J.P. Morgan’s Mali Bartlett explains how virtual netting is dismantling the inefficiencies of legacy intercompany settlement, offering multinational treasurers a "cashless" path to real-time liquidity and centralized FX control.
The “plumbing” of global finance is currently undergoing a silent but radical overhaul. For decades, multinational corporations have accepted a status quo defined by friction, a landscape where fragmented accounting systems, multi-day settlement delays, and opaque fee structures are simply considered the cost of doing business. However, as the macroeconomic environment grows more volatile, the treasury function is being pressured to evolve from a back-office utility into a real-time engine of strategic value.
At the heart of this transformation is a move away from physical cash movement and toward “virtualized” management. To understand the mechanics and the strategic implications of this shift, we sat down with Mali Bartlett, Managing Director for Liquidity & Account Solutions at J.P. Morgan Payments. With a career spanning over 25 years at institutions including Citi and HSBC, Bartlett now oversees global liquidity strategy and balance sheet optimization for some of the world’s most complex organizations.
Efficiency in global treasury is often hamstrung not by a lack of vision, but by a lack of integration. Bartlett points out that most treasury teams are currently struggling with three interconnected bottlenecks: fragmented systems, time delays, and hidden FX costs.
The scale of this problem is often underestimated. Bartlett notes that in some organizations, up to 30% of total transactional activity occurs between company subsidiaries. These entities frequently operate on different, non-integrated accounting platforms. Centralizing clearing and settlement under such a fragmented reality requires immense expenditure in both technology and treasury operations. Furthermore, without an automated netting system, paying intercompany invoices in various currencies triggers a cascade of hidden FX fees that erode corporate margins and inflate production costs.
While traditional netting has long been the standard for reducing transaction volumes, it has significant, underappreciated limitations. Traditional methods rely on grouping invoices together before settling them in cycles. This inherent delay in the payment cycle reinforces foreign exchange (FX) gains and losses, forcing treasurers to manage volatility that is largely self-inflicted by legacy processes.
Virtual netting fundamentally re-engineers this liquidity profile by operating on an invoice-by-invoice basis rather than grouping them into batches. By utilizing virtual accounts provided by an in-house bank (IHB), group companies can settle intercompany obligations one by one, in the currency of the invoice, without ever touching the external banking system.
“This eliminates the need for a netting cycle, keeps reconciliations clean, and removes realized FX gains and losses on intercompany trades,” Bartlett explains. By leveraging standard enterprise resource planning (ERP) payment-run operations within a virtual structure, treasurers achieve a significantly stronger and more transparent liquidity position.
The practical application of this “cashless” model is best seen in the airline industry, a sector defined by high transaction volumes and razor-thin margins. Wizz Air recently moved away from a legacy approach that relied on frequent FX swaps and physical cash movements through bank clearing.
By implementing multi-currency notional pooling alongside virtual netting, the carrier shifted to a centralized operating model. Intercompany funding and intragroup trade settlements are now managed via the in-house bank and settled through intercompany ledgers. This shift re-centers FX and market risk management at the Group level. Instead of tactical, entity-by-entity execution, the treasury team now has a unified, “birds-eye” view of risk, allowing for more strategic decision-making.
One of the most transformative aspects of virtual accounts is the elimination of the “batch” mentality. Traditionally, intercompany invoices are aggregated and settled at the end of the month, leading to a massive reconciliation burden as teams try to match single payments to thousands of individual invoices.
Virtual accounts provide each entity with a sub-ledger for every currency they use. This allows for one-to-one reconciliation in real time. For a multinational generating hundreds of thousands of intercompany invoices annually, the ability to eliminate cross-border payments for all participating entities through virtual accounts is transformative both operationally and financially. It replaces the month-end “headache” with a continuous, automated flow of data and value.
As treasury leaders look at their three-year digital transformation roadmaps, Bartlett argues that “intelligent” cash management should be a top-tier priority. The risk of delaying this transition is not just operational inefficiency, but financial distortion.
“Operating under a legacy settlement model leads to realized FX gains and losses that can distort earnings,” Bartlett warns. This volatility makes it harder for investors and analysts to assess an organization’s true performance. Conversely, organizations that have already made the transition are building a measurable competitive advantage through lower hedging costs, simplified forecasting, and reduced bank fees.
A persistent concern for treasurers is the tension between global standardization and local regulation. Managing cash across diverse jurisdictions requires a framework that can accommodate local currency requirements and tax laws without sacrificing central control.
J.P. Morgan’s virtual account solution addresses this by providing a group-level framework that operates at the entity level. Each participating entity maintains virtual accounts relevant to their specific jurisdiction. Because settlement happens within an internal IHB, the organization achieves global standardization while ensuring that entities don’t need to step outside local regulations to transact. This provides a consistent global treasury strategy while maintaining smooth, compliant daily operations at the local level.
Ultimately, the shift to virtualized cross-border management is about more than just technology; it is about reclaiming control over liquidity. In an era where data is the new currency, the ability to move value as fast as information is the ultimate treasury goal.