In-house bank and payment factory

With three company codes paying through different banks, Contoso's treasury wants to centralize: one entity that holds the group's bank relationships, pays on behalf of the others, nets intercompany flows and gives treasury one view of cash. That is an in-house bank with a payment factory.

In-House Cash, In-House Banking and Advanced Payment Management

SAP's classic in-house bank is In-House Cash (IHC). Its successor in SAP S/4HANA is In-House Banking (IHB), released in 2022 and embedded in Advanced Payment Management (APM), SAP's payment factory that collects payment requests from SAP and non-SAP sources, processes them centrally and routes them to banks or internal accounts. SAP describes IHB as available for Cloud Public Edition as well, with Fiori apps and analytics, and as requiring APM. Check the scope items and licensing for your edition before designing.

How the in-house bank works at Contoso (design)

Contoso's design makes 1710 the in-house bank. Each subsidiary (1810, 1910) has an internal account with 1710 instead of its own operating bank accounts for supplier payments. When 1810 pays Lakeside Components, it sends the payment request to the in-house bank, which debits 1810's internal account and pays Lakeside from 1710's external bank account: a payment on behalf of (POBO). Incoming payments can be collected on behalf of (COBO) the same way. Intercompany payments between 1710, 1810 and 1910 become internal account transfers with no bank involved.

Bank connectivity and newer payment offerings

Payments still have to reach banks. Bank Communication Management adds batching and approval of payment files; SAP Multi-Bank Connectivity is SAP's cloud-based connection to banks for payment files and statements. In October 2026 SAP announced SAP Pay, a payments service run by its subsidiary Tereina that executes payments from inside SAP's cloud ERP over rails such as ACH, wire and check, initially in the US and the UK, with stablecoin settlement as an option. It is new; confirm availability for your edition, contract and banks before planning around it, and treat it like any new payment channel: approvals, reconciliation and fraud controls tested end to end.

What goes wrong in testing

• Testing only the external payment, not the internal account postings and statements for each subsidiary.
• Forgetting value dates and cut-off times: a request after cut-off must pay next day, and both sides must agree.
• Ignoring returns: a rejected external payment must reverse the internal debit.
• Not testing 1910's MXN payments through the in-house bank, which add currency conversion and local formats.

Netting and statements

An in-house bank can also net intercompany flows. Instead of 1810 paying 1710 for alternators and 1710 paying 1810 for distribution services separately, a monthly netting run settles only the difference on the internal accounts. Each subsidiary receives an internal account statement, like a bank statement, which it imports and reconciles. For 1910, the internal account may be kept in MXN or USD, which brings currency conversion and exchange rate controls into the in-house bank.

Cut-off times deserve their own test cases. If 1810 releases a payment request at 16:45 and the in-house bank's cut-off for same-day external payments is 16:00, the request must be paid the next business day, and both 1810's internal statement and the payment status must show the same value date. Mismatched value dates are a common source of internal account differences that take weeks to untangle.