When finance leaders first hear about Payments on Behalf Of (POBO), it often sounds like a purely technical undertaking. Plug in the right payment factory software, configure your ERP, and centralize outgoing transactions. Job done. But the truth is more nuanced.
Implementing POBO isn’t a switch you flip. It’s a strategic and operational transformation that reshapes how payments are handled, who owns them, and how your entire organization collaborates.
In this article, we go beyond the surface to unpack POBO’s operational reality. We’ll look at the messy middle: where things get stuck, why stakeholder alignment matters more than software, and how POBO can either falter or flourish based on your ability to manage change across treasury, AP, IT, tax, and beyond.
POBO is an operational mindset
Ultimately, POBO is not just a project—it’s a new way of thinking about payments. It’s a shift from fragmented, local control to centralized, scalable execution. But to realize its value, organizations must invest as much in operating model design, stakeholder alignment, and governance as they do in technology.
In the words of one Fortune 500 treasury lead we worked with:
“The tech was the easy part. The real work was getting everyone on board.”
POBO isn’t a system, It’s a strategy
At its core, POBO is about centralizing payment execution. But that doesn’t mean it’s just a systems integration exercise. You’re fundamentally changing your enterprise’s payment operating model. Each subsidiary – which used to have full autonomy over payments – will now be connected to a centralized in-house bank or payment factory. This shift impacts:
- Authority over payment approvals.
- Responsibility for regulatory compliance.
- Ownership of fraud and error risk.
- Visibility into cash movements and balances.
POBO requires a reimagining of who does what. And that’s where the operational complexity kicks in.
Stakeholder alignment: everyone has skin in the game
Successful POBO transformation starts with aligning your stakeholders. Treasury may lead the charge, but they can’t go it alone. Accounts Payable owns day-to-day processing. Shared Services may provide centralized execution. IT handles system connectivity and data flows. Tax ensures intercompany settlement aligns with transfer pricing. Legal navigates local banking rules.
In the 2023 PwC Global Treasury Survey, CFOs emphasized the growing expectation that treasury serve as a strategic business partner—not just a back-office cost center. That means treasurers must build coalitions across departments. Everyone must agree on the new operating model, roles, and SLAs.
Without this buy-in, POBO will be met with resistance. Or could even fail to launch altogether.
The perceived loss of control
A major friction point in POBO projects is the perceived loss of control by local entities. Historically, each subsidiary controlled its own payment timelines, vendor relationships, and bank interfaces. POBO looks a lot like it takes this control away.
When a centralized in-house bank in Frankfurt executes payments on behalf of a Malaysian subsidiary, that subsidiary might feel disconnected. Who resolves payment issues? Who communicates with vendors? What happens when a payment is rejected?
Change leaders must be anticipate and address these questions in operational playbooks. Local teams need service-level guarantees. Governance models should define escalation paths. In their absence, the benefits of POBO will be undermined by internal skepticism.
Governance and accountability: who owns what?
Governance is where many POBO projects stumble. You’ll need clear rules for:
- Who approves payments?
- Who monitors compliance?
- Who manages exceptions?
- Who handles bank communications?
Your answers here will differ depending on your operating model (e.g., regional shared service centers vs. global payment hub).
As highlighted in Deloitte’s 2024 Corporate Treasury Survey, the trend toward outsourcing and shared services means treasury teams must create transparent control frameworks that work across entities and time zones. This requires documented policies, automated workflows, and role-based access to systems.
Centralized doesn’t mean monolithic
A common misconception is that POBO results in a one-size-fits-all process. But in reality, payment centralization must account for local regulations, payment formats, and compliance requirements.
In some regions, local banking rules prohibit third-party payment execution or mandate the use of local clearing systems. That means your centralized model must support:
- Hybrid models where some payments remain local.
- Localization of payment formats (e.g., Zengin in Japan, RTGS in India).
- Integration with local tax and reporting obligations.
POBO structures must be designed with transparency and control in mind. As scrutiny around regulatory compliance and ESG accountability grows, centralized payments must deliver clear audit trails, real-time reporting, and robust documentation. Both to satisfy internal governance standards, and to meet the expectations of external regulators, auditors, and stakeholders.
Executional lift: the invisible transformation
The hardest part of POBO is often invisible to executives: the day-to-day process change. The real unlock isn’t the centralization, but the operational lift that comes after.
Payment run schedules change. Reconciliation processes change. Vendor inquiries escalate differently. Cash forecasting must be updated for centralized disbursements. Internal SLAs for payment timing and resolution must be documented and enforced.
These changes require training, documentation, and continuous improvement.
Lessons from the field: what we’ve seen
At Serrala, we’ve helped clients in 50+ countries implement POBO models using SAP’s In-House Cash and In-House Banking. A few patterns stand out:
- Get buy-in before you start. Teams need to understand the why behind POBO, not just the how.
- Start your pilots in regions with fewer regulatory complexities to build success stories.
- Embed governance in your workflows, don’t leave it for email chains.
- Automate reconciliation and make it visible to all parties, not just treasury.
- Communicate constantly: internal FAQs, vendor notices, and SLAs are non-negotiable.
Stay tuned for our follow-up article, where we dive into the technical side of POBO implementation and the architecture behind global payment hubs.
To read more on POBO, click here to discover how POBO Can Drive Strategic Growth in 2025
