5 steps for optimizing payment transactions

| 13-09-2018 | TIS | treasuryXL |

They are one of the most important economic transactions and since all times have provided us with order and structure, but at the same time they have been a nuisance, because they are equally complex and essential. They come in the form of cash payments, semi-cash payments and non-cash payments, with the latter definitely at the forefront. But in order to organize payment transactions optimally, there are a few things that need attention.

In this article you will find out everything on how to renew your payment transactions, making them more transparent, simpler and more secure. At the same time, you can keep up with digital transformation.

Step 1: Getting an Overview

Regarding innovations in payment transactions, there are many items that require attention. For this reason, it is important to get an initial overview of the current payment transactions situation and a breakdown of the complexity of the factors contained in this term. You should be able to answer questions regarding current payment formats, including abroad, bank communication and possible bank connections before you start making any changes. You should also take into consideration your own payment transactions, in order to recognize weaknesses and potential improvements. Only then will you know if there is still potential for optimization and where the innovation process needs to start.

Step 2: Setting Goals

As is the case with successfully mastering any task, it is important to first set goals in advance and to monitor the results to be achieved. In this way, you prevent inaccurate or unwanted results and a lengthy change process. In order to define your goals, you should compare and consider the potential connections to the bank, systems and formats which are to be used in the future. Moreover, an initial conceptional model of the potential new banking landscape should be developed.

Once the first two steps have been carefully considered, it is down to the nitty gritty: making better decisions.

You can read the full article on the website of Treasury Intelligence Solutions GmbH.

 

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PGO Treasury and Corporate Finance (RT) will start shortly – only a few places left

| 27-08-2018 | VU Amsterdam | treasuryXL |

In previous blogs we informed you about the post graduate education treasury at the Vrije Universiteit in Amsterdam. This will be the first year that the program will be in English. As in previous years, a nice mix of treasury experts with different professional backgrounds will start in September. The VU informed us only a few places are left.

KEY FACTS ON THE PROGRAM

The postgraduate executive programme Treasury Management & Corporate Finance combines two finance disciplines Treasury Management and Corporate Finance. These disciplines largely overlap and are even inextricably connected.

This postgraduate executive program is running now for more than 20 years at the Vrije Universiteit Amsterdam. It is an unique program in The Netherlands and even abroad.

As from September 2018 the program will be given entirely in English in order to connect to the increasingly larger community of non-Dutch speaking finance professionals in The Netherlands.

The completion of this postgraduate executive program is rewarded by the title Register Treasurer. This title is well known and well recognized by the community of treasury professionals.

The curriculum is organized in 6 modules which each cover a clear sub discipline in Treasury management and Corporate Finance. Each module comprises of 6 lecture days on Thursday (starting at noon until 20:00). It is an intensive and efficient program which lasts for 1.5 years.

The postgraduate executive program Treasury Management & Corporate Finance is strategic partner of the Dutch Association Corporate Treasurers (DACT).

Partners of the program are KPMG, Orchard Finance, PwC and Zanders Treasury & Finance Solutions. Senior affiliates lecture in the program.

If you want more information about the program you can contact de Vrije Universteit.

 

 

Global Political Risks

| 23-08-2018 | ICC Consultants | treasuryXL |

In deze blog worden de internationale politieke ontwikkelingen geanalyseerd die impact kunnen gaan hebben op de financiële markten en de mate waarin. De visie van ICC Consultants is gebaseerd op een groot netwerk binnen de wereldwijd toon-aangevende researchhuizen en 40 jaar ervaring in de financiële markten. Deze blog bevat gedeeltes van het totale rapport. Het volledige rapport kunt u downloaden middels de weblink onderaan deze blog.

 

Brengt Turkse torpedo stieren aan het zinken?

