A software package’s ability to provide relevant analysis of cash management fees depends on the vendor’s knowledge about how each bank builds its account analysis statements, says Gaëlle Parquic, Associate Director at Redbridge Analytics.

– Why are treasuries modernizing their approach to controlling their bank charges?

– There are many reasons why a treasury might adopt a tool to monitor its bank fees: for example, to automate a tedious procedure, to prepare for a bank renegotiation, or to ensure a recently negotiated pricing grid is being applied correctly. These tools improve the treasury’s access to, and understanding of, all the cash management fees the company pays to its banks. They also make it easier for the company to get reimbursed for billing violations.

The fees a company pays for all its cash management services tend to vary between 0.5–1.0% of its turnover, depending on its size, international footprint, banks, and history of renegotiations with its banking partners. In a period in which companies are looking to make savings – seven out of ten finance departments are considering how to make additional savings, according to a Redbridge survey– bank fees are clearly something worth looking at.

When a treasury’s organization is decentralized, central treasurers no longer want to rely exclusively on reporting by their subsidiaries about the fees they’re paying for cash management services without having the possibility to check it themselves.

Once a new company has been acquired, a quick check of its bank fees provides a quick overview of the cash management services it uses. It also provides insight into whether the prices it pays for each service are in line with those of the group, and can lead to a quick negotiation to harmonize payment practices.

Another reason to control bank fees is the desire to clean up or rationalize the company’s account structure. This can help identify the most attractive banks to use when opening new accounts or providing additional side-business. Only specialist bank fee monitoring software can easily provide this type of information in just a few clicks.

In our experience, companies using the HawkeyeBSB software developed by Redbridge find that 10% of their accounts are dormant.

– What are the benefits of automating bank fee monitoring?

– Generally speaking, treasurers who control their bank fees manually focus on the most important items and rarely have time to analyze their bank billing statements in depth. Automating this task makes the process more reliable and provides more detailed analysis. For example, automation makes it possible to compare the prices charged for the same service between banks. They can also identify services that they did not realize were being used.

I remember a client who was unaware of the importance of the costs linked to lockboxes, which are used for cashing cheques in the United States. But after implementing our HawkeyeBSB bank fee monitoring software, he quickly entered negotiations with his banks for this service.

In summary, using a tool to control bank fees saves money and time, and results in more in-depth analysis.

– How does analyzing bank fees change a company’s relationships with its banks?

– Treasurers who regularly monitor their cash management fees become more autonomous of their banks. Bank fee monitoring software sends alerts whenever it identifies pricing discrepancies. This means that the treasury department is much quicker to ask for a refund.

Treasurers who analyze their bank fees using dedicated software can also track how their consumption of banking services evolves over the years. Some services become used much more frequently over time, even if they were not important considerations in the original price negotiations with the bank, which may have been several years previously. One way of controlling banking fees is to identify the right time to restart negotiations with the banks.

– What’s the best way to successfully renegotiate your cash management fees?

– First, it’s important to know which services are needed, in what volumes, and their current price. Having an idea of volumes helps you determine what’s at stake in the forthcoming negotiations. Identifying the prices charged for each service by the various banks then makes it possible to establish a relevant benchmark against which you can compare the offers. Finally, it’s useful to identify all the services invoiced for by each bank, as they are not always negotiated within the framework of an RFP. A tool that monitors cash management fees makes all this possible and prepares you for successful negotiations with your banking partners!

– What characteristics should a good bank fee monitoring software package offer?

– In recent years, several treasury software vendors have developed bank fee modules that are able to aggregate bank fee statements. These tools’ ability to provide in-depth analysis depends on the vendor’s knowledge about how each bank builds its account analysis statements.

How a service appears on a bank account analysis statement may differ within the same banking group, for example depending on geography. Understanding bank fee statements requires considerable expertise.

Bank fees are at the heart of the DNA of Redbridge, which launched Redbridge Analytics five years ago to provide a coherent suite of solutions to improve treasury departments’ performance. This platform brings together all of Redbridge’s expertise, including comprehensive mapping of each item charged based on AFP codes. Our objective is to guarantee to each user of our HawkeyeBSB tool that the information in its interface is consistent, so that they can easily compare different banking partners, different services and different regions. What’s more, our dedicated tool is accessible in SaaS mode, which means it can easily be shared with other departments in the company. It’s also extremely flexible in terms of the banking fee formats that it accepts (such as PDF, Excel, EDI, BSB, csv and Camt.086).

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