What is a "virtual account" that reduces the burden of verifying the name of the transferor? Explanation of the mechanism that makes it easier to automate deposit clearing

"I should have been deposited, but I don't know who the transfer is from" - Are you worried about identifying the name of the transferor in your monthly payment confirmation and clearing work?

Especially in business-to-business (BtoB) transactions, Bank transfer may cause irregularities, such as cases where the name of the buyer and the name of the transferor are different, or cases where there is a transferor with the same surname and name. Manual verification can be time-consuming, and omissions or clearing errors can affect accounts receivable management and collection operations.

The "virtual account" explained in this article is a solution that helps address these issues. By issuing a unique account number for each order or customer, it is easier to determine which transaction is being deposited for without relying solely on the name of the transferee.

In this article, we will explain how virtual accounts help automate deposit and clearance operations, along with the benefits of introducing them. If you are aiming to reduce man-hours in the accounting department and improve the accuracy of cash flow management, please read to the end.

Key points of this article

• We will explain how virtual accounts make it easier to automate the deposit and order reconciliation process that was done manually.
• We will sort out how to deal with issues caused by the name of the transferee, such as transfers from the same surname, corporate name, or different names.
• We will introduce the reasons why it will lead to a reduction in man-hours in the accounting department and a shift to core operations.
  
  

"Inconsistency in the name of the transferor" and its issues that plague accountants

Why does the name of the transferor and the order information not match?

Bank transfer in business-to-business (BtoB) transactions is one of the widely used payment method in Japan. On the other hand, for accountants, it can contribute to the burden of payment confirmation and clearing work. One of the major factors is the "mismatch in the name of the transferor".

Specifically, in the following cases, the buyer's information and the name of the bank transferee may not match, and manual verification may be required.

• Mixing the name of the corporation and the name of the person in charge
  invoice The above name is the corporate name, while the transfer is made in the personal name of the person in charge, or vice versa.
  
  
• Transfers from Group companies and affiliates
  This is a case where a lump sum transfer is made in the name of a group company different from the original orderer.
  
  
• Transferee with the same surname and name
  In sole proprietorships and small business partners, there are multiple transferees with the same surname and name, and it is difficult to identify them based on the amount alone.
  
  
• Incorrect entry of the name of the transferor
  This is a case where the transfer is made by a mistake made by the transferor or in a simplified name due to internal regulations.
  
  

Confirming the name of the transferee one by one is a task that tends to be a big burden for accountants.

The cost and error risk of manual deposit clearing

The manual clearing process, which begins with the identification of the name of the transferee, is not only time-consuming but also presents a challenge that demonstrates the need for standardization and efficiency in operations.

Increased man-hour burden

Clearing operations, especially at the beginning of the month, can easily put pressure on the resources of the accounting department. Companies with a high number of transactions may require a reasonable amount of time to verify the process.

Risk of Human Error

When performing manual reconciliation, missed confirmations or input errors may result in uncleared or double reconciliation.

Implications for cash flow management

If it takes time to confirm a payment, it can affect accounts receivable management and follow-up operations. As a result, it can also affect the accuracy of cash flow management.

These issues are more likely to become apparent as the company grows and the number of business partners and transactions increases. Therefore, it is one of the reasons for considering DX in accounting operations.

What is a "virtual account"? How to make it easier to automate deposit clearing

A virtual account can help reduce the burden of manual and complicated deposit settlement. This is a mechanism that makes it easier to manage deposits by setting a unique account number for each customer or order for a single parent account held by a company.

How to issue a unique account number for each customer and order

One of the great features of virtual accounts is that they can be assigned an account number for each customer and transaction.

Traditionally, Bank transfer requires multiple customers to transfer money to the same account, requiring clues to identify deposits based on the name and amount of the transferor. On the other hand, with a virtual account, you can set a unique account number on the system, such as:

• customer-fixed
  It is a method of assigning a dedicated virtual account number to a single customer.
  
  
• Trading (order) fixed type
  A single order or invoice is assigned a dedicated virtual account number. It is suitable if you want to have more detailed control.
  
  

When the customer transfers money to that dedicated account, it is easier to identify "which transaction is deposited for" in the system.

Why it is easy to reduce the burden of name verification

Virtual accounts reduce the need for accountants to match only the name of the transferee for clues.

• Easy to verify even if the name of the transferor is different.
  For example, even if the billing address is in the name of a corporation, there are cases where the transfer is made in the name of the individual person in charge. If you have a virtual account, it will be easier to determine transaction information based on the account number to which you are transferring.
  
  
• Easy to distinguish even in cases with the same surname and the same name
  Even if there are multiple customers with the same last name and name, assigning different account numbers can improve the accuracy of the matching.
  
  

In this way, it will be easier to reduce the burden on tasks that previously took time to confirm the name of the transferee.

Accounting DX with a virtual account

The introduction of virtual accounts is one of the effective means to promote DX in payment management operations.

By using the account number contained in the deposit data received from the bank as a key and linking it with the sales management system and accounting system, it is easier to automate the reconciliation and clearing process.

As a result, the person in charge will be able to proceed with the work mainly to check the results of automatic processing, which will lead to a reduction in the burden of payment clearing work that was previously done manually. By operating it in conjunction with the review of business flows, it will be easier to improve the efficiency of the entire accounting department.

Three benefits of introducing a virtual account to accelerate accounting DX

The introduction of virtual accounts not only improves operational efficiency, but also leads to the development of the accounting department's system and the improvement of work quality. Here are three main benefits:

1. Reduction of labor costs and man-hours and shift to core operations

One of the major benefits is that it is easier to review the resources you used to spend on clearing deposits.

• Leads to reduced man-hours
  It reduces the burden of monthly clearing work and makes it easier to reduce the working time of the person in charge.
  
  
• Easier to focus on core operations
  It is easier to redirect the reduced man-hours to more value-added tasks such as cash flow management and management analysis.
  
  

2. Faster accounts receivable Recovery and Improved Cash Flow Management

By making it easier to link deposit information with transaction information, it will be easier to grasp the payment status.

• Easy to proceed with follow-up work
  By confirming payments smoothly, it will be easier to proceed with follow-up actions such as product shipment and service provision.
  
  
• Easy to notice non-payment or missed confirmation
  It will be easier to grasp the uncleared items, making it easier to make necessary confirmations and reminder responses.
  
  

As a result, it is expected to lead to improved accuracy in accounts receivable management and improved cash flow management.

3. Reduced Human Error

By incorporating automated processing by the system, you can expect to reduce manual reconciliation errors.

• Limitation of accounting errors
  It is easier to reduce the risk of occurrence such as clearing omission and double clearing.
  
  
• Easy to handle audits and record management
  By organizing the linking between deposits and transaction information, it is easier to check and manage history.
  
  

This is also important for aiming to improve the accuracy of accounting work.

Why choose GMO-PG's virtual account solution?

The virtual account solution provided by GMO Payment Gateway (hereinafter referred to as GMO-PG) helps companies streamline their deposit management operations through system integration.

It supports connection to multiple financial institution and collaboration with other payment method, and aims to design operations according to the business flow of each company. It is one of the easy options to consider for companies that want to centralize payment management across multiple channels or to improve the efficiency of BtoB transactions.

If you are considering reducing the burden of accounting work or shifting to more strategic work, please contact GMO-PG.