I have discussed how Payment Factories can help improve efficiency by centralising payments. I’d like to examine in more detail how a Payment Factory can improve cash visibility across an organisation.

When people hear the term “Payment Factory,” their immediate assumption is that this surely must be just about payments. And they’re mostly right, a Payment Factory’s job is to improve the efficiency of what we call the payments initiation process, meaning the process through which payments go from the point where they’ve been output from a back office system to being ready to send to the bank.  There are many things that can happen to those payments in between and the payment factory is there to help optimise that process.

So what have payment factories got to do with improving cash visibility? A payment factory is essentially a central hub that’s used more and more to connect an entire corporate’s back office – all the different ERP systems, the treasury management system, etc., that are initiating payments to their bank connectivity channels.  What we see as a result is that once they have this in place, with connectivity to the banks and connectivity to their back office, it makes sense to leverage this for other instruments. So just as much as you want to send payments out in a single way to your banks, there’s a lot of value in bringing in your account statements from all of your banks through this same channel.  That means using a payment factory to distribute those account statements to the different systems within your organisation that need them, in the formats they need them.

It again comes back to the idea that, before payment factories, companies will have been using different bank solutions that don’t have much or any integration into the back office.  So the idea of being able to concentrate account statements in one place and then distribute them as needed in your organisation wasn’t really possible.  Having a payment factory in place makes that possible because the investment on both the integration side and potentially on the bank connectivity side has already been done.  Most banks around the world connected to SWIFT will send out Account Statements that can be read and validated by a payment factory, and potentially enriched with other information before being forwarded on to the TMS and other back office systems. That allows a corporate to get much better visibility of balances and transactions across all of their accounts. In my next blog, I’ll examine why SWIFT Connectivity alone isn’t enough to provide improved cash visibility.

Have you implemented a Payment Factory? I’d like to hear about your experience.