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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Virtual accounts

What are virtual accounts, and how do they help a business match incoming payments?

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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Virtual accounts are account numbers a bank issues on top of a single real account, so a business can give each customer, project or subsidiary its own number while all the money lands in one place. Each payment arrives already identified by the number it was sent to, which makes reconciling receipts close to automatic and shows quickly who has not paid. A receivables lender sees the benefit in cleaner collections data, while the bank providing the numbers has to know who stands behind each one, because a virtual account used by a third party can obscure whose money is moving.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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RECEIVABLES AND TRADE

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