Bank Fee Analysis and Billing
Everything is Changing
TEXPO
Fort Worth,
April, 2011
OPEN SOLUTIONS
WEILAND FINANCIAL GROUP
TODAY’S PRESENTERS
STEVE WEILAND
Founder & VP Strategic Development
The Weiland Financial Group
A Division of Open Solutions Inc
Principal contributor
• ANSI X12 822
• TWIST BSB
Principal author
• AFP Guide to Account Analysis: Statement
Standards and Transaction Set 822
Implementation Guide
• BSB Requirements Document
Contact Information
• Stephen.Weiland@OpenSolutons.com
• +1 847-810-6120
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TODAY’S PRESENTERS
BRIDGET MEYER
Independent Bank Account Relationship
Management Consultant
Technical Consultant and Author
• 2008 version of the AFP Service Codes
• New Global Services Codes
Product Manager of the AFP Accredited
Services Provider Program
Former Financial Program Specialist with the
US Treasury Dept, FMS
Contact Information
• Bridgetmeyer@embarqmail.com
• 281-802-1139
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
Change: Balance Considerations
Change: Service Considerations
Growing: Electronic Statement Usage
New: eBAM, Get Ready
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
• Account Analysis – Why examine it, who cares?
• Account Analysis – What is it?
• Elements of Account Analysis
• The Change Drivers
Change: Balance Considerations
Change: Service Considerations
Growing: Electronic Statement Usage
New: eBAM, Get Ready
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WHY EXAMINE IT, WHO CARES?
REASONS TO EXAMINE BANK CHARGES & BALANCES
Cost Control
• Reduce bank fees, optimize balances
• Eliminate pricing errors, invalid services, bad volumes, closed accounts, redundant services
• Allocate costs to departments
• Compare prices by bank and benchmarks
Investments
• Maximize return on investable balances
• Track balances, offset fees, & invest the rest or fund other activities
Compliance
• Bank fees and balances merit oversight and transparency
• SOX argues for bank fee and balance control and reporting
Metrics
• Your bank statements provide tremendous insight into your treasury operation
• What divisions/departments are using what services and at what cost?
• Is our service usage (volume) increasing or decreasing? Why?
• What should we budget for the coming year?
• Which bank offers the best prices?
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WHY EXAMINE IT, WHO CARES?
BANKS MAKE MISTAKES. ARE YOU CATCHING THEM?
1,000’s of customers
100’s of pricing plans
1,000’s of contract dates
Funneled
(keyed)
Through
100’s of locations
1,000’s of services &
chargeable events
Multiple
Systems
Billing
System
as
Catchall
=
Mistakes
1,000’s of accounts &
relationships
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ACCOUNT ANALYSIS – WHAT IS IT?
A WAY TO SAVE MONEY & SO MUCH MORE
A bill for services rendered
A marvelous record of
balances and services
A weighing process
For some…a flat out mystery
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ACCOUNT ANALYSIS – WHAT IS IT?
A WEIGHING PROCESS - Traditionally
Balances
Services
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ACCOUNT ANALYSIS – WHAT IS IT?
A WEIGHING PROCESS -> Profit To The Bank
Services
$7,000
Balances
$10,000 EC
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ACCOUNT ANALYSIS – WHAT IS IT?
A WEIGHING PROCESS -> You pay $3,000
Balances
$7,000 EC
Services
$10,000
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ACCOUNT ANALYSIS – WHAT IS IT?
A WEIGHING PROCESS -> Break Even
Balances
$7,000 EC
Services
$7,000
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ELEMENTS OF ACCOUNT ANALYSIS
CALCULATE THE BALANCE ON WHICH THE EC IS BASED
Balances
Average Daily Ledger Balance
$250,000
Less Float
50,000
Average Daily Collected Balance 200,000
Less Reserve Requirement (10%) 20,000
Balance to Support Services
180,000
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????
????
????