Turkije ligt onder vuur van de financiële markten. Turkije is ook een van de grotere spelers in het uitdijende kamp van staten die zich meer en bewegen in autoritaire richting. Vijfenvijftig jaar geleden zag JFK al in dat een geheel liberaal-democratische wereld er (voorlopig) niet in zat. Hij wilde dan in elk geval zeker stellen dat in de wereld plaats was voor een vreedzaam bestaan van zowel liberale democratieën als andere vormen van bestuur naast elkaar. Na de Koude Oorlog ontstond in alle Westerse euforie even het idee dat de kapitalistische democratie niet meer te stoppen was. Deze overtuiging is (vooralsnog) gelogenstraft door o.a. China en Rusland…

Welvaart in ruil voor je mond houden

In veel van die landen – inclusief China, Rusland en eigenlijk ook Turkije – gold en geldt de impliciete afspraak tussen overheid en volk van sterke economische groei in ruil voor politieke passiviteit. Dat is de vriendelijke manier om het te beschrijven, want veelal zal een regime het natuurlijk niet accepteren als het volk af wil van deze constructie (zoals we de laatste jaren al vaker hebben gezien). Leiders in deze landen zijn  er ook niet gerust op: in de afgelopen vijf jaar zijn in meer dan tien procent van de landen in de wereld politieke wisselingen van de wacht geweest als gevolg van (onvrede over) corruptie….

Uiterst kwetsbaar model

Het is de vraag of de wereld zoals JFK die zei voor ogen te hebben – waarin democratische en autoritaire landen in relatieve vrede naast elkaar kunnen bestaan – stand kan houden in dit tijdsgewricht. Leiders als Trump, Poetin, Xi Jinping en Erdogan plaatsen steeds meer vraagtekens bij de door het Westen vormgegeven wereldorde.  Deze leiders worden in de kaart gespeeld door de uit de bocht gevlogen vormen van kapitalisme die je zou kunnen aanduiden als winner-takes-all-capitalism, groeiende ongelijkheid, stagnerende of dalende reële lonen en grote culturele maatschappelijke veranderingen…

Le Trente Glorieuse is niet meer

De periode tot ruwweg de  jaren zeventig wordt veelal aangeduid als Le Trente Glorieuse: een periode met – vooral in het Westen – de prachtige combinatie van hoge economische groei,  toenemende productiviteit, stijgende reële lonen, sterke technologische vooruitgang en de gestage uitbreiding van de  verzorgingsstaat /sociale vangnetten.  In feite was het een tijd waarin efficiëntie, gelijkheid en volledige werkgelegenheid veelal samengingen. Die periode is duidelijk voorbij, wat tot veel onvrede onder bevolkingen leidt, tot de draai richting populisten en tot een meer naar binnen gekeerde opstelling….

Loper uitgerold voor beren

Vanuit politiek oogpunt zijn wel voldoende aanknopingspunten voor bears. De groei wordt bedreigd door identiteitspolitiek, het ondermijnen van instituten die de veiligheid en economische groei de afgelopen zeven decennia hebben geholpen en protectionisme en andere initiatieven die internationale productieketens en andere vormen van globalisering in gevaar brengen.

In Europa werd na de verkiezingen in Nederland en Frankrijk in de eerste helft van 2017 gedacht dat het populisme op zijn retour is. Niets lijkt minder waar: in bijvoorbeeld Italië, Oostenrijk, Hongarije en Polen leiden populisten regeringen, in Zweden staan rechts-populisten op de eerste plaats in de peilingen en in Duitsland zijn ze nummer twee…..

Oorlog op vele fronten

Dergelijke ontwikkelingen hoeven niet van vandaag op morgen tot paniek op de markten te leiden, maar ze zaaien wel de zaden voor verdere verzwakking van groeipotentieel. Tot nu toe werd het meest gevreesd voor de gevolgen van een handelsoorlog, maar de combinatie van handelsconflicten, geopolitieke waaghalzerij en rollen van de spierballen en de weaponizing of finance is juist de grote dreiging. James Mackintosh – columnist van de Wall Street Journal – wees er al op dat handelsoorlogen weliswaar niet goed zijn voor de economische groei, maar dat ze zelden een recessie inluiden of de groei echt hard raken. Dat in tegenstelling tot financiële crises die een lange lijst van economische slachtoffers hebben achtergelaten……

Het volledige rapport dat geschreven is door Andy Langenkamp, politiek analist bij ICC, kunt u downloaden op de website van ICC Consultants.

