Volante Technologies, the financial data integration company, today published its corporate treasury best practices on white paper on ‘How to build an in-house corporate bank’.

They have found that the nature of the processes in the core functions - payments, trade/supply chain finance, and investments, benefit from being brought together in an in-house banking hub.

Inhouse Banking Hub

Source & Copyright©2013 -  Volante Technologies Inc

Volante argues that from a business standpoint, the do-it-yourself approach to building an in-house corporate bank is on the right track. It is a smart strategy for a corporate treasury to manage financial transactions directly on behalf of its constituent businesses. It also makes operational sense to keep the business logic for financial messaging separate from business applications and banking relationships. By using an external source to manage its message formats, a corporate in-house bank can focus on its competencies and take advantage of the resulting benefits across its core treasury functions.

Don’t set up IHB on the TMS by default
Volante believes that many companies establish in-house banks by default, within their treasury systems adding new treasury capabilities slowly over time. Initially, these modified systems are likely to be highly effective. However, as business processes start to change, these corporate treasuries lack the necessary flexibility required to adapt their systems to the new information flow. This is especially true when these organizations grow beyond national borders and have tax and compliance issues of international consequence. In addition to managing increased financial complexity, corporate treasuries must also address the integration of inconsistent and rapidly changing messaging standards. 

Instead, they recommend setting up an Inhouse Banking Hub connecting to the ERP systems, the TMS, payment systems, and accounting systems:

Source & Copyright©2013 -  Volante Technologies Inc

Balaji Kumar Alamanda, CPA, CTP, and co-author of SOX Compliance with SAP Treasury and Risk Management, commented, “Through relevant examples, the white paper highlights the best practices required to set up an in-house bank to help firms gain potential cost savings, efficiency gains, and higher straight-through processing rates. It is highly relevant for companies with global subsidiaries, which are trying to improve their liquidity management capabilities, as their cash tends to be concentrated into a few main accounts. With an in-house bank, the corporate treasury improves visibility into its global cash and also increases investment income.”