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ELEMENTS OF ACCOUNT ANALYSIS
LIST AND TOTAL ALL PERIOD SERVICE CHARGES
Services
SERVICES RENDERED.... VOLUME
Collected Balance OD
8,000
FDIC Premium/Thou
250
Monthly Maintenance
1
Deposit Items
1,000
PRICE CHARGE
6.00% 40.77H
.06
15,00H
30.00
30.00
.10 100.00
----Total Charges Before Credit 185.77
Compensable Subtotal
130.00
Hard Charge Subtotal (H)
55.77
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BALANCE
????
????
40,000
133,333
-----173,333
173,333
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ELEMENTS OF ACCOUNT ANALYSIS
ESTABLISH THE COMPENSATION POSITION
ACCOUNT POSITION.......
Earnings at 1.0%
Less Compensable Charges
Earnings Excess
Hard Charges (H)
Total Due
????
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..FEES
150.00
130.00
20.00
BALANCES
180,000
173,333
6,667
55.77
55.77
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THE CHANGE DRIVERS
REGULATION, GLOBALIZATION, TECHNOLOGY
 Reg Q – Glass Steagall Act, 1933
 Reg CC – Expedited Funds Availability Act, 1987
 822 – The US Electronic Analysis Statement, 1991
 Check 21 Act, 2004
 Electronic Services – New, imaging vs paper
 BSB - The Global Electronic Billing Statement, Oct 2006
 FSRR - Financial Services Regulatory Relief Act, Oct 2008
 TAG – Transaction Account Guarantee, part of TLGP, Nov 2008 & Aug 2009
 Dodd-Frank Wall Street Reform and Consumer Protection Act, July 2010
 eBAM – Electronic Bank Account Management, Now
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
Change: Balance Considerations
• Some examples
• Interest on reserves
• Overdraft charge base balances
• Dodd-Frank & hard interest
• Tiered earnings credit rates
• Pay with balances or fees
Change: Service Considerations
Growing: Electronic Statement Usage
New: eBAM, Get Ready
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BALANCE CONSIDERATIONS
SOME EXAMPLES
We’ll start with the classic analysis statement balance
presentation and earnings credit calculation
Net Collected
Positive
Average Ledger Balance
$250,000
Less Float/Holds
50,000
Average Collected Balance
200,000
Less Reserves (10%)
20,000
Balance to Support Services 180,000
Earned Credit at 1.0%
150
Net Collected
Reduce Float
Net Collected
Reduce Float
No Reserves
$250,000
20,000
230,000
23,000
207,000
$250,000 $250,000
20,000
20,000
240,000
230,000
0
0
240,000
230,000
173
192
Pos Collected
Reduce Float
No Reserves
200
A net increase in Earned Credit of $50, or 33%
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BALANCE CONSIDERATIONS
INTEREST ON RESERVES, THE FSRR ACT OF 2006
Effective date moved from Oct 1, 2011, to Oct 1, 2008
Authorizes interest payments on funds maintained at the Fed
• On Required Reserves: average targeted Fed funds rate less 10 points
• On Excess Reserves: lowest targeted Fed funds rate less 75 points
• On Clearing Balances: implicit earnings credit against Fed services
Depository institutions not required to pass along interest to their customers
Reg Q will no longer prevent explicit interest payments to DDA accounts
How (and will) corporate checking accounts benefit?