 

What corporate treasury can learn from corporate insurance

15-06-2018 | Treasurer Search | TreasuryXL |

Last week Treasurer Search sent it’s monthly newsletter that included below article. Not all people in the market will think the same as the author, but we think it is definitely an interesting way of looking at our insurance colleagues.

 

One of the many benefits of being a recruiter is that every meeting is a lecture of an expert about his professional life and developments. An excellent way to learn and keep up-to-date. Every second week I try to transfer this knowledge to my colleagues in Team Treasurer Search and the risk topic often gets attention. I also want to share my observations about insurance and treasury with you.

First, perhaps a bit cynical, why is corporate insurance reporting to the group treasurer more often? The importance and professional level of insurance is increasing, this is also acknowledged by CFOs. To prevent their span of control becoming too big, they delegate the profession to legal, procurement and recently often to treasury. Many treasurers are not motivated by insurance tasks and ignore the overlap that exists. Traditionally the risk types “market risk” and “liquidity risk” create primary tasks for treasury departments that often motivate the candidates I meet. Recently counterparty or credit risk gets a bigger role, not only with financial services companies. My recent conversations with corporate insurance managers brought me new insights in how risk can be analysed and managed.

In previous blogs I wrote that “new school treasurers” distinguish themselves by better connecting with their business partners and provide understandable solutions that make sales, operations and finance happy. Insurance managers were already forced to talk with the business their whole life. If an insurance manager does not understand what his business partners do, he will not be able to make a proper assessment of the risk. And that does include all types of risk: staff getting sick, goods not being supplied, tornados, computer viruses, politicians starting embargos, etcetera. They are closer to enterprise risk managers than treasurers are. By now there are practical and scientific strategies to mitigate various risk types. Insurance managers know.

In my perception treasurers can learn from insurance how to connect to business partners and help them finding solutions for complex and diverse problems. Do you think me setting them on a pedestal is right or am I too positive?

If you want to find out more about Treasurer Search and their services visit their company profile on treasuryXL.

Cyber Security and Business Intelligence

| 5-6-2018 | TIS |

Fintech Hotseat – AFP 2017: Alongside smaller companies, there are still many medium and large sized companies that have not yet implemented real-time monitoring of their payment processes. The result? These organizations then fail to discover missing cash until the end of the month. In this interview during the AFP Conference 2017 Giancarlo Laudini, SVP Global Sales and Marketing Operations, gives you insights how business intelligence can help you to prevent cyber crime and fraud in your organisation.

To see full interview click here

Content originally posted on TIS on 15/1/2018

Cash flow forecasting – more than just safeguarding liquidity

| 4-6-2018 | Gerald Dorrer | TIPCO Treasury & Technology GmbH |

“We don’t need cash flow forecasting” – statements like this are frequently heard at companies with significant cash reserves. They often highlight concerns about major internal expenses as capturing the relevant data can tie up significant resources. Modern cash flow forecasting, however, is about far more than just safeguarding against insolvency. And using up-to-date technologies only minimal efforts are needed to implement a forecast that will provide you with an array of insightful data. 

The easy way to achieve modern forecasting

Many of the data needed for cash flow forecasting already exist in various systems. ERP systems are a particularly efficient data source. For example, this is where you’ll find all of your receivables and payables, including the associated due dates and terms of payment. These data alone will already provide much of what you need. You can also find other influential factors here such as the volumes of regular salary payments. Modern forecasting systems already come complete with an interface to ERPs, making it possible to import these data at the press of a button and take them into account in your forecasts.

