Enterprise Resource Planning (ERP) is an information system integrates accounting, financial, production, sales, and human-resources, and other management information of the whole organization. ERP system can be customized to the requirements of individual companies. In recent years, the fusion between ERP and on-line banking system has been blooming fast. Major bank groups like Bank of America Merrill Lynch and HSBC are promoting related services to clients.
In this report, a general introduction on ERP banking technology with examples is provided.
2. Integrated Treasury Management Banking with ERP
Established with ERP, Treasury Management System focuses on cash management in company. Banks serve corporate clients in terms of accounts payable, accounts receivable, and liquidity management. With integrated treasury platforms of banks, corporate clients can maximize benefits from accurate massive payments and collections management.
2.1 Payments Management
Traditional paper payment processing, e.g. invoices and checks, are inefficient and costly. Bank of America Merrill Lynch applied e-Payment system based on ERP, named the “Paymode-X”, integrates online accounts payable and payee management system. Accounts payable systems are directly linked to the bank. Payment data is exchanged between companies and the bank in a single file, facilitating auto-reconciliation of accounts payable aging in ERP systems.
Companies can set up different payment approval levels into Paymode-X system based on their structures. During the approval process, general ledger information and purchase order data are shown for management to review invoice payment. Moreover, Paymode-X allows invoices be split across cost centers.
2.2 Receipts Management
Files can be uploaded from ERP system into Receivables Management System of banks. During cash receipt transactions, data of these files are matched with references such as payer ID, invoice number, and payment amount. In case of insufficient reference data, manual reconciliation is still available to update bank records. Banks can update accounts receivable aging in ERP by synchronizing data, and the integration process can be standardized. Then the companies obtain updated information of accounts receivable of the whole group, including subsidiaries.
An example of ERP based receipt management is: when students pay tuition fees with reference numbers to bank accounts of universities, these payment data will be transmitted directly to internal accounting systems of universities. Student payment records in the university database will be updated automatically then.
3. In-House Cash (IHC) Banking ERP
Developed by SAP®, In-House Cash banking ERP facilitates intercompany cash transfers, loan payments, investment management, and other services.
In traditional centralized treasury system, transitions are inefficient and costly within a company group, and between vendors, customers, banks. On...