Bridget  Meyer,  CTP  Product  Manager  of  BRM  Services  

The  Montauk  Group  

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Agenda  Bank  rela@onships,  like  any  other  personal  rela@onship,  go  through  phases:  �  Da@ng  � Wedding  �  Honeymoon  �  7  year  itch  �  Divorce  

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Da@ng  �  Courtship  �  Fancy  Dinners  �  Promises  

� Always  returns  calls  �  Eager  to  come  visit  �  Complimentary  

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The  One!  

The  Wedding  �  Plan!  �  Sign  the  Contracts  � Merge  Accounts  � Move  In  Together  

�  Signatories  � Open  Accounts  �  Training  �  Tes@ng  

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The  Honeymoon  � Needs  addressed  quickly  �  Both  par@es  commiRed  to  the  rela@onship  �  Transi@on  issues  resolved  � Happy  

�  RFP  pricing  in  effect  �  Errors  resolved  quickly  �  Start  recognizing  savings    �  Life  is  good  

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Seven  Year  Itch  �  Comfortable  �  Take  each  for  granted  �  Rou@ne  � Only  call  with  our  problems  

�  Pricing  has  doubled  from  the  RFP  �  ECR  is  next  to  nothing  �  Banker  takes  weeks  to  resolve  issues  �  Bigger/New  prospects  get  aRen@on  

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Rela@onship  Sta@s@cs  � Average  length  of  @me  from  marriage  to  separa@on  in  the  US  is  8.7  years.  

� Average  length  of  a  corpora@on’s  bank  rela@onship  is  10  years  

�  Smaller  organiza@ons  (those  with  revenues  of  $250Mill-­‐$499  Mill)  only  average  8  years.  

�  Privately  held  companies  in  informa@on/communica@on,  manufacturing,  retail/wholesale  services  tend  to  switch  bank  partners  more  frequently.  

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“Marke@ng  yourself  to  a  new  person  on  a  first  date  ohen  involves  being  charisma@c,  clever  and  quick-­‐-­‐but  most  jobs  and  most  rela@onships  are  about  being  consistent,  persistent  and  brave.”    -­‐Seth  Godin  

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How  can  we  build  a  bank  rela@onship  that  will  weather  the  storm?        If  the  average  is  10  years,  that  means  over  50%  last  longer.        How  do  they  do  it?      

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3  Keys  to  Successful  Rela@onship    �  Consistent  by  con@nuing  to  ‘date’  even  aher  the  contracts  are  signed  and  the  honeymoon  is  over,      

�  Persistent  in  your  review  of  your  analysis  statements  (on  both  sides)  so  that  errors  are  caught  and  resolved  quickly,  and  

�  Brave  enough  to  nego@ate  your  bank  fees  in  a  way  that  recognizes  the  value  you  both  bring  to  the  other.    

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We  all  want  to  know  that  what  we  pay  for  is    

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FAIR   ACCURATE  

When  asked  how  they  feel  about  their  current  ECR  and  fees  they  pay  their  banks  currently,  17%  of  treasurers  said  they  felt  they  were  geong  the  best  possible.  

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Fear  Only  5%  of  treasurers  actually  said  they  were  “afraid”  to  nego@ate  beRer  terms  with  their  banks.    

   

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Rela@onship  Pricing  Pros:  �  Volume  discounts  �  Flexible  pricing  models  �  Encourages  “Share  of  the  Wallet”  ini@a@ves  �  Considers  credit  in  an  otherwise  treasury  services  world  

Cons:  � No  transparency  in  the  charges  �  Cross  bank  comparisons  are  ridiculous  

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History    Circa  1970-­‐1978  –  The  birth  of  Account  Analysis    �  Collapse  of  the  BreRon  Woods  system  leads  to  exchange  rate  fluctua@on  

�  Removal  of  “gold-­‐backed”  US  currency  �  Short-­‐term  inves@ng/  Money-­‐markets  increased    �  Balances  and  liquidity  dried  up  �  Banks  started  charging  corpora7ons  fees  for  bank  services  

�  1978  -­‐Corpora7ons  demand  an  itemized  bill  for  bank  fees.    

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History    Circa  1978-­‐2000  –  The  Standardiza@on  Era    �  Banks  invest  in  new  technologies  as  PCs  and  internet  become  standard  

�  The  list  of  services  being  billed  by  banks  increases  drama@cally  

�  1987-­‐  AFP  (known  then  as  NCCMA)  publishes  standards  for  Account  Analysis  Statements  generated  by  banks  including  the  AFP  Service  Code  and  EDI  822  

�  Treasurers  start  issuing  standard  RFPs  for  bank  services    

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The  RFP    �  Request  For  Proposal  (RFP)  allows  a  company  to  say  which  services  they  WANT.  

�  Banks  describe  HOW  they  will  provide  those  services  within  their  bank  –  all  in  wri@ng.  

�  Pricing  is  standardized  for  cross  bank  comparison  (if  template  is  used)  

�  Banks  bidding  against  the  compe@@on  ensures  lower  pricing.  

�  Pricing  can  be  fixed  for  a  specific  term  (1-­‐2  years)  

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Reviewing  RFP  Results  �  Beware  of  “low-­‐ballers”  � Get  demos  of  the  online  plasorms  and  modules  �  Talk  to  references  of  the  specific  rela@onship  management  team/person  you  will  be  working  with.  

� Ask  specifically  about  error  resolu@on  procedures  –  will  you  get  the  same  person  or  a  call  center?  

�  Consider  more  than  just  price.  � Don’t  be  afraid  to  nego@ate  the  proposal  down  even  further.  

