For more than 30 years, AFP Services Codes© have been recognized as the industry standard for identifying service charges that appear on account analysis statements and in responding to RFPs.

Just knowing this, makes one wonder how we have come all the way to 2018 only to find we have corporate treasurers (many born after the AFP Code standards were established) who today still cannot make sense of their bank fees? The underlying issue causing this dilemma may very well reside inside the walls of banks, but it would be unfair to say, “banks must shoulder all the responsibility”.

The AFP Service Codes (formerly called TMA Codes) were originally built in 1986 by a committee made up of banking professionals, corporate treasurers, FinTech firms, and what was then called the Treasury Management Association (known today as the AFP).

Imagine this, in the 5-year period ending in 2013 the AFP Service Codes committee added 247 new codes and made changes to 443 other (already existing) codes. These changes have left us with now more than 2,500 domestic AFP Service Codes. From this list, banks must choose the correct code when doing fee mapping and service code assignments. Within this same time span (2011) the AFP Service Codes committee also created a set of more than 800 Global AFP Service Codes for banking services that are widely adopted across Europe, the Middle East, Africa, and the Pacific Rim.

Simply said, the AFP Service Codes are in fact the general ledger Chart of Accounts for Bank Fees. This chart of accounts is a bit different from most general ledger systems though because when it comes to bank fees in this analogy, every financial institution in the world is being asked to use the exact same set of General Ledger numbers!

As new technology evolves, these service codes absolutely must change with time. How can banks possibly be held solely responsible to correctly associate every one of their fees to a very specific category and distinct service code defined by the AFP…..and do so over time? While some financial institutions have given their best effort to internally assign AFP Service Codes on their own, the assignments in many cases have simply been “best guesses” leaving corporate treasury departments often scratching their heads.

For this 30+ year-old Chart of Accounts for Bank Fees to provide more value throughout the industry, banking personnel need to stop thinking they can map their bank fees to this Chart of Accounts for Bank Fees all on their own. While a bank is certainly not going to negotiate with its’ corporate clients for mapping determinations, there at least needs to be an intense audit of what banks are assigning. Guessing the correct AFP Service Code or even defaulting to a code of some miscellaneous category is not helping corporate treasurers and is not the answer. Banks cannot simply assign this daunting task to their FinTech providers either…. as their guessing will possibly be worse than the bank’s.

Listening to treasury employees comment at AFP 2018 in Chicago made it very clear to me, that stronger adoption and communication of AFP Service Codes is needed in the industry.

The usage of the AFP Service Codes over the last 30 years is screaming for quality improvements. The Bank Fee Chart of Accounts isn’t wrong; the bank fee assignments are. Banks can solve for this by a) assigning the proper AFP Service Code to every line item service, b) having their AFP Service Code assignments audited by the AFP (thus becoming Accredited Providers of the AFP Service Codes), and c) showing the certified AFP Service Code on every billable service displayed on the account analysis statement whether a customer has asked for such or not. Simply said, it is time for the AFP Service Code to become a part of the statement standard for all account analysis (visualization will improve standardization).

As banks become Accredited Providers of the AFP Service Codes, I believe we will see massive improvements in bank fee analysis. An Accredited bank also has their service code list reviewed annually, so code assignments are not just frozen and forgotten about for years to come. In my opinion, bringing AFP Service Codes to the foreground is the best answer to getting banks and corporate treasury on common ground.

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