Another helpful tool is predictive analytics. Although the statistical methods which predictive analytics are based on have already existed for quite some time, modern technologies now make it possible to use these in practice. Predictive analytics is the key to leveraging historical data to predict future developments with an amazing degree of accuracy. A good example of the advantages offered by this procedure is in the case of a company with seasonal fluctuations in terms of its revenues. If you already have a target figure for revenues in the coming year, then predictive analytics will be able to rapidly and accurately break this down into sales for the individual months. But far more complex scenarios are also conceivable, such as the early identification of trends by means of automated analyses of social media data which can ultimately be translated into cash flows.

Flexibility

But which factors characterise a modern forecasting system?

Besides the criteria mentioned above (a connection to existing data sources and predictive analytics), flexibility is the most important factor – in all respects.

A modern system will allow you to freely define the structure of your forecasting within just a few minutes. Regardless of whether you need standard forecasting of operational and non-operational payments and financial cash flows or whether your company mainly engages in project-related business, you should be able to freely define the structure and the details of your cash flow categorisation. On the other hand, it should also be possible to rely on templates provided by the system in order to start the process using a structure tailored to your specific industry.

At the same time, modern systems also allow you to be flexible in terms of your forecasting horizon. Everything should be possible: from short-term day-by-day forecasting required by banks for companies facing critical cash flow bottlenecks, to long-term forecasting with a horizon of several years. Top-of-the-line systems can even offer you the option of mixing daily, weekly and monthly data in order, for example, to forecast the next seven days on a daily basis, the following twelve weeks on a weekly basis and the remaining nine months on a monthly basis. You can specify how the weekly and monthly values are automatically distributed. This means that you are free to define how previous figures with a low degree of granularity appear at the weekly or daily level after the next data rollover.

Flexibility is also required when it comes to displaying the data. Modern systems offer you several features which enable you to investigate the causes of significant differences between the current and earlier forecasts. For example, switch between the various levels of granularity, whether in terms of the structure or the timeline, or compare forecast and actual figures, or even forecasts from different points in time. Thanks to these flexible display options, expensive analysis tools are no longer necessary; all you need to do is take a quick look at your system.

More than just safeguarding liquidity

The primary purpose of forecasting of course remains ensuring sufficient liquidity. Based on your current cash reserves, the cash flows captured for future time periods are aggregated to provide you with the forecast of cash available at the end of every period. This makes it possible to quickly spot cash bottlenecks.

If your system also offers you the option of managing your credit facilities and their due dates, and integrating these into your cash flow forecasting, then this will enable you to quickly determine when credit lines will need to be drawn on or when they will need to be increased. This is just one of the many aspects which make it clear how significantly you can be supported by a well-designed system.

Systems which also permit you to forecast on a currency-differentiated basis offer considerable additional benefits. This feature will allow you to capture all cash flows in the original transaction currency. The advantage here is that, as soon as you have prepared the forecast, you not only have an overview of the development of liquidity but also of your FX risk exposures. If your system also allows you to manage FX hedge transactions, a comparison of FX payments and these hedge transactions will enable you to determine your unhedged FX exposure in no time at all. The latest systems can even automatically generate hedge proposals based on the unhedged exposure which are then automatically forwarded to your trading system in a workflow-based process once these have been confirmed and approved.

Conclusion

Technological progress has made preparing a cash flow forecast easier today than ever before. Even if no liquidity bottlenecks are currently likely at your company, due to the ongoing reduction in the expenses involved, it nonetheless makes little sense to take unnecessary risks and to pass up on the advantages that comprehensive cash flow forecasting offers.

