The winds of change are blowing and improving global bank billing.
When I was a young treasury analyst I was given a task to do a cross-bank comparison focused on lockbox. It seemed like an easy task but, like many of you who have attempted similar exercises, I quickly learned how difficult that job really is. We had a software, too, but even that did not ease the pain because the AFP Codes that the banks provided didn’t match up. I searched for resources to help me, downloaded the AFP Code book, and even joined an AFP taskforce to learn everything I could to master this puzzle.
Eighteen years later I am still mastering that exercise but there is hope. The AFP developed an Accredited Service Code Provider Program in the early 2000’s as a resource to help banks properly assign the AFP Service Code and keep their assigned codes accurate over time. Until now, only a handful of banks have gone through the process but the wind is changing. Citibank announced their global accreditation today (click here for the full press release). The AFP has confirmed that they have multiple proposals out for additional banks who are interested in going through the exercise. Change is coming! If you have not asked your banks if they are AFP Accredited then be prepared to map all of the services found on your account analysis statements globally all by yourself. Even after years of experience mapping AFP codes, it is incredibly difficult to make sure you are mapping apples-to-apples if you do not have access to the bank product managers who can tell you if a report is a summary or detailed report, automated or manual, etc. Banks have been putting the burden of mapping onto the corporate long enough.
David Watt, Director of Treasury at Uber recently said this about Citibank’s recent Accreditation, “Citibank’s commitment to providing correct, validated AFP Service Codes as an AFP Accredited Provider is a major step in improving the quality of the bank billing provided to each Citibank customer and creates opportunities for data analytics that will drive the entire industry forward. The ability to synthesize, compare, and report on the cash management services utilized in each country at the global level is a huge step in improving transparency, not just to the activities of the bank for expense management, but also the activities of Uber’s global treasury operations for accuracy and consistency.”
Even after everything is mapped properly, you will still have some inconsistencies in how banks charge and you will never get them to agree to a standard billing convention for large commercial cash management services (many have tried). I am not even suggesting that they should. All businesses come up with different billing strategies to attract clients and differentiate themselves from the competition. I can tell you that when everything is mapped correctly, however, cross-bank comparisons, standard RFP’s, and many other analyses become possible.