How to Analyze and Manage your Bank Fees

by Danielle Son

reading time 3 min

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Analyzing and managing bank fees electronically not only saves costs but also enhances the quality of treasury processes.

Managing bank fees is a task that is often regarded as cumbersome by treasurers. Dealing with bank fees means working through, and trying to make sense of complex stacks of paper. As a result, it is often delegated or signed off by the accounting department without verification. This way of working is not ideal because systematic analysis of bank fees can not only save considerable sums of money but also lead to real improvements in treasury processes.

Monitoring bank fees is beneficial for many reasons. Despite this, many corporate groups are reluctant to implement a solution due to a lack of resources. Even if they have a smart system available, it still requires manual work and, most of all, time to process electronic statements, check all the fees charged, and identify discrepancies and deviations. When you must do that for many bank accounts, you really have your hands full.

 

What are Bank Fees?

The term "bank fees" refers to any fee that financial institutions charge their private and business customers for transferring, exchanging, or paying or receiving an international money transfer. These fees may be one-time or recurring. Examples of bank fees include account maintenance fees, withdrawal and transfer fees, non-sufficient funds fees (NSF), late payment fees, and more.

 

Reasons why you should analyze and manage your Bank Fees

It is common that banks incorrectly charge fees. . Most banks claim that updates to their fee calculation systems are sometimes responsible for charging standard fees instead of those that have been specifically negotiated with certain clients. Due to human errors, it is regularly necessary to check whether the agreed fees are used by the bank’s software.

Treasurers need to understand the fees they are being charged by different banks. A Bank Fee Analysis module should be able to report and identify any discrepancies in fees by cross-checking your organization’s accounts with bank billing statements and system-updated fee structures, thereby eliminating the potential for overcharges.

There are many reasons why bank fee analysis software is recommendable. In this blog article, we will go over the reasons as well as the benefits of a software, and show you how to analyze and manage your bank fees.

There are several reasons for analyzing bank fees. These are the 5 key reasons why you should do so:

  1. It increases transparency on bank fees and agreed conditions
  2. It improves the quality of treasury processes
  3. Bank fee analysis provides better control over the bank fees charged by banks
  4. It gives you an information advantage that can be leveraged during discussions with banks (e.g. price negotiations)
  5. Finally, it saves cost and time

Besides the fact of having the possibility to check whether the agreed fees are being charged, another benefit is that once there is transparency about the services and fees charged, conclusions can be made quickly about suboptimal payment processes - making it easier to identify inconsistencies.

Another positive side effect of a transparent overview of bank fees is the comparison between different subsidiaries. By analyzing bank fees, it is possible to determine whether all your subsidiaries in a given country pay the same fee for the same service.

In addition to quantitative factors, analyzing bank fees also gives you a better impression of the quality of the services offered by your banks. Bank fee data provides insight into activities of the entire treasury, this helps with cost allocation and reporting. By managing your bank fees properly, you will have all the data promptly at hand to analyze how much money the organization has saved, which gives you a better negotiation position when talking to banks.

 

How analyzing and managing Bank Fees work in practice

The benefits of bank fee analysis are clear. But, how bank fee analysis and management work in practice?

First of all, you need a bank that is able to provide you with electronic statements in standardized formats (e.g. TWIST BSB or camt.086 formats). Second, your systems must be able to read and process these formats. While you can open the statements in Excel, a separate system is required for in-depth analyses. . Many companies use bank fee analysis tools for that purpose exactly because it allows them to receive and upload bank fee statements electronically.

 

The best Bank Fee Analysis Tools contain the following functions:

  • Payment Services Tender
    A summary of all fee tables and volumes based on captured statement data serves as a rapid and easy basis for preparing Request for Proposals (RFPs)
  • Overview of fees
    This provides a clear overview of amounts, volumes, and statement errors by bank group and company
  • Analysis of fees
    Obtain a complete overview of fees, filtered by any criteria
  • Comparison of fees
    Multi-bank comparisons of your fees highlight the best offers available
  • Compare volumes
    Compare total transaction volumes (fee-based) with direct integration with your ERP
  • Potential cost savings
    determine potential cost-savings by using the lowest fee per bank/country
  • Overview report
    Check the complete status of your accounts and fees in the system

 

Having a clear overview of your bank fees is the key to saving money and time. Discuss unclear fees with your banks, demand incorrectly charged fees back and keep your subsidiaries in line. A detailed overview of all services, fees, volumes and incorrect fee statements strengthens your negotiation position in discussions with banks and subsidiaries and provides the foundation for redefining your bank relationships.

If you are looking for a good practical example of how bank fees can be analyzed and managed you can learn from our case study with Deutsche Post DHL.

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