 

Gerald Dorrer – Manager TIPCO Treasury & Technology GmbH 

 

Content originally posted on Cash & Treasury Management File on 26/3/2018

 

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TIS – the single source of truth

| 29-03-2018 | treasuryXL | TIS Treasury Intelligence Solutions |

On Tuesday 27th March 2018, treasuryXL attended a seminar in Amsterdam organised by TIS. TIS stands for Treasury Intelligence Solutions and, during this seminar, Christian Werling from TIS  gave a very informative presentation about their services which focus on cloud solutions for managing the administration of bank accounts. These solutions offer real-time reporting on all bank accounts – worldwide – and the ability to use just one system to validate and release all payments. In a world where a treasury department might hold more than 100 bank accounts, dispersed over more than 10 banks spread out across different time zones  and having to maintain the possession and custody of numerous bank tokens and log in protocols, a one stop solution is very enticing.

Why?

In today’s world, companies can find themselves with a physical presence in a multitude of countries and locations. In the current environment, a corporate treasury would need to log on to the website of every unique bank where they hold accounts and extract the bank statements for the previous day. Using separate bank tokens and log in protocols, this process can quite easily take up to 1 hour. Furthermore, all the separate data needs to be collated and then uploaded into 1 system, Various subsets of the information need to be given to different internal departments so that they can perform their daily tasks – reconciliation, data input and verification.

The reality

In the modern age, you could find yourself as a Treasurer, within a large complex organisation, consisting of a head office, subsidiaries, legal entities and shared service centres. The underlying platforms can consist of book keeping systems, ERP, HR and different databases. Additional data flows come from e-banking systems, TMS and stand alone projects. The output from all these systems are then used to connect to the banks. Furthermore, all these layers of connectivity can be subject to fraud or attack from outside sources.

TIS provides a single point of contact via a SaaS (Software as a Service) platform that connects to all these systems, thereby offering a simple and effective control over the data flows in real time.

Advantages

  • Real time information
  • Control from a single point
  • Centralised bank account management
  • Centralised bank account mandates
  • Transparency
  • Cost efficiencies

After this we were informed about how the system works in the real world. Bas Coolen is the global head of treasury at Archroma – a colour and speciality chemicals company based in Switzerland. They have a physical presence in over 35 countries and 3,000 employees. Formed 5 years ago, they wanted a minimal  IT solution to their legacy banking operations. These operations stretch from Asia, via Europe to the Americas and involved many different banks.  They concluded that no single bank could provide the service they required within every country and that they needed a solution. By adopting the platform offered by TIS, they have been able to implement a global system that encompasses all their bank accounts – this provides them with a single source of truth. Importantly, the security aspects can now be maintained from one source – all the relevant authorisation matrices are now contained in one platform, along with the capability to perform all global e-banking operations from one location.

TIS were joined at this seminar by Cashforce, who presented their Smart Cash Forecasting and Treasury system – that will be the topic of our next blog.

treasuryXL would like to thank TIS for allowing us to participate in this seminar. If you have any questions, please feel free to contact us.

 

How To Optimize Your Cash Management – upcoming event

| 19-03-2018 | treasuryXL | TIS Treasury Intelligence Solutions |

Treasury Intelligence Solutions GmbH (TIS)- a partner of treasuryXL, are organising a very engaging event that is being held in Amsterdam on Tuesday 27th March 2018, for corporate treasury. We have been kindly invited to attend and shall report back to you later, with our thoughts and experiences on what promises to be an interest evening. Read on for more information about this event and sign up if you find this event relevant to you and your company.

TIS will be joined by Cashforce, at the TIS Experts Evening in Amsterdam. The main focus will be on TIS client Archroma and their presentation on the global implementation of TIS.

TIS is the leading cloud platform for the management of company-wide payments and cash flows. TIS enables companies to make more efficient, more secure and more cost-effective payment transactions while also enabling customers to make better decisions when analysing financial and operational performance in real time.

Bas Coolen, Head of Treasury at Archroma, will present challenges in his department and his key objectives for a consolidation of bank account management and an optimization of payments.

