Cash management 2.0: The strategic power of a ROBO solution

Receipts on behalf of (ROBO): In-house banking deep dive

What is receipts on behalf of (ROBO)?

Receipts on Behalf Of (ROBO), also known as Collections on Behalf Of (COBO), is a fundamental function within in-house banking. It centralizes the collection of incoming payments from customers across subsidiaries, allowing the in-house bank to manage receipts through a consolidated set of accounts. This streamlines cash inflows, optimizes liquidity, reduces banking fees, and enhances cash visibility and control. While the in-house bank operates like an external bank in managing these collections, it does not require formal banking licenses or regulatory filings typical of external financial institutions.

How ROBO works in practice

The in-house bank acts as a virtual bank within the organization, offering collection services to affiliates much like an external bank would—but with significantly greater efficiency and control. This is particularly impactful in ROBO processing, where the in-house bank centralizes incoming payments and optimizes their management across the organization. Here’s a closer look at how ROBO operates within an in-house banking framework.

• Invoice Issuance - Affiliates generate and send invoices to customers, specifying centralized in-house bank account details for payment.
• Payment Collection - Customers make payments directly to the in-house bank’s centralized accounts, regardless of the affiliate they are transacting with.
• Allocation & Posting - The in-house bank identifies incoming payments, allocates them to the appropriate affiliate’s virtual account, and posts the corresponding entries.
• Reconciliation & Reporting - Affiliates receive virtual bank statements reflecting incoming payments, enabling seamless reconciliation with their accounts receivable records.
• FX & Liquidity Management - The in-house bank consolidates foreign currency receipts, manages exposures, and optimizes liquidity across the organization.
• Global Structuring - Similar to POBO, in-house banks managing ROBO may establish regional strategic IHB hubs (e.g., in the U.S., EMEA, APAC) to optimize tax efficiency and comply with local regulations.

ROBO common challenges & pain points

While each organization’s challenges are unique, certain issues tend to be common when managing decentralized collections. The absence of centralized receipt processes can hinder efficiency, visibility, and control, creating both operational and strategic challenges. Below are some of the most pervasive issues companies face without ROBO structures.

Regulatory compliance & adherence challenges

• Tax & Legal Complexities – Managing receipts across multiple legal entities creates challenges in tax reporting, revenue recognition, and compliance.
• Inconsistent Banking Regulations – Some regions impose restrictions on consolidated collection accounts, requiring workarounds that increase operational complexity.
• KYC & AML Compliance Risks – Handling customer payments across multiple jurisdictions requires stringent anti-money laundering (AML) and Know Your Customer (KYC) compliance.
• Regulatory Compliance Challenges – Decentralized receipt processes elevate the risk of non-compliance with global financial regulations and reporting standards.

Operational complexity & inefficiency

• Decentralized Receipt Processes – Subsidiaries managing their own collections result in inconsistent processes, increased errors, and reduced control over cash inflows.
• Delayed Cash Application – Manual payment matching causes processing delays, impacting working capital efficiency.
• High Reconciliation Workload – Unstructured payment flows make reconciliation time-consuming and prone to errors.
• Fragmented Customer Payment Processes – Disconnected collection methods across subsidiaries create inefficiencies in managing accounts receivable.
• Manual Reconciliation & Error Risks – Lack of automation in collection processes increases manual intervention, error rates, and processing delays.
• Proliferation of Bank Accounts – Multiple collection accounts across subsidiaries increase administrative costs and complicate cash management.

Technology & integration gaps

• Siloed A/R Systems – Disconnected invoicing and treasury platforms create inefficiencies in tracking incoming funds
• Limited Automated Cash Application – Manual posting of incoming funds slows down credit availability for customers
• Difficulty in Managing Multi-Currency Collections – Without a centralized approach, FX conversions and multi-currency settlements become complex.
• Lack of Real-Time Payment Visibility – Limited system integration makes it difficult for treasury teams to track incoming receipts instantly.

Liquidity & cash visibility challenges

• Poor Cash Flow Forecasting – Decentralized collections reduce treasury’s ability to predict and manage cash inflows accurately.
• Limited Cash Visibility – Fragmented collection systems hinder real-time insight into cash positions, complicating liquidity management and forecasting.
• Higher Banking Fees for Collection Accounts – Managing multiple collection accounts increases bank charges and administrative costs.
• High Foreign Currency Costs – Managing foreign currency receipts locally leads to higher conversion fees and increased exposure risks.
• Inefficient FX & Cash Positioning – Without centralized receivables, cash remains fragmented across multiple accounts, leading to suboptimal liquidity deployment.

Key benefits of ROBO

Organizations implementing ROBO gain numerous strategic and operational advantages. The extent of these benefits often depends on factors such as the company’s size, geographic spread, currency exposure, and current processes. Below are some of the most significant benefits typically realized when adopting a ROBO structure.

