Payments and Bank Communication in S/4HANA Cloud

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Product Information

Bank Communication Management in SAP S/4HANA Cloud

At SAP, we are simplifying your communication with banks by offering various options for bank communication to meet individual customer requirements.  This blog is not meant as a replacement of the documentation, it is rather an extension of the documentation. This blog post will focus on the comparison of the various communication options, also providing guidance so that you can make the right business decision for your company.

Three Ways of Bank Communication

You may have noticed that we currently have three ways to communicate with banks. These include: 

· Bank Integration with File Interface (‏1EG‏),

· Application Interface to Retrieve Payment Files (‏2YM‏), and

· Bank Integration with SAP Multi-Bank Connectivity (‏16R‏).

There are numerous reasons for this. You’re probably asking yourself – which option should I be using?

Comparing the Three Ways of Bank Communication

Bank Integration with File Interface (Scope Item 1EG)

If your company is very small with a very limited number of house banks, you can use the Bank Integration with File Interface (‏1EG).‏ In this scenario, files are handled manually to exchange information about payments and bank statements with your bank.

Key Process Flows:

· Download the payment instruction file created by your back-end system

· Upload the bank statement from the bank to SAP S/4HANA Cloud

Pros:

· You don’t need any additional SAP S/4HANA Cloud license

· You don’t require Advanced Cash Operations (Scope Item J78)

Cons:

· You’re responsible for the bank communication and the remedy of defects

· Very manual and hence error-prone process

· High risk of fraud, because files can be manipulated

Application Interface to Retrieve Payment Files (Scope Item 2YM)

If your company has a decent number of house banks and you're running a 3^rd party solution for the monitoring and approval of payments, you can implement the scope item Application Interface to Retrieve Payment Files (Scope Item 2YM). This scope item provides a basic SOAP service to send outgoing payment files to banks. This scope item does not provide direct bank communication.

Key Process Flows:

· Retrieve payment medium files from SAP S/4HANA Cloud and send them to banks.  

Mandatory Knowledge:

· Deep knowledge of the Data Medium Exchange Engine (DMEE) or Extended Data Medium Exchange Engine (DMEEX)

· Decent experience with web services

· Familiarity with the payment and bank statement formats, depending on your requirements

Pros:

· Potential flexibility

Cons:

· It’s a priced item, Advanced Cash Operations (Scope Item J78) is required

· You need to submit a request and get approval from SAP to activate the Application Programming Interface (API)

· You’re in charge of the integration project. This leads to higher effort and cost

· You must develop your own encryption mechanisms between the middleware and the bank

· You must plan for operation maintenance for the integration scenario è This leads to higher effort and cost

· You require self-managed middleware

· Depending on your requirements, the average implementation project takes at least 2 to 3 months

· This scope item will not be enhanced in future releases and is excluded from future developments

· This scope item will not support additional message types, such as payment status

Because of all the topics above, SAP highly recommends using SAP Multi-Bank Connectivity (16R), providing direct bank communication and an out-of-the-box service managed by SAP. For the inbound communication, such as receiving bank statements, customers should use the communication scenario Finance - Account Receivable Bank Statement Integration (SAP_COM_0316). This communication scenario is related to the scope item Bank Integration with File Interface (Scope Item 1EG).

SAP Multi-Bank Connectivity (Scope Item 16R)

If you are looking for an out-of-the-box service of bank communication, irrespective of the number of banks you have, you can opt for SAP Multi-Bank Connectivity (Scope Item 16R). With SAP Multi-Bank Connectivity, SAP establishes the connections with your banks to automatically send payment instructions and receive status notifications, bank statements, and lockbox messages. Leveraging the monitoring capabilities, you can supervise the status of all payment instructions and see which bank statements are received and which expected bank statements are still missing. The payment monitoring is available with Advanced Cash Operations (Scope Item J78).

In addition, SAP Multi-Bank Connectivity allows you to automate other types of messages, such as bank services billing (camt.086) and deal confirmations (MT300 and MT320). You can even manually process other messages, such as images of scanned checks, which are not yet automated via a bank message monitor. The integration with your bank(s) is fully managed by SAP leveraging direct bank integrations, EBICS or SWIFT. During the onboarding you decide on an integration option for each bank with our onboarding team. If you decide to go for a direct integration and there is no standard integration with that bank available yet, SAP will get in touch with your bank to establish an individual host-2-host connection.

Key Process Flows:

· Connect securely with encryption and signatures between SAP S/4HANA Cloud and SAP Multi-Bank Connectivity and the connected financial institutions or banks

· Forward payment instructions to banks in local format

· Receive status notifications for payment instructions

· Receive bank statements in standard formats, such as MT940, MT942, camt.052, camt.053, camt.054, BAI2, CSB43, CFONB

· Receive BAI2 lockbox messages

· Send and receive MT300 and MT320 messages

· Receive camt.086 fee reports

· You have the option to process other messages manually

· The list of supported formats is not complete and will be continuously enhanced and updated in future releases.

Pros:

· Connects securely with encryption and signatures between SAP S/4HANA Cloud and SAP Multi-Bank Connectivity and the connected financial institutions or banks

· Managed integration by SAP

· Reduced time and effort of implementation

· Reduced time and effort of maintenance

· Automation of messages sent and received

· Option to mix integration channels like direct bank integration, EBICS and SWIFT, out of one service

· Advanced Cash Operations is not vital for the use of SAP Multi-Bank Connectivity. If you want to use payment monitoring, you will need Advanced Cash Operations (J78) as this is not supported with Basic Cash Operations (BFB).

Cons:

· It’s a priced item

Conclusion: Our Recommendation

Considering the pros and cons listed above, SAP highly recommends leveraging SAP Multi-Bank Connectivity (16R) as a standard solution, as this offers an out-of-the-box service provided and updated by SAP.

Feedback

Don’t hesitate to share your thoughts, ideas or questions about the Bank Communication Blog with us in the comments section below. We will do our best to answer them all swiftly. Also let us know if you have any suggestions regarding what topics we should cover next.