Introducing Virtual Reference Numbers

What are VRNs?

Automated payment matching and reconciliation VRNs are dynamic account aliases that point to a single bank account or settlement account. Businesses can assign a unique VRN to a specific client, user, vendor, counterparty or transaction, so that when an incoming credit or debit hits their account, they know exactly who sent funds and why. With a nearly limitless number of VRNs available, business can choose exactly how they want to issue VRNs.

In addition, VRNs have the benefit of being completely self-service. This means businesses can create, lock, shut down or modify VRNs without the administrative burden that often comes with requesting changes to a traditional bank account.

Why VRNs matter

We’ve heard from our clients that they’re handling an increasing volume of incoming payments, which they only expect to grow as they scale their business. For most businesses, managing thousands of daily transactions is often time consuming and error prone as inbound payments can be difficult to match to specific senders due to a lack of payment details. This can lead to misapplied payments, costly mistakes resulting from manual processes and a lack of cash flow visibility.

Adding to this complexity is the growing risk of fraud. Sharing static account numbers exposes businesses to vulnerabilities that can compromise sensitive financial data.

Here’s how it works:

Newline’s VRN solution provides a smarter way to manage incoming payments.

• Instead of requesting payment by sharing actual account details, businesses can create unique VRNs for specific counterparties or one-time purchases.
• When payments are sent to the VRN, they settle in a designated bank account.
• The payments are tagged with the VRN used in the payment, enabling businesses to automate transaction matching.
• If irregular account activity is detected, businesses can simply shut down the VRN associated with the activity instead of closing the entire account.

Benefits of VRNs

For businesses that receive a large volume of income payments, VRNs confer the following meaningful benefits:

Automated payment matching and reconciliation

When a payment arrives, the VRN associated with the transaction enables businesses to automatically match the payment to the correct counterparty. Pairing VRNs with a ledger enables companies to automatically match incoming payments with the correct invoice or client record, eliminating the need for manual reconciliation.

Enhanced security and control

VRNs enable businesses to accept payments without sharing their primary bank account details. Instead of sharing sensitive account details when requesting payments, businesses can spin up and share new VRNs. Because VRNs make it easy to track and match payments to a specific counterparty, they also make it simpler to detect unusual activity. Once unusual activity is detected, businesses may choose to simply shut down the associated VRN, thus isolating the impact of the activity.

Real-time cash flow management

VRNs enable businesses to automatically match incoming payments to the correct records as soon as they’re received, enabling companies to view their cash flow and cash position in real-time. Additionally, with real-time updates, businesses can generate up-to-the-minute reports on payment activity, identify trends and monitor overdue receivables.

Self-service payment flows

Businesses can create, deactivate and manage VRNs without involving their bank. This enables businesses to spin up or shut down VRNs for new projects, clients, payment types—or however they want to handle their payments, giving them the ability to adjust how they handle incoming payments at the speed of their business, not the speed of their bank.

“Managing inbound payments can create significant bottlenecks, especially for businesses with complex invoicing needs. We built VRNs to help businesses automate the most manual and errorprone elements of the receivables process so they can more efficiently process payments and gain a clearer view of their cash position.”

Jonathan Daberkow, Product Management Lead, Newline by Fifth Third

Who benefits from VRNs?

Newline’s VRNs are suited to any business managing high transaction volumes, including:

• Accounts receivable & accounting software can integrate VRNs to automate matching of payments to invoices, reduce reconciliation errors and streamline workflows for their users.
• Payments companies can use VRNs to automatically track the incoming flow of funds thereby reducing disputes.
• Insurance companies can automatically match incoming premium payments to client records, ensuring accurate policy updates.
• Subscription services can use VRNs to track recurring payments by subscriber, reducing churn caused by billing errors and improving cash flow visibility.
• B2B organizations with complex invoicing and receivables workflows can assign VRNs to clients or invoices, simplifying payment tracking and automating account reconciliation.

What to expect next

At Newline, we’re focused on helping our clients launch embedded payments and financial services tailored to their businesses. With the launch of Virtual Reference Numbers, we’ve addressed one of the biggest challenges in payment operations: reconciling incoming payments quickly and accurately. Looking ahead, one of the key products on our roadmap is virtual sub-accounts, which will allow businesses to segregate funds within the physical parent account. This will enable businesses to easily allocate funds for specific clients, departments or projects without the administrative burden of opening and managing separate accounts.

Newline’s virtual sub-account product will come with an integrated ledger that can be linked to an organization’s general ledger. Paired together, VRNs and virtual sub-accounts can be used to build integrated accounting or straight through reconciliation functionality.

Ready to transform your payment operations?

Virtual Reference Numbers provide a solution to help businesses reconcile payments quickly and accurately so they can focus on growth.

If your business handles a large volume of incoming payments and wants to improve efficiency by automating transaction matching, you can learn more about VRNs by reaching out to your Fifth Third representative or by contacting Newline by Fifth Third directly.