Bank Fees Reconciliation & Negotiation

Analysis of bank charges and fees has always been difficult because banks use different charging structures, and because their charging systems were inefficient and inconsistent. Today banks are installing charging systems which enable them to charge for every single process and transaction. It is now essential to check and reconcile bank charges.

Bank Fees Analysis
For many companies, the reconciliation of bank fees and charges with bank agreements was a lost cause. This has changed with the emergence of systems and services, which can analyze bank charging data from many different banks, regardless of the format and source of the data. These systems and services save considerable time and administration, enable detection of all types of errors, and improve both control and negotiation. The types of errors revealed include overcharging, e.g. charging the standard 4.5¢/payment rather than the agreed special price of 3¢; undercharging; not giving a discount for higher volumes of payments than expected; and charging for services not used.

They also provide the corporate treasury department with a clear insight into how subsidiaries are using bank services. Another important benefit is the understanding of whether it is more effective to use account balance compensation to pay the bank charges or to pay the fees direct. The analysis is vital in the annual bank charges and fees negotiations. Many corporate users of these systems and services find that they achieved full Return On Investment in the first year of operation.

There are two types of account analysis and reconciliation systems/services: the stand-alone specialist, and the modules that are part of the general cash and treasury management systems. A wide range of advisors and consultants provide advice and support in analyzing and negotiating bank charges and fees.

Bank Services Billing Standard
Although the bank charges and fees analysis systems and services are increasingly effective, there is still a crying need for standardization of bank charging structures. If only to make it easier to compare the bank charges and fees in their proposals.

For many years companies have been demanding greater visibility and standardisation in the bank billing process so that they can reconcile and optimise their use of bank services. Only banks in North America use the same standard for bank fee invoices, Ansi 822, which has been employed since the 1990s. Unfortunately, this standard is not usable elsewhere as it does not cover cross-border tax regimes and non-US currencies.

A new international standard, the Bank Services Billing Standard (BSB), which has been developed and issued by TWIST and SWIFT, is being deployed world-wide. This programme is being driven by the International Bank Compensation Group (IBC), which is made up of many multi-national corporations including General Electric and Microsoft. The BSB is an XML based standard which provides a common transaction name or transaction code for each of the major cash management services offered by the international banks. It also allows standard message structures for billing information.

Some 20 banks are committed to using the BSB standard for billing and statements and several have already implemented it. A new XML 20022 version of the BSB is being developed. There are plans to bring together the BSB and eBAM standards to provide a comprehensive set of bank-to-customer administration standards which, if adopted, will make the evaluation of bank charges even easier.

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