Archroma is a global colour and specialty chemicals company headquartered in Reinach near Basel, Switzerland. It operates with 3,000 employees over 35 countries and with 24 production sites.

Cashforce will inform you about the art of automating your cash forecast with minimal effort.

TIS and Cashforce are very much looking forward to stimulating discussions and ideas with their comprehensive agenda and lectures. Reports on trends, achievements and real-world examples from the industry will round up the program for this evening.
During the networking section you will have the opportunity to further exchange with Bas Coolen and the experts from Cashforce and TIS. You can take this opportunity to ask your questions about how to operate an elaborate cash management system, that offers the functionality you require.

The event is being held in the Dylan Hotel, built on the site of a famous theatre – so we can expect a good performance.

Register now for one of the last remaining seats via the following link: Expert evening Amsterdam

treasuryXL wishes everyone – both participants and attendees – a productive evening and will report back later with our findings.

From dull numbers to smart data: A new era of cash visibility is dawning

| 06-03-2018 | TIPCO | Sponsored content |

Building on information that is now more readily available than ever before, advances in technology help create new insights for corporate treasurers. 

 

 

For the last decade or so, many treasury departments have focused on getting their hands on the data required for establishing daily, or at least weekly, visibility of group-wide cash. Countless projects have revolved around collecting electronic bank balance data – think MT940 and others – and considerable time and resources have been invested in automating and speeding-up data retrieval from TMS, ERP, trading platforms and other source systems.

After all, besides bank balances, data on bank and IC loans and deposits, intercompany clearing accounts and other financial positions needed to be incorporated as well to allow for a realistic assessment of the group’s financial status and available headroom. However, reporting based on these data has remained a painful exercise for most treasury teams as it typically involved exporting information from various, isolated data silos to numerous spreadsheets containing a plethora of handcrafted reports. The result: the number of hours spent on consolidating data, updating reports and correcting errors often reached double-digits, on a weekly basis.

The first step: compiling information

In recent years, the provision of relevant data has become much more automated and common place since the goal of having electronic account statements of all bank accounts world-wide centrally available was high on the priority list of many corporates. Very often, this was part of a larger effort to streamline and centralise cash management and payments. In many cases, a TMS was introduced to replace Excel spreadsheets and the treasury modules of popular ERP suites started to offer more sophisticated features, providing corporates with a preference for all-in-one solutions with a viable alternative to a standalone TMS. A mix of tried-and-tested, file-based connectors and more sophisticated web-services allowed for even speedier data interchange between source systems such as TMS, ERP or trading platforms. And any data not centrally available to the treasury department was collected from subsidiaries – facilitated in the best case by easy-to-use, web-based applications. With this kind of information basis established, dedicated treasury reporting solutions were leveraged to achieve close to 100% visibility of cash. At the same time, the rise in business intelligence software allowed end users to easily retrieve data without having to resort to spreadsheets and accessing reports online or even via smart devices became the norm rather than the exception.

The next step: Turning information into insight

For many corporates, these steps were already a big leap forward. But what next, now that all the integration challenges have been mastered and information is readily available? Of course, the ‘data puddles’ turned ‘data pools’ mentioned above can be used for plain and simple financial status reporting. But, given that it is 2018 and self-driving cars will soon hit the road in California: should that really be it? For us, the answer is a clear ‘no’. Today, treasurers have access to a whole new range of applications which make use of information that is now more readily available than ever, and which leverage recent advances in technology such as artificial intelligence to provide value-added services to treasury depart-ments. While we are very careful when talking about ‘revolutions’ in treasury, the advances we want to highlight below surely are a noteworthy evolution. Until recently, data analysis in treasury was still very much a manual task. This no longer needs to be the case as smart tools greatly reduce the time needed for performing even in-depth data analyses, thus allowing more time to be spent on acting on the results of such analyses. Let us take you on a quick ‘tour d’horizon’ using five examples of how smart applications can take your cash visibility to the next level:

1. Policy checks
In a typical treasury policy, one finds numerous rules and regulations relating to the opening of new bank accounts, the maximum allowed number of these accounts, acceptable account purposes, etc. Why not replace email-based processes for new bank account requests with intelligent workflows that not only ensure an end-to-end audit trail, but which also ensure that new bank accounts are automatically fed into all relevant systems such as ERPs, TMS or reporting tools once finally approved.