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We  all  want  to  know  that  what  we  pay  for  is    

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FAIR   ACCURATE  

Statement  Op@ons  

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Account  Analysis  Statements  

PDF/Paper  TWIST  BSB    EDI  822    

AFP  Service  Codes©  

AFP  Global  Service  Codes©  

AFP  Service  Codes©  

AFP  Account  Analysis  Statement  Standard  § Customer  Informa@on  §  Rate  Informa@on  §  Balance  and  Compensa@on  §  Service  Informa@on  §  Adjustment  Detail  §  Summary  of  Accounts  §  Historic  Balance  and  Compensa@on  Informa@on  (op@onal)  

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EDI  822  Set:  Account  Analysis  §  Customer  Account  Analysis  Transac@on  Set  (822)    used  within  the  context  of  an  EDI  environment.  

§  Transmits  detailed  balance,  service  charge,  and  adjustment  detail  primarily  from  a  bank  to  its  corporate  clients.  

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EDI  822:  Process  

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BANK  sends    EDI  822  

SOFTWARE  decodes  and  filters  822  informa7on  

CORPORATE  generates  reports,  tracks  volume,  and  consolidates  informa7on  

Benefits  of  Receiving  EDI  822  §  Ability  to  accumulate  volume  and  price  informa@on  provided  on  mul@ple  AA  statement  to  generate  consolidated  reports  

§  Set  volume  parameters  and  prices  to  flag  possible  errors  

§  Eliminates  the  need  for  hardcopy  account  analysis  

§  Increases  confidence  in  the  overall  analysis  

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EDI  822  Drawbacks  &  Alterna@ves  Drawbacks  §  Sohware  costs    Alterna7ves  §  Develop  in-­‐house  sohware  §  Ask  bank  to  export  AA  Statement  in  a  usable  format    

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Service  Fee  Informa@on  §  AFP  Service  Codes  ©  §  Bank  Billable  Unit  Codes  §  Descrip@on  of  Service  §  Volume  §  Price  §  Total  Fee  

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010101 DDA001 General Account Activity - Credit Posting 1500 $0.10 $15.00

Quality  Control    The  number  one  issue  with  Account  Analysis  Statements  is  accuracy.  When  asked  how  many  errors  were  found  on  their  analysis  statements  within  the  past  6  months,  treasurers  at  the  AFP  Na@onal  Conference  said:  

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Crossroads  Banks  should  be  compe77ve,  accountable,  and  safe.  �  Are  they  providing  valuable  services  at  a  fair  price?  

� Why  can’t  they  get  my  statements  right?  

�  Are  they  too  big  to  fail?  

Corporate  porRolios  must  be  profitable  to  the  bank.  �  Is  this  client  needy?  �  Are  they  worth  my  @me?  �  Can  I  get  more  of  their  wallet?  

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Can  we  fix  this  rela7onship?  Or  should  we  just  call  it  quits?  

 

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The  Divorce  

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Reasons  for  Divorce  Reasons  we  end  our  personal  rela@onships:  �  Communica@on  �  Conflict  Management  �  Sex/In@macy  

         -­‐Source:  Psychpage.com  

Reasons  we  end  our  bank  rela@onships:  �  Pricing  for  services/cost  control  �  Service  related  issues  (i.e  problem  resolu@on  response)  �  Credit  availability  �  Changes  at  the  bank  

         -­‐Source  AFP  Retail  Industry  Survey  

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Divorce  Quotes  

“The  bank  is  not  what  it  used  to  be.”  “We’ve  outgrown  each  other.”  “It  was  a  mess  from  the  start.”  

“He  lied  to  me!”    

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Courtship  Lies  Lie   Truth  

“Sure  we  can  provide  that  service.”   The  Mechanism  becomes  a  workaround.  

“Your  balances  will  cover  the  fees.”   They  don’t.  

“We’ll  give  you  X%  rate  (ECR/Loan  Rate).”   6  months  into  the  rela@onship  they  change  the  rate  or  tack  on  hidden  fees.  

“I've  been  with  this  bank  for  12  years...I'm  not  going  anywhere.”  

3  months  later  they  leave  the  bank.    You  are  now  passed  around.  

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Lies  Later  “We  can’t  do  that”  “You  have  to  have  that  service  in  order  to  have  the  other”  “You  have  the  best  pricing  our  bank  offers”  “We  don’t  budge  on  ECRs”  “I  can  only  credit  you  1  month  for  that  error”  “We  are  too  big  to  fail”  “Sure  we  can  provide  that  service!”  

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� Corporate  parents  can  play  a  crucial  role  in  a  bank  rela@onship.  

� Offer  unsolicited  advice  � Many  even  mandate  the  bank  you  must  use  even  when  it  may  not  make  sense.  

� “Arranged”  bank  rela@onships  leave  a  corpora@on  feeling  trapped.  

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Geong  out  of  the  Parent  Trap    �  Build  a  solid  case  of  evidence  �  Show  yearly  cost  to  the  company  for  banking  with  that  partner  verses  an  alterna@ve  

� Avoid  further  commitments  with  the  bank  �  Be  pa@ent  �  Be  persistent  �  Be  brave  

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 Imagine  a  world  where  banks  and  corpora@ons  celebrated  Silver  and  

Golden  Anniversaries….    

and  s@ll  liked  each  other  enough  to  hold  hands.    

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Ques@ons?  �  Bridget  Meyer,  bridget.meyer@themontaukgroup.com  � AFP  Guide  to  Account  Analysis,  www.afponline.org  

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