Bank Communication Management with Integration Package for SWIFT
The Bank Communication Management application works with its SAP Integration Package for SWIFT to send and receive electronic payment messages to and from banks. Communication flows over SWIFTNet, the highly secure and reliable network that has long been a workhorse in electronic financial communication. The figure below illustrates the flow of messages between the ERP system of the corporate customer on one side and the bank on the other side.
A Credit Transfer Initiation message initiates the transfer of funds from the corporate customer’s designated bank account to the ultimate beneficiary. In essence, the customer pushes funds to the party that is being paid. Payments can be batched or sent singly.
A Debit Transfer Initiation message is used by an authorized beneficiary to transfer funds directly from the bank account of the party that owes the beneficiary money. In essence, the beneficiary pulls the funds from the payer.
A Payment Status Report message provides updates as to the status of a credit or debit transfer. Different values of status codes in the message change the status of a credit or debit transfer to “received by SWIFTNet,” “received by bank,” “accepted by bank,” “rejected by bank,” and so on. The status messages and Bank Communication Management’s integrated status monitor form a basis for straight through processing of electronic payments.
A Bank to Customer Statement message provides the corporate ERP customer with information about bank accounts for cash management and reconciliation. The information includes entries booked to the account, as well as account balances at a specific point in time. One message can contain information about multiple accounts. (Note: The implementation of this message is still in testing by customers and banks.)
The Bank Communication Management application also supports SWIFT FIN messages via SWIFTNet. FIN is a well-established predecessor to ISO 20022, and includes initiation, status, and report/statement messages. Here too, the application’s status monitor is seamlessly integrated with the message support. Although ISO 20022 messages play a major role in the European Payments Council’s Single European Payment Area (SEPA) ongoing initiative to harmonize electronic payment systems, the FIN messages are still in wide use.
Optimizing Working Capital
Bank Communication Management’s support for straight-through processing via electronic bank connectivity works hand-in-glove with In-House Cash, another application in the Treasury Applications from SAP family, enabling centralized control over company payments.
The Cash and Liquidity Management application, another part of Treasury Applications from SAP, completes the picture by enabling treasury managers to manage and optimize liquidity.
Sources of More Information
For a broad overview of SAP’s solutions for optimizing working capital, see Cash is the Lifeblood of Your Business, which is on the public Web.
For more information on the Bank Communication Management application, see the Bank Communication Management Wiki page on SDN. The bottom of the Wiki page has links to additional sources of information.