2. Compliance controls
Combined with smart request workflows as described above, regular, system-supported compliance checks further enhance group treasury’s grip on what is going on around the group. Whether these checks relate to the number, currency or counterparty of bank accounts or other financial positions, or the timeliness of data on authorised signatories in the system, outliers can easily be identified, and compliance can be swiftly restored.

3. Fraud detection
When electronic account statements are merely used as a means of importing end-of-day balances, much of their potential is lost. Based on smart search patterns, data provided as part of the remittance information can be used for valuable insights: Where in the group do frequent cash-based transactions occur? Banks’ business transaction codes (BTCs) or other related text snippets can point you in the right direction and responsible, local or regional finance staff can be notified automatically, using workflow-based notification processes so the background and soundness of such cash movements can be checked.

4. Performance KPIs
KPIs as a means of systematically measuring treasury performance are high on the agenda of many of the more advanced treasury departments out there. Whether they relate to the efficiency of core treasury processes (think request and approval workflows once again) or to other indicators such as the overall number of bank accounts, the percentage of accounts included in cash pooling arrangements, the share of trapped cash in overall cash – to name only a few basic KPIs: a well-compiled set of such figures that covers not only cash management but other areas as well – presented in the form of a clearly laid out KPI dashboard, finally provides the treasurer with a strategic steering wheel.

5. Bank fee controlling
You wonder what bank fee controlling has to do with cash visibility. The short answer: everything. Regular, system-supported bank fee analysis is not only about penny pinching but equally about developing an in-depth understanding of what is going on further up the process chain. A strikingly high number of fax payments in a country where you wouldn’t expect them? Fees titled ‘Others’ which amount to thousands of euros every month? If nowhere else, then you’ll find this information in the electronic fee statements (e.g. camt.086) provided by your bank. A smart analysis tool allows you to interactively drill down from cruising altitude to the line item level and within minutes you can reach out to either your bank’s customer service, your subsidiary or both to clarify what’s going on.

If you would like to know more and find out how technology can help you go one step beyond cash visibility and ease your daily life as a treasurer, get in touch with us. We are looking forward to helping you unleash your data’s full potential.

TIPCO Treasury & Technology GmbH

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Bank fee monitoring – more than just “penny pinching”

| 06-02-2018 | TIPCO | Sponsored content |

The electronic analysis of bank fees not only cuts costs but also helps to sustainably improve the quality of treasury processes.
Monitoring bank fees is not a task which is particularly popular in treasury departments. The idea of working through stacks of paper in the hope of understanding confusing bank fee nomenclature doesn’t usually generate much enthusiasm. This onerous task is often delegated, or statements are just blindly signed off on by the accounts department. That’s a shame. Why? Because the systematic analysis of bank fees can not only save considerable sums of money but can also lead to real improvements in treasury processes.

Evil intentions are not the only reason behind incorrectly charged items. Banks claim that updates of their fee calculation systems are sometimes responsible for standard fees being charged rather than those which have been specially negotiated with certain clients. Simply on the grounds of human error, there is a need to regularly check whether agreed fees are always taken into account by the software that banks use.

What do you need to do to retain an overview?

First of all, you need a bank which is capable of providing you with electronic statements in either the TWIST BSB or camt.086 formats. The gentle pressure that major corporates have put on their banks in recent years has paid off. Banks are increasingly responding positively to relevant customer requests. We will be happy to provide a list of those banks which can already provide these statements and in which countries.

