Request-to-Pay, the new European payment standard ➜

The use of virtual IBANs in business

From the creation of the virtual IBAN to the receipt of customer funds, this new tool significantly transforms the daily lives of finance and accounting departments.

How to create Virtual IBANs

Virtual IBANs are made available to businesses by Payment Service Providers approved by the ACPR. At the request of the company, the PSP generates “sub-IBANs”, associated with real payment accounts, into which the funds will be collected.

Once generated, it is up to the company to oversee the entire lifecycle of virtual IBANs, from their assignment to an accounting object to their potential deactivation. From its ERP, it can establish bank reconciliation rules, transaction limits, automatic communication scenarios (customer notifications and internal alerts), access rights, etc. Such customization facilitates the entire organization of the service and the company’s activity.

How can I get paid with a virtual IBAN?

vIBANs can be displayed directly on customer invoices, simplifying the payment experience. By importing them into the accounting or invoicing tool, each generated invoice will natively include a virtual IBAN on the payment slip. Thus, when a transfer is received, it will be automatically identified and reconciled.

They can also be inserted into payment links sent by email, SMS, or QR code, upon creation. The customer does not need to perform any additional action, greatly facilitating payment by transfer, whether standard, instant, or initiated.

Virtual IBANs, used for SEPA and SWIFT transfers, pave the way for fully digitalized operations within businesses. The upcoming Verification of Payee requirement will strengthen the traceability and efficiency of online collection solutions.

Discover how CentralPay processes bank transfer payments using virtual IBANs ➜

¹ Observatoire de la sécurité des moyens de paiement, Chiffres clés de l’Observatoire – Premier trimestre 2022 (2022)

² Enjeux DAF, étude sur les employés chargés de recouvrement (2022)