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BALANCE CONSIDERATIONS
INTEREST ON RESERVES: BANK RESPONSES
Average Daily Ledger Balance
Less Float
Average Daily Collected Balance
Less Reserve Requirement (10%)
Balance to Support Services
NIF Earnings at 1.0% = 150.00
Average Daily Ledger Balance
Less Float
Average Daily Collected Balance
NIF Earnings at 1.0% = 166.67
NIF Earnings at 0.9% = 150.00
Average Daily Ledger Balance
Less Float
Average Daily Collected Balance
Less Reserve Requirement (10%)
Balance to Support Services
NIF Earnings at 1.0%
= 150.00
Reserves Earnings at 1.9% = 31.67
181.67
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$250,000
50,000
200,000
20,000
180,000
180,000
Classic Approach
Reserve reduction
with ECR of 1.0%
New Approaches
$250,000
50,000
200,000
200,000
Eliminate reserves with
same rate of 1.0%
200,000
Eliminate reserves with
reduced rate of 0.9%
$250,000
50,000
200,000
20,000
180,000
180,000
20,000
Reserve reduction with
ECR of 1.0%
and
earnings on reserves at
10 points less than the
Fed Funds rate of 2.0%
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BALANCE CONSIDERATIONS
OVERDRAFT CHARGE BASE BALANCES
Example Assumptions:
30 day month
Ending OD balance on day one: (300,000)
Ending balance on each of the other 29 days:
248,275.86
Aggregate Balance Results:
Average Balance Results:
Positive: 29 * 248,275.86 = 7,200,000
Positive: 7,200,000 / 30 = 240,000
Negative: 1 * (300,000) =
(300,000)
Negative: (300,000) / 30 = (10,000)
Net: =
6,900,000
Net: 6,900,000 / 30 =
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230,000
Charge
No Charge
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BALANCE CONSIDERATIONS
DODD-FRANK & HARD INTEREST: July 2011,Bank Responses
Option 1: No change. “Soft” earnings credit only
• Earnings credit rates usually lower than hard interest rates
• Reserve requirement might reduce effective rate
• Credit not taxable
• Charges offset by soft credit cannot be expensed
Option 2: “Hard” interest only, pay with dollars
• Hard interest rates usually higher than earnings credits rates
• Credit is taxable
• Charges can be expensed
Option 3: Hybrid combination of “Soft” credit and “Hard” interest
• Soft credits offset fees, hard interest earned on excess balances
• Earnings credit not taxable while hard interest is
• Reserve requirement rate may be a factor
• Charges offset by soft credit cannot be expensed
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BALANCE CONSIDERATIONS
TIERED EARNINGS CREDIT RATES
No tiering. Any and all balances at the same ECR.
ACCOUNT POSITION.......
Earnings at 1.0%
Less Compensable Charges
Compensable Charges due
Total Due
..FEES .BALANCES
150.00
180,000
173.77
231,693
(23.77)
(51,693)
23.77
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BALANCE CONSIDERATIONS
TIERED EARNINGS CREDIT RATES
Tiering in effect. Balances over 100K earn at a higher rate.
ACCOUNT POSITION.......
..FEES
Earnings at 1.5%
225.00
Less Compensable Charges 173.77
Earnings Excess
51.23
Excess
.BALANCES
180,000
154,461
32,739
51.23
There were charges due. Now there is an excess.
Note: Tiering (on what balance?) can also be used to
establish the hard credit interest rate.
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BALANCE CONSIDERATIONS
PAY WITH BALANCES OR FEES?
Assumptions:
IMPORTANT!