On the other hand, your systems need to be able to read and process these formats. While you can open the statements relatively easily in Excel, special system support is necessary in order to perform in-depth analyses. Many corporates use web-based and TMS-independent platforms for this which have specially developed to monitor bank fees. Bespoke interfaces guarantee integration into your existing system landscape. A good example of such a system is the treasury information platform TIP, which is already in use at corporates such as Deutsche Post DHL Group or Lufthansa.

How will you benefit from regular checks?

The first benefit comes from checking that agreed fees are actually charged in practice. The press of a button is all it should take to highlight all discrepancies and provide a basis for demanding reimbursement from the bank. But this is just the beginning. Once transparency has been established about the services and fees charged, it doesn’t take long to draw conclusions about suboptimal payment processes. For example, if your analysis frequently highlights expensive “non-STP” or “repair” fees, you would be well advised to take a closer look at your payment processes. Perhaps there is simply a need to update incorrect master data. On the other hand, it might be necessary to brief your personnel on correct payment processes.

A further example: document-based payment methods. If your Canadian subsidiary in-structs a bank by fax to perform 800 transfers a month, this is not only a problem for your internal audit team but generally also extremely expensive. Here is another case relevant in the context of compliance which can be highlighted by bank fee monitoring: Cash withdrawals from company accounts at a bank branch may be above board in certain cases but should certainly be queried.

Another positive side effect of a transparent overview of bank fees is a comparison between different subsidiaries: Do all your subsidiaries in a particular country pay the same fee for the same service, and if not, why not?

Another situation: Imagine that you asked the general manager of your Spanish subsidiary three months ago to close two unnecessary EUR accounts, but the account management fee keep appearing on the statements. Electronic statements can therefore help you to insist on compliance with your cash management policy.

However, this issue is not only suitable as a means of slapping the wrists of banks and in-ternal troublemakers. The systematic processing of bank statements also provides you with exactly the data you need for your next payment service RFP: The relevant products you use and volumes are presented on a silver platter; meaning that you don’t need to painstakingly collect these data from your subsidiaries. Besides the quantitative factors, the analysis of bank fees also provides you with a better impression of the quality of the services provided by your banks. Armed with these data, you are far better prepared for bank negotiations.

What will the future bring?

What might still sound far-fetched today may soon become reality: Work is already ongoing in some pilot projects to directly book fee-based information from electronic account statements in ERP systems. This is based on statements prepared using the ZUGFeRD format, a standard developed by the Forum for Electronic Invoicing Germany (FeRD), which will make it possible to send invoices in a defined PDF format which can then be automatically read and processed.

Parallel to this, the German Association of Corporate Treasurers (vdt) has formed a working group to establish an XML format proposal which meets the minimum requirements necessary for bank fees to be VAT deductible. And, in the near future, electronic statements may also include all of the key elements of banks’ year-end summaries.

Efforts to introduce electronic bank fee statements are also being intensified internationally: The Common Global Implementation (CGI) initiative, investigating the standardisation of payment formats, has set up a working group to further develop camt.086, the ISO standard for cash management statements. Numerous other initiatives in Germany, Austria and France are also regularly bringing banks, corporates and system providers together for meetings. Increasing numbers of medium and large corporates are starting relevant projects and sharing their experiences at fairs such as those of the Association of Financial Profes-sionals (AFP) in Denver and at the Finance Symposium organised by Schwabe, Ley & Greiner. This issue is also being addressed in academia, highlighted by the numerous dis-sertations and theses focussing on how theory and practice should be combined. Last but not least, system providers are increasingly integrating bank fee monitoring into their solutions.

How can you help?

Rising demand from corporates is ensuring that this issue remains firmly at the top of credit institution agendas. While banks of course are keen to pass on the necessary investment costs to their customers, don’t let yourself get caught up in any discussions on this issue. After all, you don’t pay other suppliers to send you electronic invoices that you can understand.

TIPCO Treasury & Technology GmbH

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