Payment & Collection Factories
A payment & collection factory centralises making and/or collecting payments on behalf of a company or group replacing the numerous departments and divisions throughout the company. Over the last decade many large companies, and increasingly medium-sized companies, have set up payment factories. By January 2010, there were well over 2,000 payment factories world-wide supported by the leading cash management banks.
Payment Factories Supported by the Leading Banks
The first stage in the development of most payment factories was just to make payments. This enabled companies to cut costs, particularly when combined with e-invoicing, increase control over outgoing payments and optimise cashflows. The next stage, once centralised payment processing was fully established, was to carryout collections. This is much more difficult but also produces considerable cost savings and improved control.
Cashflow Management Centres
The leading payment factories are in the third stage of their development. The payment factory processes are being integrated with the netting systems and the in-house bank. And all bank connectivity is via SWIFT to improve STP rates for payment delivery (and collection), and to make it easier to change banks.
The Third Stage Payment Factory - the Cashflow Management Centre
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These advanced payment factories have become, in essence, the company's or group's cash flow management centres.
BenefitsPayment factories can cut a company's or group's costs in many ways. They ensure that all payments are made locally rather than cross-border, reduce the number of bank interfaces required, and save time and effort in the subsidiaries and operating units. They also cut FX fees and exposures by the concentration of FX purchasing. The concentration of payments and collections enables a company or group to fully standardize and harmonize processes and systems, to improve security and fraud control, and compliance with processing regulations such as Sarbanes Oxley. Another important benefit is the improved visibility of funding requirements and liquidity.
Available Advice, Systems and Services
Several consultancies provide specialist advice on how to set up and operate payment factories.
A range of payment factory solutions are on hand, some of which also provide liquidity management and in-house bank functionality. These are delivered as stand-alone systems or hosted solutions, as modules in general treasury systems, as web-based services and as outsourced services.
Some banks provide dedicated payment factory support.