Monthly Compensable Charges = $1,000
Bank Net-of-Reserves Earnings Rate = 1.0%
Requirement Factor = 1/(.01 * (30/360)) = $1,200
CD Per Annum Rate = 1.5%
Balance Approach (Earnings offset Fees):
Monthly Balance Required: $1,000 * $1,200 = $1,200,000
Plus 5% balance cushion:
$60,000
Total Monthly Average Balance Used:
$1,260,000
Income Expense
Monthly Fees:
0
$1,000
Monthly CD Interest: $1,575
0
( $1,260,000 *1.5% *30/360 )
Transfer Fees:
0
$50
Net Monthly IBT:
$1,575 - $ 1,050 = $525
Less 20% Tax on Net: $105
Net Gain: $420
Fee Approach:
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
Change: Balance Considerations
Change: Service Considerations
• DODD-FRANK & FDIC fees
• Hard Charged vs Balance Compensable
• Bargaining: volume discounts
Growing: Electronic Statement Usage
New: eBAM, Get Ready
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SERVICE CONSIDERATIONS
DODD-FRANK & FDIC FEES
Prelude: Transaction Account Guarantee Program (TAGP)
• Part of Temporary Liquidity Guarantee Program approved 11/21/08 (12 CFR 370)
• Guarantees non-interest bearing deposit accounts over $250,000 without limit
• Bank’s TAG fee based on risk category and non-interest balances exceeding $250,000
• Termination Date: December 31, 2010 (third extension)
Dodd-Frank Wall Street Reform & Consumer Protection Act
• Singed into law July 21, 2010 (Public Law 111-203)
• Unlimited coverage for non-interest accounts extended to December 31, 2012
– Unlike TAGP, participation is mandatory for all banks
– Unlike TAGP, prohibits charging a separate premium for this increased coverage
– Unlike TAGP, does not cover NOW accounts
• Reserve ratio increased from 1.15 to 1.35
– 9/30/20 target – DIF is $20 Billion in the red as of June 2010
– Offset required for institutions with total consolidated assets of less than $20 billion
– 1.5 cap lifted
• Changes assessment base calculation from deposits to assets
• Insurance coverage permanently raised from $100,000 to $250,000 for all accounts
Other Developments – Dec 2009 one-time payment of 13 quarters’ fees & FDIC credit swaps
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SERVICE CONSIDERATIONS
DODD-FRANK & FDIC FEES
Experience shows a major increase in FDIC fees
The FDIC is silent on how or if their fees are to be passed on to bank
customers – are you paying a premium or receiving a discount?
Impossible to tell if you are being penalized for your bank’s risky behavior
Impossible to determine if you are paying your “fair share”
Dodd-Frank makes assessing the price of extended coverage impossible
Must compare the price of coverage per insured dollar across your banks
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SERVICE CONSIDERATIONS
HARD CHARGED VS BALANCE COMPENSABLE
Two services are Hard Charged. No balance
offset. What you see is what you pay
SERVICES RENDERED.... VOLUME
Collected Balance OD 10,000
FDIC Premium/Thou
250
Monthly Maintenance
1
Deposit Items
1,000
PRICE CHARGE
6.00% 50.00H
.06
15,00H
30.00
30.00
.10 100.00
-----Earnings at 1% 150.00
Less Compensable Charges 130.00
-----Excess Earnings
20.00
Plus Hard Charge Subtotal (H)
65.00
Total Due
65.00
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BALANCE
40,000
133,333
------173,333
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SERVICE CONSIDERATIONS
HARD CHARGED VS BALANCE COMPENSABLE
Change the two services to compensable
and the charge can be offset by balances.
SERVICES RENDERED.... VOLUME
Collected Balance OD 10,000
FDIC Premium/Thou
250
Monthly Maintenance
1
Deposit Items
1,000
PRICE CHARGE BALANCE
6.00% 50.00H
.06
15,00H
30.00
30.00 36,000
.10 100.00 120,000
------ ------Earnings at 1% 150.00
Less Compensable Charges 130.00 156,000
-----Deficit Earnings
20.00
Plus Hard Charge Subtotal (H)
65.00
Total Due
65.00
CHARGE
50.00
15.00
30.00
100.00
-----150.00
195.00
-----45.00
.00
45.00
BALANCE
60,000
18,000
36,000
120,000
------180,000
You saved $20.00
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SERVICE CONSIDERATIONS
BARGAINING: VOLUME DISCOUNTS
No volume discount on high volume services
SERVICES RENDERED.... VOLUME
Collected Balance OD 10,000
FDIC Premium/Thou
250
Monthly Maintenance
1
Deposit Items
1,000
PRICE CHARGE
6.00% 50.00
.06
15,00
30.00
30.00
.10 100.00
-----Total Charges Before Credit 195.00
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BALANCE
60,000
18,000
36,000
120,000
-----240,000
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SERVICE CONSIDERATIONS
BARGAINING: VOLUME DISCOUNTS
Tiered pricing discount on high volume service
SERVICES RENDERED.... VOLUME
Collected Balance OD 10,000
FDIC Premium/Thou
250
Monthly Maintenance
1
Deposit Items
400
300
300
PRICE CHARGE
6.00% 50.00
.06
15,00
30.00
30.00
.10
40.00
.08
24.00
.06
18.00
-----Total Charges Before Credit 177.00
BALANCE
60,000
18,000
36,000
48,000
28,800
21,600
-----212,400
You saved $18.00
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
Change: Balance Considerations
Change: Service Considerations
Growing: Electronic Statement Usage
• What are the Electronic Statements?
