The revolutions in the digital world are making an impact on the way cash is managed. The concept of virtual accounting services has advanced with the help of technological innovation. Hiring an outsourced accounting agency for a virtual account set up instead of an in-house accounting department benefits your small business. Let us explore the benefits of setting up virtual accounts for your business.
What Is The Scope Of Virtual Accounting?
Virtual accounts eliminate the need for physical cash sweeps and help businesses utilize the cash more effectively. The accessible and integrated virtual services streamline all the accounts and facilitate interconnectivity between payables and receivables. With centralized transaction processing, business leaders get a comprehensive view of the cash flow and make informed decisions. It also provides visibility and generates reports needed for internal auditing.
Advantages Of Virtual Accounts
Small and medium businesses aim to rationalize their financial accounting structures to reflect the latest digital revolution and streamline their reconciliation process for payables and receivables. By automating these processes through virtual accounts, businesses can improve their liquidity risk management. Below are the pros of virtual accounts that help achieve greater operational efficiency.
Single Centralized Account
As businesses grow, they maintain separate bank accounts for each unit and have complex account architecture to support their unique operating and regulatory requirements. Manual reconciliation processes in such environments are expensive and time-consuming. Virtual accounts eliminate these hurdles by creating a single centralized account that organizes the balances and transactional data for all accounts in one place.
Detailed Reporting
Virtual accounts have unique identifiers and are mapped to the physical account. Every transaction will have an entry that identifies the corresponding physical account transaction. Opening and closing balance is also maintained for virtual accounts, much similar to a physical account. Without administrative overheads, virtual accounts provide flexible reporting options at a very granular level.
Enhanced Reconciliation
Businesses can provide customer-specific virtual account numbers that allow for automatic remitter identification. This process reduces the considerable time and effort spent in receivables matching. It also reduces the number of open invoices and improves customer relationships. The automation of the reconciliation process gives more visibility to the cash balances.
Automated Solution
Virtual accounts enable a smarter and leaner accounting function which allows more time for strategic initiatives planning. By streamlining and automating the accounts payable processes, companies can manage cash flow and improve security. These automation platforms also reduce fraud and help organizations pay suppliers faster.
Seamless Integration
The digital transformation of banking solutions enables the integration of virtual accounts with other cash handling software. This seamless integration provides visibility and control of data through centralized access. With this flexibility, companies can provide better funds availability across accounts without the need for complex sweeps. Effective cash forecasting can optimize account balances across subsidiaries.
The Impact Of Virtual Accounts On Businesses
Companies can define their virtual account structures synchronous with their business needs. Though the physical account control will be with the bank, businesses will have more flexibility with their virtual account management. This flexibility allows businesses to optimize their working capital management.
Read More : Getting Your Work Done By Virtual Bookkeeping Services
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