Forte Financial Blog

Reprieve for IAT

2008-08-03T15:31:28-07:00

On Friday, NACHA announced a six month extension of the deadline for International ACH Transactions (IAT) from March 2009 to September 2009. Many smaller banks were caught by surprise by the changes necessary to support IAT. Although software vendors are prepared to make the necessary changes available in upcoming releases and many banks outsource their ACH processing to third party vendors that were on track for March 2009, the new transaction code requires process changes not only at banks but among their customers to ensure that regulations to prevent terriorist financing and money laundering are followed.

Excerpts from the IAT Q&A developed for Corporates by Arlene Chapman at AFP:

What is the definition of an International ACH Transaction (IAT)?

An IAT is an ACH debit or credit entry that is part of a payment transaction originating from or transmitted to an office of a financial agency located outside the territorial jurisdiction of the U.S. The distinguishing feature of an IAT is the geographical location of the financial agency involved in the payment transaction. It does not depend on the location of the originator or receiver of the transaction.

Why is the term “financial agency” used? Why not simply “financial institution”?

The term “financial agency” refers to both financial institutions and money transmitting businesses. An office of a financial agency is involved in an IAT if it: 1) holds an account that is credited or debited as part of a payment transaction; or 2) receives funds directly from or makes payment directly to a person as part of a payment transaction; or 3) serves as an intermediary in the settlement of any part of the payment transaction.

What information must I provide when my organization originates IAT transactions?

The information that must be included in an IAT is the same as the information you provide in an international wire transfer. There are seven mandatory addenda records that are part of an IAT. They must contain:
• Name and physical address of the originator
• Name and physical address of the receiver (beneficiary)
• Account number of the receiver
• Identity of the receiver’s bank
• Correspondent bank’s name, Bank ID number and Bank Branch Country Code
• Reason for the payment

The field requirements are consistent with SWIFT standards.

Can I include remittance information with an IAT transaction?

Yes, two optional addenda records accommodate the transmission of remittance
information. A maximum of 160 characters (80 characters per addenda record) can be included.

More from the AFP Q&A available here

American Banker (subscription required)
NACHA IAT Resources

50 Most Influential Female Bloggers

2008-08-03T13:30:15-07:00

Most of the posts I read and reference in my professional blog are written by men (I don't know why, since banking, finance, and payments aren't lacking talented women). My neglected personal blog is equally lacking when it comes to referencing blogs written by women. Sadly, my RSS reader is too. But not for long... check out this list of the 50 Most Influential Female Bloggers from NxE.

Spreadsheet "Worst Practices"

2008-08-03T13:06:45-07:00

A couple related articles from CFO.com on spreadsheet worst practices and how to fix them. The first article generated so many emails that they published a follow up with even more tips.

Spreadsheet "Worst Practices"
Here's how finance executives abuse the most-useful of computer programs — and how to do better.
Shahid Ansari and Richard Block
CFO.com | US
May 14, 2008

Sloppy Spreadsheets: Readers Speak Out
Readers make some pointed additions to CFO.com's "worst practices" list.
CFO.com Staff
CFO.com | US
June 18, 2008

Spreadsheet Worst Practices

Poor segregation of data (don't embed data in formulas)
Poor documentation of assumptions (leads to misinterpretation, or worse yet, forgetting why you used the numbers you did)
Poor documentation of constraints (interim calculations highlight data difficulty, faulty assumptions, and misapplied algorithms)
Difficulties in making changes (build spreadsheets anticipating that you'll be asked to modify and recalculate with a variety of different assumptions)
"Now It's Here; Now It's Not" (retain original calculations for comparison to what-if scenarios)
The Presentation Readiness Problem (include meaningful column and row labels so that the entire spreadsheet can be easily incorporated into PowerPoint)

The article includes examples of both worst and best practices that you can download. And the follow up article includes rants and raves from readers and even more tips.

And don't forget my previous post on Excel Tips and Tricks (my clients are still amazed by the easy gantt chart)

CFOs: Balancing Business Results with Integrity

2008-08-03T12:32:33-07:00

CFO.com interviews Ben Heineman, author of High Performance with High Integrity:

According to CFO.com:

Ben Heineman got an eyeful of the C-suite during his 18 years as general counsel for General Electric Co. until his retirement in 2005. A book by Heineman published in June, High Performance with High Integrity, argues that a chief financial officer can and should act as guardian and protector of the company's integrity without abandoning his role as business partner to the CEO. In an interview with CFO.com, Heineman, 64 and a one-time Assistant Secretary of Health, Education, and Welfare under Jimmy Carter, took some swipes at impatient CEOs, sycophant CFOs, anti-whistleblower cultures, and the SEC.

Excerpt from the interview at CFO.com

Question:
If a CFO does have to quit because he can't support a decision the CEO makes, is his career irreparably tainted?

Answer:
Not necessarily. Sometimes the CEO might not want to have a fight about it, and sometimes you can work your way out of it.