• What’s the purpose?
• AFP Code use and globalization
• Who’s producing them?
New: eBAM, Get Ready!
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ELECTRONIC BANK FEE ANALYSIS
YOUR OPTIONS ARE CHANGING
1. EDI Transaction Set 822 - Domestic
2. BSB – Global
3. WEB
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ELECTRONIC BANK FEE ANALYSIS
WHAT’S THE PURPOSE? TO AUTOMATE REVIEW
Gain faster delivery, accelerate payment
Eliminate the paper, reduce statement charge
Satisfy SOX and EU directives by examining all prices & charges
Check all bank calculations (find errors)
Check expected balances, volumes, prices
Allocate bank charges automatically
Perform modeling and “what if” scenarios
Compare divisions, departments, regions, etc...
Export data to existing systems ( GL, Budgeting, Payables )
Perform bank-to-bank comparisons
Examine each and every line item charge and tax
Analyze global fees in one common currency
Archive statements electronically
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ELECTRONIC BANK FEE ANALYSIS
822 & BSB ELECTRONIC STATEMENT STANDARDS
822
BSB
ANSI ASC (US)
TWIST (Global)
Format
X12 Looping Format
XML
Balances
Important – earnings
credits, reserves
Not required but desirable
(No Reg Q)
Compensation
Yes – single currency
Yes – multiple currencies
Very important – AFP
codes, balance required
Very important – AFP codes
optional, no balance required
Taxes & Currencies
NA
Very Important
Relationship Structure
Yes
Yes
Adjustments
Yes
Yes
Absolutely!
Absolutely!
Standards Body
Services
A Tool for Treasury?
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ELECTRONIC BANK FEE ANALYSIS
WHAT SOFTWARE OPTIONS DO I HAVE?
822
BSB
Over 800 corporations receive 822s
using one of the four options:
Approximately 30 corporations
have begun receiving the BSB.
Licensed Software
Hosted Software
Outsourced Analysis
Proprietary Software
Licensed Software?
Hosted Software?
Outsourced Analysis?
Spreadsheet analysis
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ELECTRONIC BANK FEE ANALYSIS
BSB TWIST UPDATE
TWIST and SWIFT have agreed to maintain the BSB standard jointly under
the ISO 20022 umbrella. They are working together to:
• Possibly extend BSB standard to enable electronic invoicing.
• Complement BSB and eBAM standards to provide one comprehensive
set of bank-customer administrative standards.
• Publish a new global set of standard service codes through the AFP
for use specifically with the BSB.
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ELECTRONIC BANK FEE ANALYSIS
BSB DEVELOPMENT CHANGES
Banks Offering BSB
Countries Available
Deutsche Bank
10 countries in Europe
HSBC
Canada
Standard Chartered
Middle East
Bank of America
Adding Europe, Asia, Canada, and Latin
America in Q1 2011.
