X9 has launched a new standard for banks to enable corporates to manage their business accounts more effectively. The new standard, called the Balance and Transaction Reporting Standard (BTRS), is in the final stages of development by the US financial standards community prior to publication in 1Q12.
BTRS will streamline communications between banks and their corporate customers thus eliminating processing errors, reducing risk and automating cash management functions. The adoption of one common standard will help a corporate treasurer efficiently utilise and invest the cash resources of his company.
“This effort to bring better standardisation in the reporting of financial transactions will benefit both the corporations and banks,” said Cindy Fuller, executive director of the Accredited Standards Committee X9, the standard developer. “Once in place, vendors will have a clear road map on what a transaction means and how it is to be reported. Straight-though processing [STP], reduced cost, reduced risk, and improved cash management are all outcomes of the new BTRS.”
It is hoped that BTRS will harmonise the disconnect found in the previous versions of the BAI releases. BAI 1 was released in 1980 and was replaced in 1987 by BAI 2. As versions 1 and 2 were specifications and not formal standards, there was wide room for interpretation. X9’s journey to BTRS was sparked by a survey from the Association of Financial Professionals (AFP), which distributed a survey to the AFP membership. The results were incorporated into the final BTRS standard.
“By harmonising the inconsistencies in the previous two versions, we are creating one common language for corporate treasurers and their banking partners. The end result will be a more efficient process for corporate treasury, thus eliminating errors and reducing risk,” said James Wills, senior business manager, SWIFT.
David Repking, senior product manager, JP Morgan Treasury Services, who chaired the X9 codes working group and managed a ground-up approach to the codes, said: “We needed to look at every type of financial transaction as the industry and markets evolved. Certain transactions were no longer used and new ones, particularly SEPA [single euro payments area], had come on to the scene. The first task was to create a clean, up-to-date slate. We also wanted a global approach, thus every BTRS code is now interoperable with the ISO 20022 global codes as well as the SWIFT MT cash reporting messages.” Through the incorporation of a language standard, UTF-8, the new BTRS can accommodate ‘double byte’ and non-Latin character. As companies look to Russia, the Middle East and Asia, this is an important benefit of the new BTRS.
“In today’s global marketplace the need for better and more standard data is growing tremendously. Establishing an improved mechanism and format for communication among the various parties should improve overall end-to-end efficiency and reduce the costs associated with information reporting,” said Bill Lundeen, group manager, global banking at Procter & Gamble.
Lundeen, together with John Scully, head of information reporting services at Bank of America Merrill Lynch (BofA Merrill), co-chaired the language of the standard subgroup, where they refined and redefined the overall format. Scully said: “We looked at the deficiencies of BAI2 and what the market was demanding, and added to that clear market practice guidelines to the new standard. Our goal was to insure consistency of use by the thousands of banks, corporates and vendors that will use BTRS.”
This resulted in an updated standard that supported multi-lingual, multi-currency transactions as well as the inclusion of new batch and invoice records to support the increasingly complex reconciliation needs of corporations.
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