Bank Account Management

Bank Account Management

Traditionally, managing bank accounts and related information, for example on signatories, has been a laborious and error-prone process that is decentralized across global locations.

Typical issues encountered include:

  • no single source of bank account information across the group;
  • non-standard and non-transparent processes across locations;no globally harmonized account opening process/workflow;
  • paper-based legal documentation stored locally with no visibility or access; no guarantee of the four-eyes principle; and
  • information for reporting is not easily obtained and can be incomplete.

Clear approach

The initial benefit of implementing BAM gives a clear and more efficient approach to obtaining a global overview of banks and accounts. BAM systems are centralized, audit-friendly internal workflow solutions that are based on accurate master data. BAM tools also handle document management and can be enhanced to deal with bank fee calculations. Typical functionality includes:

  • account opening/closing workflows;
  • database with account details, signatories, etc;
  • FBAR reporting functionality; and
  • bank fee calculation.

A BAM tool that is used in conjunction with the adherence to clear internal procedures and workflows will ensure that no account is opened without the treasury department’s prior knowledge. Treasury departments must have adequate workflows and controls in place so that all account changes are managed efficiently and that any necessary information is always readily available to the management, tax authorities, and regulatory bodies.

Key benefit

An EBAM solution will extend beyond providing the functionality and benefits described above for BAM by introducing the added value of straight-through-processing (STP). Even with BAM, the external communication to banks is paper-based and slow. EBAM leverages connectivity to automate and streamline sending mandates and account requests to partner banks.

A key benefit of implementing EBAM is its ability to efficiently fulfill an organization’s regulatory reporting requirements. The two principle areas in which EBAM provides significant reporting advantages are for Sarbanes-Oxley and FBAR. EBAM makes SOX reporting more efficient and cost effective because it can be used to respond to the SOX requirement for companies to disclose, on demand, information relating to their internal controls and financial reporting. As EBAM systems maintain details of signatories and account locations across all relationship banks, the burden of compiling and reporting for FBAR is also greatly reduced.

EBAM working group

The adoption of EBAM messaging until now has been slow. This is mainly due to a lack of standardization of the messages. Recently, however, an EBAM working group has been added to the CGI initiative. This working group is made up of around 50 treasury professionals from banks, corporates and software vendors, and aims to foster the broad adoption of EBAM and enhance the quality and efficiency of EBAM processes and standards worldwide. The objective is to simplify the adoption of EBAM for both corporates and banks by developing standard field usage in the messages (ISO 20022) sent between organizations.

There are a number of organizational changes that logically lead to BAM automation. These include the formation of central treasuries and regional treasury centers, and of in-house banks and payment factories, sometimes in shared service centers. In all these cases, the drive for enhanced corporate efficiency, and also for central visibility and control over cash, inspires the first steps to investing the necessary technology to achieve improved results. These are very exciting times for bank account management as the growth of the EBAM market and the realization of the potential benefits of EBAM are certain to push it higher up the agenda for companies.