Barclays Bank, BNP Paribas, Danske
Bank, Citibank, and JP Morgan
rolling out to additional regions
*ISB/TWIST BSB –Fall 2010 Newsletter
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ELECTRONIC BANK FEE ANALYSIS
AFP CODE USE AND GLOBALIZATION
Since 1986, AFP Services Codes© have been
recognized as the standard for identifying
balances and charges that appear on account
analysis statements and in responding to RFPs.
Updated in 1997, 2004, 2008
CALL FOR VOLUNTEERS!
Assigned by bank product managers
Used to compare “apples to apples” across all
bank relationships
Global service code book in development
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ELECTRONIC BANK FEE ANALYSIS
AFP CODE INFORMATION – HOW TO GET IT
My bank sends me AFP codes but I don’t know what they mean. HOW DO I
GAIN ACCESS TO THE AFP CODE DESCRIPTIONS AND SEARCH ENGINE?
ASK YOUR BANK
ASK YOUR SOFTWARE PROVIDER
PURCHASE A YEARLY LICENSE FOR
ONLINE ACCESS FROM AFP
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ELECTRONIC BANK FEE ANALYSIS
AFP SERVICE CODE© STRUCTURE
AFP codes are always a 6 character
alphanumeric code.
00 Product Family
00 Product Group
0 Service Line
0 Service Detail
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ELECTRONIC BANK FEE ANALYSIS
AFP SERVICE CODE EXAMPLES
Return Item Notification - Internet

10 Depository Services +
 04 Return Items +
 1 Return Item Notification – Automated+
 6 Internet =
 100416
Wire Transfer Out Phone Repetitive

35 Wire and Other Funds Transfer Services +
 02 Outgoing Fedwire Transfer – Manual +
 00 Repetitive =
 350200
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ELECTRONIC BANK FEE ANALYSIS
GLOBAL SERVICE CODES Coming Fall 2011
Domestic Codes
Global Codes
Length
6 digit alphanumeric
8 digit alphanumeric
Level of detail
High
Moderate
Compatibility
822, Web/Excel
Only BSB
Balance Codes
Yes
No
Service Codes
Yes
Yes
Accessible/Searchable
online
Yes
Coming
Accreditation/Mapping
Services
Yes
Coming
AFP will provide a mapping that links the Global to the Domestic codes for
corporations who may use both.
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ELECTRONIC BANK FEE ANALYSIS
AFP CODE STANDARDIZATION TRENDS
Global Interest
Domestic Bank Analysis
RFP Usage
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ELECTRONIC STATEMENT USAGE
AFP SERVICE CODES © ACCREDITED PROVIDER PROGRAM
Increase standardization in reporting bank
compensation by recognizing banks that are
using the AFP Service Codes© consistently
with the standard.
•40% Accuracy Rate in assigning AFP codes – Why?
•Banks continue to merge
•Code mapped is a code frozen
•Not properly trained
•Fluid industry
•What you can do.
•Pay attention to your AFP codes
•Not getting them? Ask for them
•Ask your bank to become Accredited
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BANK FEE ANALYSIS AND BILLING
EVERYTHING IS CHANGING
First Things First
Change: Balance Considerations
Change: Service Considerations
Growing: Electronic Statement Usage
New: eBAM, Get Ready!
• What is BAM?
• Why is BAM important?
• eBAM, Hanging the “e” on BAM
• eBAM, Acceptance
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NEW: eBAM, GET READY!
WHAT IS BAM? BANK ACCOUNT MANAGEMENT
A single, globally accessible, centralized way to manage and control bank
account data
• Banks
• Accounts
• Signers and limits (mandates)
• Bank contacts
• Corporate structures
• Account hierarchies
• Audit trail (openings, modifications, closings)
• Related documents
A single “source of truth” for all bank account related questions
• How many accounts do we have? How many did subsidiary X open last month?
• Who are all of our signers? Do they all still work here? What are their limits?
• How are our accounts related? Is our account structure efficient?
• What happens if we change banks, merge, acquire a new company?
