It is time to update and standardize cash reporting formats, according to a survey by the Association for Financial Professionals.
It found that a vast majority of companies want to see the Banking Administration Institute (BAI) cash reporting format—which is used for everything from bank account information reporting to controlled disbursements to lockbox or receivables information reporting--standardized across banks. The format is used for current-day or previous-day information reporting from banks.
The most recent version of the BAI cash reporting format is about 20 years old, and has undergone so many bank-specific changes that it is hardly recognizable as a standard.
This makes it difficult for corporates to manage information coming from different banks, and adds to the burden of data mapping and integration that is such a headache for companies’ finance departments. The survey noted: “Disparities across banks have made it difficult for corporates to process real-time data that could give them full transparency into their liquidity picture.”
The difficulties go right through from data download to its use within the organization. According to the survey, 57 percent of respondent download BAI data from a bank’s internet portal or e-banking platform, while 55 percent report using direct file transfer to get the data in-house. Then it is generally either automatically or manually fed into a treasury workstation or ERP system.
A full 28 percent of survey respondents report manually uploading the information to back-office systems and a further 12 percent must re-key the data into an Excel spreadsheet.
Given the challenges with disparate data formats coming from different banks—most using variations on the BAI’s 20-year-old format—most survey respondents (87 percent) said that they would like to see standardization in BAI formats and implementation guides used by banks.
Many (44 percent) also want to see XML descriptions and tags standardized in such a way that both machines and humans can easily understand them—often a problem given the many variations seen from bank-to-bank—and 37 percent called for a reduction in the customization that is allowed.
David Bellinger, AFP's director of payments, noted that AFP corporate members need consistent global standards. “In this survey they made it clear the BAI standard can make it a challenge to efficiently apply the data they need to manage their global treasury and liquidity operations, particularly when they use more than one bank," he added.
A group working with the ANSI X9 standards body—which is a standards group aimed at creating and promoting standards for the financial services industry—has been focusing on updating the BAI standards to address these concerns.
The group now working on improving the BAI cash reporting format—which includes banks, company finance executives, vendors and SWIFT—plans to release a first draft for comment in late 2010.