What the heck is an Integrated Receivable Hub?

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We tend to focus on purchase to pay solutions and early payment acceleration at Trade Financing Matters, but there is much activity around order to cash. I mean not all suppliers sell to large buyers with nice early pay solutions.

One solution gaining in popularity is an integrated receivables hub. A hub is a solution that is designed to aggregate payments and their remittance details received from multiple payment sources, such as lockbox, checks, wire transfers, ACH, and cards. Think of it is a lockbox on steroids. In the U.S., 70% of large corporations still use a lockbox

Banks have been developing Integrated Receivable Hubs to help their customers improve days sales outstanding.

The graph below provides a visual.

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Hubs provide a great way to provide consolidated reporting and account receivables feeds of all incoming payments and a process to manage exceptions.

These types of solutions help companies apply cash quicker, manage exceptions faster and promote effective collections management. By doing so, it leads to better working capital management.

One of the vendors active in this market is Direct Insite. They provide a platform called Paybox and the banks “resell” Paybox to corporate clients and deliver invoices to their treasury clients. Paybox facilitates delivery, dispute, adjustments, payments, and integration back to the biller, every step of the way. Banks are looking for ways to solve receivable problem for corporate customers. Citibank is live with it today.

As part of that electronic payments piece, the Payer can upload his discount schedules to pay early and they can collaborate on true discounting back to biller so they can pay early.

In many cases, banks are still the aggregators of corporate clients. Products like Receivable Hubs give banks a way to preserve their customer base and spin off other products like finance.

This is a service that solves not only the receipt of payments, but also the payments application process as well.

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