• North America: Most banks create income by charging usage fees on a wide variety of services. These fees are typically broken down in at least some detail in an “Account Analysis Statement,” which is essentially the bank fee equivalent of an invoice, sent out monthly.
• Europe and the Middle East: Banks create income using “float” and charge fewer per item or usage fees.
• Asia, South America, and the Caribbean: Fees and taxes are often bundled together, making it difficult to gain visibility into specific charges.
• Miscellaneous: Some areas throughout the world charge percentages of outgoing transactions. Additionally, some foreign banks bundle together fees accrued at different branches, leaving you with little visibility into your volumes by bank.

• Data and pricing sheets must be collected from each bank and office that analysis is being performed on. Depending on the organization, this might involve 100+ accounts at over a dozen banks in multiple countries. The first step of the analysis, then, begins with deciding how you will collect data from each bank.
• This process can involve collecting paper statements, accessing information through bank portals, or receiving data via electronic file format to a Treasury Management System (TMS) or other technology solution. In many situations, not all of these options are available. While in the U.S., the Account Analyses can simplify the process, for organizations with banks located around the globe, data must be collected in varying formats, currencies, and languages.

•    After the initial collection of data, information must be aggregated and consolidated for easier analysis.
    •    At this point, you will need to standardize the currency, language, and fee structure of statements and pricing.

• For each account, are your rates consistent with any contracts / negotiated rates? Note: You will especially need to keep an eye on this at year-end, as many fees revert to standard when the new fiscal year rolls over.
• How do your rates at this bank compare to those at your other banks? How do they compare to external benchmarks and industry averages? Note: Not all banks offer standardized pricing contracts, and charges may vary significantly by region or bank. For instance, one bank may bundle certain fees (such as for wire processing), while others may charge on a per-wire basis. This makes comparisons complicated.
• Are you using every service you’re being charged for, or are you paying for duplicate services or services that are no longer relevant to your organization?
• Have your volumes increased such that you might qualify for better rates than when you last negotiated the price?
• Are you getting the best rate for your merchant cards based on your usage volume?
• Could you consolidate banks and get a better price for higher volume?
• Could an operational change from paper to electronic help?
• What geographic factors and moves might optimize your bank fees?
• Consider share of wallet. Are you making sure you are important to all the banks you do business with? Are you positioning yourself so that they will want to negotiate with you?

• Once savings have been identified, it’s time to negotiate new pricing and contract terms with the banks. As you work through this negotiation, keep the relationship context in mind. Again, consider the share of wallet, and keep in mind as well that switching banks may be too much of a headache to be considered other than as a last resort.

• Ultimately, this negotiation process should land you with streamlined and cost-effective pricing and an organized list of fee schedules. However, it is still important to follow up with the banks, ensuring that they have implemented all agreed-upon changes.

   

• A common approach. Bank fee analysis is often treasury’s least urgent problem, and when not prioritized, it tends to be put off indefinitely.
• Ignoring bank fee analysis is highly inadvisable unless an organization has minimal bank activity (e.g., 1-2 banks and <10 accounts). Otherwise, doing nothing represents a severe exposure with regards to bank surcharges, elevated fee structures, and operational errors that could have been caught during an analysis.
• If this is your organization, and you realize you ought to manage your bank fees but are understaffed and overwhelmed already, read on. There are options farther down this list that might help.

• This approach encompasses different levels of complexity. Some organizations simply pull a pdf from the bank and glance over it to ensure nothing looks off in the fees. This high-level check is certainly better than nothing but is inadvisable for companies with significant bank volumes.
• The second level of in-house management is more detailed, typically involving taking an Account Analysis and putting it into Excel for a more in-depth analysis.
• If you are able to manage your bank fees in-house, the pros are simple and excellent: it’s getting done, and your company is reaping the benefits. The cons attach to that crucial qualifier: If you are able:
  • Con 1: Many organizations have too much bank activity to effectively track and analyze using spreadsheets alone.
  • Con 2: Lack of manpower: Perhaps the most common problem, many organizations find that they have no one with enough time to allocate to the task.
  • Con 3: Reviewing statements or Account Analyses or putting them into Excel requires that those documents be available, which is often not the case with international banks. In some countries, banks exclusively release bank fee data via electronic file format, and many organizations lack the technological tools to receive and read the files provided.

• Many TMS and Treasury Aggregators offer bank fee management modules and automated workflows for gathering and storing information. Many of these systems can accomplish a significant amount of analysis and are especially competent at comparing actual fees to contracted rates. There are, however, a few limitations to this option, as noted in the next points.
• If you don’t already have a system in place that offers this capability, implementing one is unlikely to be justified by bank fees alone. And even if you do have one, there is still the cost of the bank fee management capability to consider.
• These modules can’t do everything. At this point in technological development, there must be a human element involved to appropriately perform certain tasks necessary for thorough bank fee analysis, such as comparing banks against each other or handling fees calculated by transaction percentages. There are often limitations as well in the number of formats these modules can process.

• Outsourcing to a third party represents a very complete option. Third-party bank fee management services can typically manage the process from start to finish, handling the receipt and aggregation of data, identifying any type of issue, and negotiating lower fees on behalf of the client. For many organizations with limited resources, outsourcing can be the only viable option.
• Like automation using treasury technology, this option is not free. However, the savings are likely to outweigh the price.
• Fee structures differ among third parties. Some charge a flat rate, while others charge a percentage of your savings, ensuring that you will net savings from outsourcing to them.
• The one other potential con to keep in mind as you consider outsourcing is the inevitable possibility of exposure anytime sensitive information is transferred outside the organization. If you are looking into outsourcing, be sure to carefully review the third party’s security measures for data both in transit and at rest.

(If outsourcing sounds like the right option for you, Strategic Treasurer can help by removing the headache of monitoring bank fees by outsourcing to their team of experts. Since what you pay is only a percentage of what the outsourcing is able to save you, you can be assured of net gain for your company. )