There are three scenarios: 1) Good board, good CEO: It's rare that the CEO in that situation will do something completely improper, forcing a resignation. 2) Good board, bad CEO: Here you have a possibility of at least going to the board and saying, "It's broken, I can't work with the CEO anymore and he can't work with me, let's just have a reasonable ending and I keep my reputation intact and get some of the financial benefits I've earned." That can work. 3) Bad CEO/bad board: You're screwed.

CFOs ought to do due diligence on the CEO before they accept these jobs, and look very carefully at whether the CEO believes in the partner/guardian model. You'll never know for sure, but a lot of people just take the job with the fancy company, lots of money, stock options, restricted stock units, the company car and the rest of it, but there's nothing worse than being in a situation with a bad board and a bad CEO, because then you get out with your reputation harmed.

CFO.com interview
Buy the book at Amazon.com

Still Struggling with Close Processes?

2008-08-03T12:02:52-07:00

Companies of all sizes - but especially large, multi-unit organizations that have grown through acquisition and have a spaghetti of accounting and finance systems - struggle to close their books in a timely manner each month, quarter, and year. Even those that do a good job each period, struggle to maintain control over the close process.

A recent publication from Deloitte offers practical advice for addressing close challenges:

Finance organizations that struggle to finish their close process are far more likely to make serious mistakes. They may not have time for entity-level controls or analysis that could help the business manage risk and make decisions more effectively. This publication addresses these topics and includes useful sections on:

Identifying key challenges

Assessing the close process

Tackling problems

Learning from case studies and reviewing benefits

Download here.

Blasphemy! Is Paper-based Manual Processing Better in Some Cases?

2008-08-03T11:48:41-07:00

Over at BankerVision, James Gardner, heads toward blasphemous territory when he suggests that in some cases, paper based manual processing may make more sense and cost less than grappling with IT complexity.

IT systems are now so expensive we are at an inflection point. The point where doing things manually is more economically efficient for certain higher value, lower volume products than doing them automatically.

Paper as an innovative solution requires political fortitude on the part of the proposer. It is almost always unpopular. We've all been so indoctrinated in thinking that people based processing is bad we no longer even put it up as an option any more.

But look at its advantages. It is quick to get going. Quicker than practically any kind of IT. It is robust, and can recover from unexpected failures with ease. And it is cost effective for startup projects that don't have all that much volume and don't know exactly how things are going to work out at the beginning.

IT has none of those attributes. And I doubt it will get them any time soon.

Consider this: you can put paper behind a web site or any other self service channel and have the most fantastic experience you can imagine. It is therefore a wonder to me why web startups invest so much in their backoffice IT when they could probably get by with a beautiful user interface and a bit of elbow grease.

Elbow grease indeed! I can't endorse paper, but I am all in favor of piloting new processes using Excel and Access behind the scenes to fine-tune requirements and test business cases hypotheses.

25 Best Business Books Ever via Business Pundit

2008-08-03T11:33:56-07:00

Check out Bussiness Pundit's list of the 25 Best Business Books Ever with convenient links to Amazon.com for those you haven't already read. They asked themselves: Based on prominent reviews, academic use, and popularity, which business books would be considered “classics?” Of those, which are the best? There aren't many surprises, and I am glad to see many of my favorites included.

Coordination and Communication in Modern, Complex, Multiunit Firms

2008-08-03T11:27:29-07:00

My work often involves bridging gaps, resolving misunderstandings, and fostering collaboration between the finance department and other parts of large, complex organizations. So I was intrigued by this recent research from HBS on " interaction patterns in modern, complex, multiunit firms."

Key findings:

Communication is heavily constrained by formal organizational structure: the vast majority of communication occurs within business unit and functional boundaries, not across them. This points to the importance of drawing the right organizational boundaries.
Women, mid- to high-level executives, and members of the executive management, sales, and marketing functions are most likely to participate in cross-group communications. These individuals provide a bridge for distant groups in a company's social structure.

Communication (and Coordination?) in a Modern, Complex Organization
Published: July 31, 2008
Paper Released: July 2008
Authors: Adam M. Kleinbaum, Toby E. Stuart, and Michael L. Tushman

New Solutions for "Stranded" Payments

2008-08-03T11:18:50-07:00

How do you handled "stranded" payments? Those received at the corporate headquarters rather than mailed to a lockbox, handed over in person to sales representatives or over the counter, and other errant checks?

Over at the TAWPI blog Mark Brousseau talks to Sam Globack of WAUSAU about new developments in lockbox and remittance processing that provide flexibility in front-end capture workstreams and consolidate all payments on a common back-end processing, reporting, and A/R update.

Check it out here.

Leverage a Centralized Transaction Processing/Analytics Hub to Support Smaller Entrepreneurial Biz Units

2008-08-03T11:11:34-07:00

Food for thought from today's NYTimes biz section:

After spending decades growing and merging themselves into their behemoth proportions, big businesses are rediscovering the charms — and the innovative side effects — of thinking small. By breaking huge business units into smaller, nimbler teams, companies stand a chance of rekindling the creative spark that got them rolling in the first place.