Important for control (trapped cash, fraud), compliance (SOX), and cost (fees)
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NEW: eBAM, GET READY!
WHY IS BAM IMPORTANT? CONTROL
A surprising number of organizations do not have a complete list of accounts
Treasury often discovers accounts during other projects
Dangers include:
• Trapped cash
• Exposed accounts
• Long periods of time where fraud would not be discovered
Amount Year
Firm
Event
$4B+
1999
Parmalat
Italian conglomerate
$4 Billion overstatement of cash and falsified
audit validation of funds related to the firm’s Bank
of America account.
$1B+
2009
Satyam
Indian IT Outsourcing
Falsified financials over several years. Listed
53,000 employees. Used fictitious employees to
siphon funds. Overstated assets, understated
liabilities. Created fictitious cash balance of over
$1 billion equivalent.
Craig A. Jeffery, The Strategic Treasurer: A Partnership for Growth (Hoboken: John Wiley & Sons, Inc., 2009) pp.137
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NEW: eBAM, GET READY!
WHY IS BAM IMPORTANT? COMPLIANCE
SOX REQUIREMENTS
BAM
302 Financial Statements
Account Audit Support
• CEO and CFO certification required
• Validation = complete inventory of
accounts and balances (for cash,
investments, etc.)
• Treasury or external auditor
reporting
• Ensures complete list of accounts
• Balances easily verified
• Account list ready for bank
verification
404 Internal Control Framework
Process Controls - BPM
• Auditors must certify that they have
a framework
• Auditors must certify that the
framework will identify discrepancies
and has been tested
• Open, Close, Change
• Identification of every step
• Easily test the control structure
• Graphical display of account
structure in a funding tree
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NEW: eBAM, GET READY!
HANGING THE “e” ON BAM
eBAM streamlines communication between corporations and banks
• eBAM is an electronic XML messaging standard composed of 15 message types
• ISO 20022 approved, maintained by SWIFT
• No more need for paper, PDFs, faxes, or emails between you and your bank
With eBAM, you will be able to electronically…
• Open accounts
• Perform account maintenance (change mandates, account details, etc.)
• Close accounts
eBAM significantly cuts down the time and resources spent in account management
But before you can use eBAM – you need BAM!
• How can you change a signer if you don’t know the account number, the bank it’s
held at, who the current signer is, the person with the authority to change it, etc.
• Plus, you need a BAM system that fully integrates with the eBAM standard to fully
realize its automation benefits – otherwise eBAM data must be manually entered
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NEW: eBAM, GET READY!
ACCEPTANCE
Standard developed and supported by SWIFT
Accepted by ISO 20022
Distinct benefits for corporates
Distinct benefits for banks
Test cases in progress
High attention level
Promise and Progress
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APPENDIX: BANK ACCOUNT RELATIONSHIP
CONSIDERATIONS
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ORGANIZATIONAL CONSIDERATIONS
Do I have a comprehensive bank account management policy?
How many accounts do I have? Where are they domiciled? Do I know all my accounts and account numbers
held at each bank?
What types of accounts are they? Can I easily get a list of all my disbursement accounts, collection accounts,
custodial accounts?
Is the account a member of a hierarchy? Is the account a relationship parent, a detail account or some level in
between?
Who are my signers? Who can sign an account as an individual or as part of an identified group? Are digital
signatures allowed and controlled? What happens when signing authority is removed?
Who are my account contacts? Who are my primary and secondary account bank contacts for each of my
accounts?
What are my signers’ signing limits? Are dollar limits established for each signer?
How often do we run a bank audit and is it accurate? Is the required information current, reliable and easily
sampled?
How easy is it to import/export data to existing systems (GL, Budgeting, Payables, HR)?
Should I be receiving electronic statements? Can I and should I receive and analyze the 822 and BSB
electronic statements?
Can I format all bank statements into a common format for ease of use, cross-bank reporting and comparison?
