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Payment Factories and Cash Visibility-Part 2

In my last blog, I examined how a Payment Factory can help improve global cash visibility across an organisation. Now I would like to examine that in a little more detail.

I discussed how banks connected to SWIFT will send out MT940 messages (end-of-day account statements), which can be forwarded on to the different back office systems.  That leads to the question, is it enough to simply join SWIFT?

Joining SWIFT does a couple of things – first, it gives the corporate a single channel to connect to the banks, providing one mechanism regardless of the bank that you want to send payments to or receive information from.  Second, once you move away from those bank-specific solutions, you’ve got banks that are pretty much all sending MT940 messages.  So rather than sending their own format for statements, which could be for example a FINSTA format, or a domestic format, they will typically all send MT940s over the SWIFT network.  This gives a consistent format (albeit with bank variants) coming into the Corporate for processing.   SWIFT’s message to Corporates used to be that once you’re connected to SWIFT, that’s all you need to attain global cash visibility. But the reality is that once the statement is in the door, you need a solution in place to be able to interpret that information, validate it and then forward it on to the right systems for further processing. Unless you’ve got something sitting in between the SWIFT connection and your back office, you’re not able to do that. That’s why we think that the payment factory is the perfect place to do that work.

We hear ISO20022 mentioned a lot in the payments space but there are some ISO20022 cash management messages too.  These messages have the potential to provide Corporates with more information about the transactions on their accounts but crucially, more structured information.  I believe that in the next few years, we’ll see a greater move towards widespread adoption of those XML messages.  And it will be the structured information in those XML messages that starts to open possibilities for easier and more reliable matching of account entries with outgoing payment instructions.  This information will provide another step forward in improving the reconciliation process in the Corporate’s back office.

Have you implemented a Payment Factory solution? I’d like to hear from you.


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