To date, discussions about electronic bank account management (eBAM) have focused largely on when it will be made available to treasurers and the general corporate population. Far less time has been dedicated to explaining what corporate treasurers should be doing to prepare for eBAM to make the most of the many benefits this innovation will provide when standards and interoperable systems are finally put in place. Significantly, this lack of attention on bank account management (BAM) procedures and workflow could result in organisations missing out on the most important benefits offered by eBAM adoption.
In order to be properly prepared, it is essential that treasurers have global visibility into bank accounts. An electronic repository of account details, signatories, and key documentation as well as an automated documented workflow that will support them in opening, closing, and making changes to accounts, are all key capabilities.
Global Visibility into Bank Accounts
The first priority for any treasurer is to establish a complete picture of all bank accounts. To achieve this, the treasury team will need to have a master list of active accounts. In many cases, when accounts are closed they are not properly documented and often the open/close dates are also not accurately transcribed.
Creating an accurate list of accounts will not only help to solve this problem but can also prove essential for audit purposes. Similarly, the treasury team may also uncover ‘lost’ accounts, such as those that are active but were managed on a decentralised basis and not properly documented.
Perhaps the biggest advantage of establishing this visibility, however, is that it will enable treasurers to find underutilised accounts and allow them to identify candidates for rationalisation. As almost all organisations maintain more bank accounts than is necessary, this process can contribute to a reduction in costs for the treasury department. In addition, achieving proper visibility into accounts in this way will also help generate far greater insight into their usage and overall value to the treasury function.
Establishing an Electronic Repository
Creating an electronic repository is imperative, not just to track accounts but also to manage the associated details for internal visibility and audit purposes. This collateral should include digitised archives of all contact information, bank account documents, legal and tax information and signatories.
For organisations operating without a BAM system, determining which individuals have signing rights over which accounts requires manual and painstaking research; often through multiple bank systems, files and even paper documents. For this reason, one of the principal advantages of improved signatory management and signing rights is the potential to reduce the margin of error through increased control.
Rather than searching through multiple systems, a consolidated database enables users to manage signatory changes. This database can also be electronically tied to the organisation’s internal human resources (HR) system, so that when an employee leaves the organisation he or she no longer has signatory rights with any of the company’s banks.
In addition, once eBAM is implemented, only a single corporate system would need to be ‘eBAM- enabled’ in order to facilitate the electronic transmission of signatory changes and other account maintenance information to the bank. Having this functionality in place will significantly reduce the future IT burden, as well as streamline processing time and costs in treasuries.
Achieving visibility is critical to any sort of efficiency or decision-making when managing bank accounts. Equally important is the need to create a workflow that will dictate and document the controls and procedures used to open, close, and make changes to corporate bank accounts.
Establishing clear, internal procedures, whereby everyone in the organisation follows a single standardised process for managing bank accounts, including the storage of account information and documentation, will in turn increase confidence to the entire process. Significantly, it will also improve the ability to respond to information requests or identify potential fraudulent situations.
For most organisations, implementing multiple levels of approval is paramount to this process. Putting in place a separation of duties for bank account activity offers centralised control – even if the operations and locations are decentralised.
Achieving this balance is fundamental to increasing the efficiency of regional controllers overseeing local operations. In addition, it is also important for them to have enough responsibility to manage financial flows in their region, yet not so much that it results in there being multiple systems of record when it comes to financial governance.
In preparing for eBAM communication, this type of electronic workflow, including multiple levels of approval, will be highly valuable when adding digital signatures (such as SWIFT’s 3SKey authentication system) to the process – a likely requirement for eBAM messages as SWIFT continues to work on its eBAM pilots and standardisation work.
Looking Ahead to eBAM
Once eBAM becomes fully adopted, establishing consolidated and accurate cross-border bank account information and workflows will allow treasurers to take advantage of eBAM-related benefits by being organised and confident in the information they are providing.
Whether the treasury team is attaching electronic documents to extensible markup language (XML) messages in support of an account opening request or delivering an automated digitally signed signatory change, this standardisation will facilitate an easier and more timely process of opening, closing and maintaining bank accounts, contributing to improved overall business efficiency.
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