HSBC has announced the launch of Next Generation Virtual Accounts, which aim to help wholesale clients increase their cash management efficiency by consolidating bank accounts and centralising transactions.

The bank describes NGVAs as an innovative multi-currency solution, available in more than 20 currencies, which build on the reconciliation benefits of traditional virtual accounts by enabling treasurers to centralise payments and receivables across multiple and single entity structures.

The product has already gone live in the UK, the US, Hong Kong and Singapore and will be rolled out to Ireland, the Netherlands and the United Arab Emirates (UAE) later this year.

Benefits of NGVAs

HSBC says that NGVAs enable clients to consolidate hundreds of bank accounts into a handful, or as few as one account for each currency that they use. Transactions flow through the underlying physical accounts, with the virtual accounts acting as ledger records. This saves treasury teams the operational cost of managing cash across multiple accounts and reduces the need for complex cash sweeps and pools.

The solution provides even greater efficiency and flexibility as clients can simply go online to manage their own virtual account structures, tailored to their business needs. For example, smaller companies operating as a single entity may wish to assign virtual accounts by product line. Larger firms running an in-house bank (IHB) may want to group virtual accounts by entity.

“Next Generation Virtual Accounts are a powerful tool for treasurers who want to simplify their cash management,” said Thomas Halpin, global head of payment product, global liquidity and cash management, HSBC. “Our solution allows treasurers to create an account structure that works for them. It is innovative, intuitive and it has been well-received by clients around the world.”

Suraj Kalati, global head of liquidity and investments, global liquidity and cash management, HSBC added: “Virtual accounts are a natural intercompany solution that enables everyone to focus on what they do best. Entities can focus on buying and selling, without having to manage physical bank accounts, while the corporate treasury gains greater visibility of the overall cash position and more control over their use of funds.”

In addition to the self-management of virtual accounts, clients can receive near-real-time reporting on transactions, through HSBCnet. HSBC NGVAs also integrates with treasury management systems or enterprise risk systems using industry standard electronic formats.

HSBC’s virtual account management platform offers additional benefits for businesses that use HSBC Client Money Manager (in the UK), which will enable a better user experience for businesses such as law firms or property developers, which need to hold client funds in designated accounts.

The bank recently announced that it will scrap the minimum balance fee that applies to three million customers in Hong Kong in a move likely to be followed by competitors as they brace for fierce competition from virtual banks that will come online later this year.