In-House Cash Center Manages Payment Processes

  • by Aylin Korkmaz, Manager, Accenture UK
  • May 15, 2004
For many global companies, it makes sense to reduce overhead by consolidating their payment processes. SAP users can accomplish this by using the In-House Cash (IHC) component. The author describes the capabilities and configuration of the IHC.

Many global companies face the challenge of reducing the cost and number of intra-group and external payments. One way to accomplish this is to consolidate their payment processes. SAP provides a means to do so with the In-House Cash (IHC) component. It can also be used for incoming payments from the external business partners of subsidiaries. IHC is one of the functionalities of the Corporate Finance Management (CFM) module. CFM is a part of SAP R/3 Enterprise Financial Extension. (See the sidebar, "SAP Enterprise and CFM In-House Cash," on page 13.) IHC is a new concept and I've found that its configuration is not well documented.

IHC, which is usually implemented at the head office of a company, provides a method to control and monitor the account balances of a group's companies and also shows the incoming and outgoing payments as a forecast. The component calls for two organizational units — the head office and an IHC center, referred to as a bank area. The head office is the headquarters or a parent company code that processes all the payments for the subsidiaries via the head office house bank.

The IHC center manages intra-company payments, payments made by subsidiaries to external partners, and incoming payments from external partners to subsidiaries. It also creates and sends bank statements to subsidiaries, which reduces the float or transfer time and eliminates the value date differences of the payments among subsidiaries. Calculating and debiting interest and charges and granting current account overdrafts are also possible within IHC.

Of course, not all companies can centralize all their payment processes, so different usage configuration methods exist in IHC. For example, it is possible for the house bank of the head office to make intra-company payments and payments to external business partners while keeping the internal payments from external business partners to subsidiaries in the subsidiaries' local banks.

Aylin Korkmaz

Aylin Korkmaz is a manager in Accenture’s Global Energy practice specializing in finance streamlining and management reporting. She has seven years of experience working in global multi-stream projects containing challenging business process designs and change management issues. Aylin has deep process architecture and design skills, and is one of Accenture’s leading practitioners in the area of Financial and Strategic Enterprise Management modules. She has led design and configuration teams within complex SAP solution environments and delivered cutting-edge finance and business intelligence solutions.

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