Virtual Account Management (VAM) has evolved from a “nice-to-have” experiment into a core treasury capability. Traditional banking structures often fail to provide the real-time visibility and streamlined processes modern finance operations require. VAM solves this by reducing errors, eliminating manual work, and giving teams instant access to accurate financial data.
When implemented strategically, VAM tightens liquidity management, strengthens forecasting, and removes reconciliation bottlenecks. These results don't happen by chance—they come from following VAM best practices.
So, what are the Best Practices for Virtual Account Management today?
Maximizing Cash Visibility and Optimizing Liquidity Management
Ask nearly any CFO what keeps them up at night, and poor cash visibility ranks near the top. Despite investing heavily in financial systems, many organizations still struggle with fragmented data and delayed insights.
Virtual accounts help eliminate this problem by routing transactions through structured, traceable channels, creating a single source of truth.
Real-world impact
A European retailer reduced unidentified cash from 18% to less than 2% after establishing a disciplined VAM structure. Treasury didn’t suddenly gain new staff—they gained clarity.
Treasurers often joke that they previously managed cash “with one hand tied behind their back.” With VAM, every inflow and outflow becomes visible without chasing spreadsheets or making educated guesses.
When liquidity is transparent:
- Idle cash decreases
- Working capital allocation improves
- Risks are reduced during economic volatility
The result: better decisions, faster.
Operational Excellence Through VAM
Every finance leader aims for operational excellence—but many spend their days reacting to issues caused by poor data quality or inconsistent processes. VAM helps reverse that pattern.
A CFO from a mid-sized manufacturing firm once shared that their team spent six hours daily manually reconciling transactions before VAM. Within three months of implementation, that time dropped by 70%. No new hires. No ERP overhaul. Just a clean, well-structured virtual account setup.
Why VAM drives operational excellence
- Transactions land in the right place automatically
- Reconciliation becomes predictable
- Data becomes clean and audit-ready
- Teams can focus on strategic work, not administrative tasks
Efficiency isn’t simply about speed—it’s about creating the environment for thoughtful, strategic finance.
Driving Operational Efficiency Through Automation and Streamlined Processes
Virtual accounts significantly reduce manual touchpoints, cutting costs and errors while accelerating month-end cycles. Instead of scrambling at period-close, teams receive real-time updates throughout the month.
Automation benefits
- Eliminates repetitive reconciliation tasks
- Ensures accurate mapping of receipts to virtual accounts
- Removes the need for excessive physical bank accounts
- Delivers precise reporting for each business unit or entity
One global retailer reported a 50% reduction in reconciliation volumes thanks to VAM. Their treasury manager joked that for the first time, they weren’t begging employees to work overtime during reporting weeks.
Beyond efficiency, automation reduces reliance on “tribal knowledge”—the undocumented insights held by long-time team members. This shift lowers operational risk and ensures continuity.
Laying the Strategic Foundation for VAM Success
Successful virtual account management does not begin with technology—it begins with strategy.
Before setting up any virtual accounts, organizations must clearly define what they hope to achieve. This includes identifying:
- Which business units or customer groups need segmentation
- Reporting requirements
- Integration needs with ERP, TMS, or banking systems
A common misstep? Creating hundreds of virtual accounts without first evaluating or cleaning existing processes. VAM amplifies order—not chaos.
A strong strategic foundation ensures VAM becomes a powerful liquidity engine, not an overcomplicated experiment.
Building Robust Virtual Account Structures and Governance
Governance is the backbone of any successful VAM initiative. Without it, organizations risk spiraling into unnecessary complications.
Key governance elements
- Clear naming conventions
- Ownership and purpose documentation
- Lifecycle guidelines for opening, modifying, and closing accounts
- Permission controls and access rules
A global logistics company once faced customer frustration and misapplied payments due to duplicate virtual accounts created without oversight. Technology can’t compensate for poor governance—strong processes must guide the system.
When governance is tight, teams gain:
- Confidence in data
- Predictable reporting
- Scalable structures as the business grows
Advanced VAM Applications for Complex Scenarios
Virtual accounts deliver the greatest benefits in high-volume, multi-entity, or highly segmented environments.
Examples of advanced use cases
- Marketplaces: Each seller receives a dedicated virtual account for instant payment identification.
- Real estate portfolios: VAM helps segregate tenant payments across dozens of properties.
- Healthcare networks: Simplifies patient payment reconciliation across locations.
- Shared service centers: A central treasury can process collections and payments for multiple subsidiaries while keeping records clean.
These examples demonstrate a simple truth: VAM enables financial structures that were previously inefficient or impossible.
Implementation, Change Management, and the Future of VAM
Implementing VAM is not just a technical upgrade—it’s a cultural transformation.
Teams may initially resist new processes, especially if they believe automation reduces control. But once they experience clearer data and reduced workload, enthusiasm quickly replaces hesitation.
Keys to successful change management
- Transparent communication
- Training tailored to user groups
- Early wins that showcase VAM’s value
The future of VAM
Over the next decade, virtual accounts will integrate even more deeply with:
- Real-time payments
- API banking
- AI-driven cash forecasting
VAM will evolve into a core engine powering holistic cash and liquidity management.
Conclusion
Virtual Account Management is far more than a fintech trend—it’s a strategic shift fundamentally reshaping treasury and finance. Organizations that adopt VAM best practices position themselves for greater agility, visibility, and control.
When teams ask, “What are the Best Practices for Virtual Account Management?” the answer lies in:
- Clear strategy
- Strong governance
- Smart automation
- Purpose-driven account structures
