diff --git a/fineract-core/src/test/java/org/apache/fineract/infrastructure/core/service/ExternalIdFactoryTest.java b/fineract-core/src/test/java/org/apache/fineract/infrastructure/core/service/ExternalIdFactoryTest.java
new file mode 100644
index 000000000..db88c5613
--- /dev/null
+++ b/fineract-core/src/test/java/org/apache/fineract/infrastructure/core/service/ExternalIdFactoryTest.java
@@ -0,0 +1,133 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.infrastructure.core.service;
+
+import java.util.Arrays;
+import java.util.List;
+import org.apache.fineract.infrastructure.core.domain.ExternalId;
+import org.junit.jupiter.api.Assertions;
+import org.junit.jupiter.api.Test;
+
+/**
+ * Unit tests for {@link ExternalIdFactory} static factory methods.
+ */
+class ExternalIdFactoryTest {
+
+    @Test
+    void testProduceWithValidStringShouldReturnExternalIdWithValue() {
+        // given
+        String value = "test-external-id-123";
+
+        // when
+        ExternalId result = ExternalIdFactory.produce(value);
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertFalse(result.isEmpty());
+        Assertions.assertEquals(value, result.getValue());
+    }
+
+    @Test
+    void testProduceWithNullShouldReturnEmptyExternalId() {
+        // when
+        ExternalId result = ExternalIdFactory.produce((String) null);
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertTrue(result.isEmpty());
+        Assertions.assertNull(result.getValue());
+    }
+
+    @Test
+    void testProduceWithEmptyStringShouldReturnEmptyExternalId() {
+        // when
+        ExternalId result = ExternalIdFactory.produce("");
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertTrue(result.isEmpty());
+        Assertions.assertNull(result.getValue());
+    }
+
+    @Test
+    void testProduceWithBlankStringShouldReturnEmptyExternalId() {
+        // when
+        ExternalId result = ExternalIdFactory.produce("   ");
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertTrue(result.isEmpty());
+        Assertions.assertNull(result.getValue());
+    }
+
+    @Test
+    void testProduceListWithValidValuesShouldReturnListOfExternalIds() {
+        // given
+        List<String> values = Arrays.asList("id-1", "id-2", "id-3");
+
+        // when
+        List<ExternalId> result = ExternalIdFactory.produce(values);
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertEquals(3, result.size());
+        Assertions.assertEquals("id-1", result.get(0).getValue());
+        Assertions.assertEquals("id-2", result.get(1).getValue());
+        Assertions.assertEquals("id-3", result.get(2).getValue());
+    }
+
+    @Test
+    void testProduceListWithMixedValuesShouldHandleBlankValues() {
+        // given
+        List<String> values = Arrays.asList("valid-id", "", null, "   ", "another-valid-id");
+
+        // when
+        List<ExternalId> result = ExternalIdFactory.produce(values);
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertEquals(5, result.size());
+        Assertions.assertFalse(result.get(0).isEmpty());
+        Assertions.assertEquals("valid-id", result.get(0).getValue());
+        Assertions.assertTrue(result.get(1).isEmpty());
+        Assertions.assertTrue(result.get(2).isEmpty());
+        Assertions.assertTrue(result.get(3).isEmpty());
+        Assertions.assertFalse(result.get(4).isEmpty());
+        Assertions.assertEquals("another-valid-id", result.get(4).getValue());
+    }
+
+    @Test
+    void testProduceListWithNullShouldThrowNullPointerException() {
+        // when / then
+        Assertions.assertThrows(NullPointerException.class, () -> ExternalIdFactory.produce((List<String>) null));
+    }
+
+    @Test
+    void testProduceListWithEmptyListShouldReturnEmptyList() {
+        // given
+        List<String> values = List.of();
+
+        // when
+        List<ExternalId> result = ExternalIdFactory.produce(values);
+
+        // then
+        Assertions.assertNotNull(result);
+        Assertions.assertTrue(result.isEmpty());
+    }
+}