TMS’s growing role in payment factory solutions and services
by Kylene Casanova
Payment factory processes and operation are now covered by many of the existing treasury management system (TMS). At the EuroFinance Conference in Vienna last week Kyriba’s Bob Stark showed how they cover the three types of payments in their centralised solution.
Kyriba payment factory
Source & Copyright©2016 - Kyriba Corp.
Kyriba take payment files from the ERP - which can be fully or partially approved – and can also incorporate additional workflows for approvals if required, and then format the files to meet bank requirements. They offer two payment routing options:
- Blind routing
- Payment files are pre-approved and pre-formatted to bank requirements
- TMS simply transmits payment files to the bank directly
- Dynamic routing: Payments imported into TMS for format transformation, additional approvals and/or application of digital signature.
Centralised processing and IHBs
All TMS solutions provide some sort of in-house bank. Kyriba, for example, provides an IHB covering four types of payment:
- International wire
- Locally routed
- Non-cash intercompany
- Non-bank payment (outsourced, peer-to-peer, etc.)
Also, the centralised processing enables Kyriba payment factory to offer a POBO option if required.
CTMfile take: The growing scope and functionality of today’s TMS now open the door for the corporate treasury department to become the central hub of all company payment flows internally and externally through their TMS. But this is not as easy as it sounds, even within groups with relatively small payment volumes. The battle between the dedicated payment factory solutions and the TMS is gathering pace.
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This is an interesting topic that will have to be answered by “All depends on what you expect from the Payment Factory.” Companies/treasurers contemplating the implementation of a PF solution should start by clearly defining what they try to achieve and believe a payment factory actually is.
Without such understanding it will be impossible to understand what system or TMS best fits the requirements.
PF solutions range from being a bank connectivity hub or low end “file switch” with no workflow support up to highly sophisticated payment processing solution including payment approval, ALM features and payment repair options and status monitoring.
Companies and treasurers also would need to be aware that the nature of traditional TMS functionality is typically “high complexity, low volume” whereas in many cases Payment Factories adds a high volume dimension to the application. If this in not properly incorporated in the design of the application and reporting of the selected product, one should plan for unpleasant surprises during operations…