Virtual accounts: the missing piece of the treasurer's jigsaw?

Read time: 6 mins        Added date: 26/02/2024

Expectations of corporate treasurers have never been higher. The standards set by frictionless, real-time transactions in the consumer sphere are bleeding across to the corporate world and the priorities surrounding cash, capital and liquidity management placed upon the shoulders of treasurers are, as a result, becoming increasingly demanding.

The key to building a future-proof solution lies in the optimisation and efficiency of cash operations. Indeed, the 2023 PwC Global Treasury Survey (PDF, 2MB) highlighted the prioritisation of cash efficiency and the implementation of digital enablement as two of six areas where treasury functions can create value across the enterprise. This optimisation can be achieved through the strategic use of digital tools that unlock efficiency and ease – and at the top of the pile are Externally Addressable Virtual Accounts (EAVAs), alternatively known as Virtual International Bank Account Numbers (VIBANs).

Taking a fresh look at virtual accounts

For businesses that manage large volumes of receivables, collections and payments across a high number of accounts, EAVAs could represent a golden opportunity to simplify, automate and improve operational efficiency. Traditionally, businesses would use a centralised bank account, which would not only necessitate the cumbersome process of lengthy KYC checks, it would also encompass a manual reconciliation process, requiring treasurers to match payments with client invoices on a one-by-one basis. This often represented a bottleneck in terms of treasury operations, since the process could take hours, or even days, and therefore limit the regularity of reconciliation. 

While virtual accounts as a concept have been around for some time, they have recently stepped into the spotlight with the development of EAVAs. Externally Addressable Virtual Accounts are a versatile digital solution which can support treasurers in their quest to optimise processes such as reconciliation and liquidity management. EAVAs are ledgers that carry their own IBAN, sort code and account number, making them externally addressable and representing a game-changing departure from previous iterations of virtual accounts. 

As a result, they behave like real accounts but are still linked to the main business account. They can be easily opened or closed as needed by the business, and can be allocated on a client-by-client basis. This means that when a payment is made, it can be quickly and easily identified without the need for any labour-intensive processes. 

EAVAs may be supported by our Confirmation of Payee solution, which checks payment details against the information on the account to reduce the risk of certain kinds of fraud and misdirected payments.


“Externally Addressable Virtual Accounts could represent a golden opportunity to simplify, automate and improve operational efficiency.”

Tim Pyecroft, Head of Corporate Sales, Cash Management & Payment Solutions, Lloyds Bank Corporate & Institutional Banking

A multi-faceted solution

Ease of reconciliation is just the tip of the iceberg when it comes to benefits of EAVAs for treasurers, however. Not only can the solution be used in conjunction with a wide range of other products to provide remedies to a number of treasury headaches, it can also improve the experience for clients.

Constructing walls

EAVAs can be used to separate and segregate different areas of the business, such as accounts payable, accounts receivable, and any relevant subsidiaries. This can be beneficial to align the accounts to their internal treasury policies, or improve processes and visibility on working capital requirements.

Optimising liquidity

The benefits of EAVAs are not just external and their ability to segregate funds means that they can also play a role in strengthening the functions of an in-house bank. They can be used to optimise liquidity – including credit and debit interest – and reduce credit requirements, as well as optimising capital requirement and the cost impact associated with traditional pooling and sweeping solutions. In short, they can be implemented internally to further reduce the burden on the treasury function.

This internal implementation can also enable the centralisation of treasuries and allow treasurers to streamline their resources. As a result, treasurers can use Payments On Behalf Of (POBO) and Receipts On Behalf Of (ROBO) functionality without losing track of key payment information to support reconciliation.

A future-first solution

For regulated businesses such as payment service providers (PSPs) EAVAs can support the use of e-wallets. Not only does this allow for the segregation of funds, it also makes it easier to reconcile payments across their customers.

Towards payment orchestration

EAVAs can help to facilitate the automation of payment processes as part of the drive towards payment orchestration. Combined with the use of different solutions within our Embedded Payments suite, which can automate account-to-account Faster Payments using Application Programming Interface (API) technology, EAVAs can allow businesses to enhance their customer proposition by maximising speed and efficiency within the customer journey.


“Our Externally Addressable Virtual Account solutions play a key role in Lloyds Bank’s objective of making the role of the corporate treasurer faster, easier and less cumbersome. Working alongside other solutions, they have been specifically designed to enhance and streamline treasury operations.“

Dac Nguyen, Head of Corporate Commercialisation, Cash Management & Payments Solutions, Lloyds Bank Corporate & Institutional Banking

Part of the bigger picture

Expectations of treasury functions may be high in the current climate, but boosting optimisation and efficiency is the key to both delivering on them and solving the problems faced by treasurers. The European Association of Corporate Treasurers (EACT) Treasury Survey 2023 (PDF, 1.8KB) found that working capital optimisation is the second most important priority over the next 12 to 14 months, highlighting the value of solutions that can assist with this challenge.

In this context, therefore, Externally Addressable Virtual Accounts are one of the indispensable tools in the treasurer’s arsenal and can help complete the toolkit alongside other solutions. By automating previously cumbersome tasks using straight-through processing, they represent an optimised and improved experience for treasury staff and customers alike. The versatility of EAVAs means that the list of use cases is nearly endless and Lloyds Bank can help you discover how and where they will add value to your organisation.

For more information on how EAVAs could support your business strategy, contact your Relationship Manager today.


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