Can I archive account statements electronically for analysis and review?
Are controls in place so that account openings, closings and critical maintenance are performed in the proper
sequence by the proper people with the required authorizations?
Am I ready for eBAM?
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COST CONTROL CONSIDERATIONS
Do I have any unnecessary accounts or services? Are there more cost effective services available?
Am I managing my bank charges? Am I recognizing pricing errors, invalid services, bad volumes, closed accounts,
redundant services, etc.?
Are my earnings rates competitive? Do they reflect the bank’s earnings on my reserve balances?
Should I be paying bank service charges with balance earnings or with hard dollars?
Can I allocate account costs to the relevant departments?
Do I have a reliable system to detect, track and resolve bank pricing and charging errors?
Do I have a way to score my satisfaction with the resolution of bank disputes to inform negotiations?
Can I easily perform service price comparisons with other banks and benchmarks?
Do I have enough historical account balance & charge information for informed and persuasive negotiations?
Can I store statements electronically and eliminate paper statement fees and storage charges?
Can I review the taxes levied on services & convert multiple currencies into a common currency for review?
Can I reasonably forecast future account charges for budgeting purposes?
Can I examine each and every line item charge on my analysis statements? Am I checking expected balances,
expected volumes, and contracted prices?
Have I established the most beneficial service charge calculations available from my banks?
• Volume Discounts, Threshold Pricing, Tier Pricing
• Balance-Based Tier Pricing (discounts based on collected balance tiers)
• Fee-based (Hard Charged) versus Compensable
• Base Charge plus Volume ($20 plus volume charge)
• Min / Max Charge Limits (never less than and never more than)
• Basket Pricing (chargeable volume equals sum of other volumes)
• Waivers Based on Balance Levels
• Percentage Discount on Charge Total
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INVESTMENT CONSIDERATIONS
Am I managing the investable balances in all my deposit accounts?
Have I examined balance compensation versus fee compensation in order to free up balances?
Am I tracking the average balances used to offset charges and then investing the remainder or using
it to fund other activities?
Am I in a short-term borrowing mode? If so, am I optimizing the use of my deposit account balances
as the earnings “credit” earned from the bank will always be lower than the interest rate paid to the
bank on borrowed funds?
Will I be ready for the repeal of Reg Q and have the tools & data at my hands to decide which
compensation approaches work best for my situation?
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COMPLIANCE CONSIDERATIONS
Am I properly overseeing my accounts, service charges, and balance usage?
Am I able to report my service charges as an element of cost and demonstrate proper price
management in compliance with SOX?
Can I demonstrate proper account controls for
• my banks, accounts, signers and related documents
• all the processes involving them such as account openings, mandates and closings?
Is my sensitive account data secure?
SOX 302 Financial Statements
• CEO and CFO certification required
• Validation = complete inventory of accounts and balances (for cash, investments, etc.)
SOX 404 Internal Control Framework
• Auditors must certify that they have a framework
• Auditors must certify that the framework will identify discrepancies and has been tested
Are EU directives satisfied?
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METRICS AND ANALYTICAL CONSIDERATIONS
Do I have an easily accessible record of every service volume, price, and charge; every balance and
earnings credit rate, for every account at all my banks going back months if not years?
Am I analyzing the wealth of information contained in my bank account statements to gain transparency
into my treasury operation, attain insights into my corporation’s business practices, and discover hidden
saving opportunities?
Do I compare division, department, or regional performance in terms of services used, service
volumes, account costs, and balance usage?
Do I perform modeling and “what if” scenarios to test different rate, balance level, volume, and
pricing assumptions?
Do I have confidence in my budgeting assumptions for the coming year?
Are my service prices escalating? Are volumes increasing or decreasing? Are services not being
used?
Do I include bank pricing and charging mistakes/problems in my bank report cards?
Do I document my conversations with my bankers and include these in my bank report cards?
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