1.Regulatory compliance & payment security

• Improved Tax & Regulatory Adherence – Centralized collections simplify tax compliance and revenue reporting.
• Reduced AML/KYC Risks – A controlled, centralized process ensures compliance with anti-money laundering and fraud prevention regulations.
• Automated Compliance Checks – Standardized collection processes reduce errors and audit risks.
• Stronger Compliance Frameworks – Standardized receipt and reconciliation processes improve regulatory compliance and reduce operational risks.
• Audit Readiness – Improved tracking and centralized documentation enhance auditability and regulatory reporting.

2. Operational efficiency & cost reduction

•  Automated & Faster Cash Application – AI-driven matching and centralized receipt processing accelerate invoice clearing, reduce manual intervention, and improve overall A/R efficiency.
• Stronger Working Capital & Credit Line Utilization – Faster cash application reduces Days Sales Outstanding (DSO), enhances liquidity, and frees up credit lines for customers, enabling increased sales and business expansion.
• Bank Account Rationalization & Cost Reduction – Consolidating collection accounts lowers maintenance fees, reduces administrative overhead, and minimizes transaction costs.
• Optimized Collection Routing & Treasury Efficiency – Payments are redirected to the most cost-effective channels, reducing cross-border transaction fees and improving treasury operations.
• Better Negotiation Power with Banks – Higher transaction volumes through a centralized structure strengthen the company’s ability to negotiate better terms, lower fees, and optimize FX rates.

3. Technology & process optimization

• Seamless ERP & Treasury Integration – Automated receivables posting ensures end-to-end visibility across finance teams.
• Real-Time Payment Tracking – Centralized dashboards provide live visibility into cash inflows.
• Multi-Currency Optimization – Aggregated collections reduce FX conversion costs and improve treasury control.
• Advanced AI Matching & Reconciliation – Machine-learning algorithms accelerate cash application by auto-matching incoming payments.
• Standardization Across Entities – Uniform collection processes across subsidiaries improve consistency and simplify internal workflows.

4. Liquidity optimization & cash visibility

• Accelerated Working Capital Cycle – Faster cash application improves free cash flow for investment and debt repayment
• More Predictable Cash Forecasting – Consolidated collections enable more accurate financial planning.
• Reduced Reliance on External Financing – Optimized cash inflows reduce the need for short-term borrowing, lowering interest costs.
• Optimized Liquidity Management – Consolidating receipts reduces idle cash at subsidiaries, enabling better deployment of funds for investments or debt reduction.

Frequently asked questions (FAQs) about ROBO

1. Do I need to implement a full in-house bank to use ROBO?

No, ROBO can be implemented independently without a comprehensive in-house bank structure. Companies can centralize collections as part of a broader shared service or treasury center initiative, realizing benefits like improved cash visibility and reduced bank fees. Full in-house banking structures can be added later as organizational needs evolve.

2. Can all legal entities participate in ROBO processing?

No, participation varies by country and currency. While ROBO is widely feasible in Western Europe and the U.S., regions like Asia and Latin America often have stricter regulatory environments, making centralized collections more complex. Each legal entity must be evaluated for compliance with local laws and tax regulations.

3. How does ROBO affect relationships with local banks?

Centralizing receipts through ROBO often reduces the number of local accounts and direct interactions with smaller banking partners. However, this strengthens the company’s negotiation power with strategic banking relationships and simplifies cash management across the organization.

4. What technologies are essential for ROBO?

Key technologies include SAP’s Advanced Payment Management In-House Banking (APM-IHB) for centralized receipt processing and intercompany balance management, SAP Multi-Bank Connectivity (MBC) for secure bank integration, and Serrala’s FS2 AutoBank for advanced automation and acceleration of cash application and A/R invoice clearing. The right technology stack depends on the organization’s size, structure, and existing systems, and objectives.

5. Does ROBO increase regulatory risks?

Centralized collections can introduce regulatory complexities, particularly around cross-border receipts and tax implications. However, ROBO often improves compliance by standardizing processes and centralizing expertise. Thorough upfront analysis of legal requirements ensures regulatory risks are minimized.

6.How quickly can ROBO be implemented?

The implementation timeline can vary tremendously depending on the organization’s size, complexity, scope, objectives, and existing technology infrastructure. A phased approach is common method of deployment that can enable a company to ramp up with a pilot region or set of affiliates quickly to gain knowledge, experience, and confidence before scaling more broadly. Leveraging standardized, tightly integrated, and highly advanced tools like SAP APM-IHB, SAP MultiBank Connectivity, and Serrala’s FS² AutoBank solutions can help accelerate deployment.