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Cash Flow Management Best Practice

Payment Factories: How to Streamline Financial Flows

by Chris Skinner

Table of contents

Executive Summary

  • The world’s largest businesses and their banks have been bringing their major global payments structures together into a rationalized, single platform known as a “payment factory.”

  • This platform is not a single system, but a single payments application that runs across multiple centers around the world.

  • These payment factories replace the previously disparate, fragmented, and nonintegrated payments applications that businesses ran historically, whereby every country had its own system and operation.

  • The aim is to gain the efficiencies and cost savings that such global integration can deliver through economies of scale, alongside fault-tolerant, mission-critical operations because each technical center now provides a real-time backup to the others.

  • The single payments platform also allows all payment transactions and currencies put through it to be managed globally in real time, which helps greatly with managing a firm’s cash position, liquidity, and risk.


During the past few years, banks and their clients have been consolidating their payments infrastructures into single, global platforms. Payment consolidation helps to overcome the issues of fragmentation between systems that have been set up over the years. For large international banks and businesses in particular, having duplicate systems in different geographies just does not make sense. As a result, international banks and companies have been transforming their back-office operations with streamlined services based on refreshed processes and the latest technologies.

The Challenge

When you consider any large bank or global corporation, you think of multiple operations in multiple countries. Now think of a business and how it began, and you will probably think of one office in one town. There lies the challenge for any business: How can it grow operations effectively?

Growth may require new offices in new locations with new staff, and throughout the 20th century it often meant implementing more robust systems to handle payroll, general ledgers, and general office support. The problem is that, as the business expands, managers are forced to implement hundreds of systems to handle payments. The systems are often incompatible because they have been implemented at different times, to handle different currencies, and in different countries with differing tax regimes over a long period of time.

In the payments world, there are also many payment instruments and processes, covering cash, checks, and electronic payments, as well as accounts payable and receivable, with all of these differing domestically and internationally. This is why historically the payments world has been such a mess for multinational businesses—a mess of payments practices, processes, and systems, across the world.

The Solution

Over the past decade, many firms have decided to rationalize their payment infrastructures and to consolidate all of their payment applications, systems, and services into a single, global platform. This has been prompted by a range of factors, including the increasing costs and risks of regulatory exposures created by Sarbanes–Oxley.

A single, global platform does not mean a single computer, as that would create too much risk exposure should such a system fail. It means bringing together all the payments for a function or instrument, such as all cash management, into a single application. This application will often operate on three or more physical computer sites globally, with each site copying the others to replicate all data and applications. The result is that one has a single view of the data on a single application, working in real time, with fault tolerance and backup across systems in case any of the physical operations fail.

Banks and financial departments call this a payments factory. The phrase is a loose term that covers the rationalization and consolidation of a payment service into these global hubs. The aim is to have a single track of payments for invoices, purchase orders, payroll, cash management, and more, that can be easily managed, tracked, and changed regardless of where these are happening.

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Further reading


  • Skinner, Chris. The Future of Finance after SEPA. Chichester, UK: Wiley, 2008.


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