For medium and large size organizations, one of the biggest headaches their finance team will come across is the need to manage hundreds of bank accounts. Usually, these multiple accounts are owned by various legal entities across different locations and, despite the complexity, many companies still manage bank accounts manually via Excel. The paper-based processes that are commonplace often result in data collection and governance that is based on e-mail ping pong.
“Multinational organizations have hundreds or sometimes thousands of bank accounts, across the globe in their different subsidiaries,” explains Jörg Wiemer (pictured), CEO of TIS (Treasury Intelligence Solutions GmbH). “This requires a solid database and inventory of your bank accounts, which is a huge problem. Why? Because colleagues constantly open and close bank accounts, if you don’t have efficient teamwork, which is also linked to efficient workflows and collaboration, then you end up with a lack of transparency. It’s a compliance nightmare.”
Wiemer says the problems finance teams will come across when using manual processes are wide ranging. Of the key potential issues, inefficient internal collaboration between head office and subsidiaries based on emails going back and forth is one. This can lead to manual, time-consuming workloads and inefficient internal processes.
A lack of audit trails, no audit-proof database, insufficient documentation for external auditors when it comes to year-end audits can also cause headaches. Then, Wiemer explains, there’s a problem with lack of transparency and incomplete inventory/database of bank accounts. This has the potential to lead to inefficient external collaboration with banks and further manual workload pressures.
Bank Account Management (BAM): Bank account management is the process whereby companies manage the opening, maintaining, and closing of its bank accounts, related signatories, master data and documents.
eBAM: Bank Account Management through software.
Before co-founding TIS, the payment and liquidity specialist, Wiemer worked as a Senior Vice President and Head of Treasury for SAP, a position that highlighted the pain points treasurers face.
“It was clear from my time at SAP that it can be really difficult to connect treasury, accounting or ERP systems, with different banks, across the many bank accounts that an organization will hold,” he explains. “This can lead to some major problems and leave organizations open to inaccuracies and potential compliance breaches”
A couple of key impacts poor bank account management can lead to, according to Wiemer, include:
- If inventory of bank accounts is incomplete the cash visibility is incomplete, this is mission critical for treasurers. “As a treasurer, you need to have a steadfast BAM for a maximum of transparency and security,” Wiemer explains. “If you make mistakes here, let’s say you know only 95% of your bank accounts, your liquidity position is inaccurate. As a result, you will make wrong decisions.“Successful bank account management requires teamwork and collaboration across the different layers of the company – headquarters, the regional centers, subsidiaries, across the different pieces of your organization – you have to do organizational accounting, including shared service, audit and so on. This is a very complex process which really needs to be orchestrated.”
- Compliance Challenges. Wiemer comments: “Compliance is a very, very hot topic. Imagine a scenario where an audit of a regional office detects bank accounts which are not known by the head office, and which are not linked to the general ledger (GL). What a horror scenario! You need to have control over funds, and you need to have control over bank accounts. Automation can help to alleviate these issues.”
Building a solution
For treasurers and their finance teams looking to overcome the problems outlined above, correct BAM solutions form the basis of effective payment processes – Wiemer describes it as the master data engine. “When you want to orchestrate payment processes you need to have a very solid understanding of who’s authorized to sign what kind of payment on which bank account. That is all built on BAM and, more specifically, eBAM.”
Successful bank account management is also about teamwork, according to Wiemer. He points to the fact that TIS Bank Account Manager supports internal collaboration through workflows and provides an accurate overview of account details and banking relationships of all branches and subsidiaries worldwide including signing permissions and documents.
This is more important given the fact that regulation is getting tougher and tougher. “KYC is a problem and banks are requesting additional information related to the account opening process,” says Wiemer. “This is also a nightmare which drives inefficiencies, and sometimes creates sleepless nights for the treasurer! Automation through eBAM with banks can help.
“What’s more, efficiency gains can be achieved if eBAM and KYC processes can be established between corporates and their banks, enabling the exchange of electronic messages with regards to opening, changing and closing of bank accounts.”
Want to learn more about BAM?
eBam is a hot topic. But the base for this is a successful BAM. What is important regarding BAM? TIS has an extensive whitepaper on this topic. Learn everything you need to know about BAM by downloading the whitepaper: https://bit.ly/2KT7jae
Investing in eBAM
For corporate treasurers looking to invest in eBAM, what advice does Wiemer have to ensure they end up with the right solution for their needs?
“You need to be very flexible in the reporting. Dashboards should offer easy to consume, easy to use reporting. If you have thousands of bank accounts you have hundreds of users in your company, so this needs to be supported through training and that ease of use. This gives you the solid base from which you can scale. Success, especially without successful bank account management, is unrealistic.
“The business case for automated solutions is all about lower cost, lower risk and higher transparency. The lower risk argument is the interesting one, because of audit trails, because of fraud protection, because of clear governance processes, rules and procedures and so on. That’s a compelling reason for any finance team to focus on developing their BAM and eBAM solutions.”
TIS is currently in the process of building a network of ‘pioneers’ who will help to shape its eBAM plus KYC as a service offering.
These pioneers – multinational organizations in the US and Europe will have an opportunity to shape the eBAM and KYC service and platform and learn more about the business case in an open, collaborative forum.
If you would like to be a pioneer and join the discussion, Wiemer would love to hear from you. Contact him via LinkedIn for more details.