As my clients labor to consolidate and streamline their back office processes, they can free up resources to focus on customers, product development, and other strategic efforts. A centralized, honed transaction processing and information reporting hub can meet the needs of a number of small, decentralized entrepreneurial spokes, offering big business efficiency and analytics.

Read more:

Even the Giants Can Learn to Think Small
By JANET RAE-DUPREE
The New York Times
Published: August 3, 2008

New IBM Tool Helps CFOs Identify Underperforming Finance Functions

2008-07-27T22:42:12-07:00

On Friday IBM announced its new Finance Transformation Workbench tool to help CFOs identify underperforming finance functions within their company and identify new opportunities to transform and improve the finance function. According to the 2008 IBM Global CFO Study, one-third of CFOs and senior finance executives stated they are ineffective at measuring and monitoring business performance.

The tool was developed by IBM Research in conjunction with IBM Global Business Services and enables CFOs to examine which finance functions and components are underperforming in comparison to industry benchmark measures and the reasons why they are not performing effectively.

Specifically, the tool can:

   Analyze business performance
   Identify underperforming finance functions and components
   Identify transformation opportunities
   Assess the business value of finance function transformation initiatives
   Visualize linkages to various enterprise models
   Pre-populate finance function benchmark data and process taxonomies
   Leverage Finance Function best practices and methodologies
   Focus on increasing revenues and reducing costs

Learn more here.

GTNews: Corporate Payments

2008-07-27T22:17:39-07:00

A recent round up of payments articles on GTNews features a couple good items on corporate payments:

How Corporates Should Tackle the Credit Crunch
Malcolm Taylor, Accuity
This article looks at the basic steps corporates can take to simplify their business operations, reduce risk and optimise performance.

Today's Cash Management Systems: Meeting Clients' Needs?
Mike Vigue, Bottomline Technologies
In order to best serve their corporate clients, banks need to extend their local awareness, operate globally and address the evolutionary change in the payments industry.

SEPA: Banks Are Building it, But Will Corporate Customers Come?
Enrico Camerinelli, Celent
How are banks, regulators, technology vendors and corporations approaching SEPA?

How e-Invoicing Can Benefit Your Clients
OpusCapita (originally published in OpusCapita Journal)
Case study about how the Finnish importer of Volvo cars was able to implement e-invoicing and the client benefits that this provided.

There's lots more at GTNews.com

Tightening Credit Increases Focus on Liquidity

2008-07-27T21:36:29-07:00

Tomorrow's New York Times reports that banks are issuing fewer loans to companies and charging more. This increases the pressure on corporate accounting and finance to manage cash flow judiciously; increasing the rate at which receivables are collected and closely managing the rate at which payments are disbursed. It's a good time to be selling corporate payment products that help companies improve their transparency to incoming and outgoing funds.

Excerpt from tomorrow's New York Times:

Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.

Read more:

Worried Banks Sharply Reduce Business Loans
By PETER S. GOODMAN
Published: July 28, 2008

How Banks Encourage the Status Quo in B2B Payments

2008-07-17T15:17:06-07:00

Today Carol Coye Benson (of Glenbrook) and I concluded a series of private B2B payment webinars, adapting the content of our B2B payment workshop for the product and technology teams at a leading payment providor. Each and every time I speak on this topic, I experience waves of frustration and hope.

Hope becuase there has been a resurgance of investment in the B2B segment of the payments industry, by both familiar and new players, and because payment networks and providors are coalesing around standards (such as ISO 20022) that will at long last enable true straight through proccessing (STP).

Yet simultaneoulsy discouraged because banks have done, and continue to do, an outstanding job of streamlining paper check processing for their corporate customers. The accounts payable department outsources its check printing, sending a file to their bank to print and mail checks and remittances to suppliers. Payments are typically received at a bank’s wholesale lockbox where the checks are deposited and the remittance data is either scanned for character recognition or hand keyed for electronic delivery to the supplier’s accounts receivable system. Remote deposit capture extends check imaging to the corporate office, further streamlining check payments. From a the perspective of corporate AR and AP, checks work. Why fix something that isn’t broken?

Musings on the Future of Contactless Payments

2008-07-10T11:29:36-07:00

David Birch has a great post on the future of contactless payments vs. phone payments:

I've heard more and more people -- on the issuing side -- talk about skipping over contactless cards completely and just moving directly to phones of one form or another, either NFC phones or phones with NFC stickers on them. The argument is, essentially, that it's hard to deliver enough added-value to compete with the cash just using a card whereas a phone can be a platform for more services for the both the payments and retail sectors.

There is much food for thought in the post, so don't stop reading - go here for the rest.

Demo Videos from FinnovateStartup Posted Online - Very Cool

2008-07-10T11:24:00-07:00

Back in April I attended Finnovate Startup here in San Francisco and live blogged the event. It was a whirlwind of 40 startup/young financial technology companies presenting 5 min demos (no scripted PowerPoint!) of their products/new features. Lots of energy, great people, and some really cool stuff.

This week the videos were posted online, so now you can watch from the comfort of your office, cafe, or sofa. Check 'em out here.

Vendors represented include:

Companies Save Money with Incentive Based Wellness Programs

2008-07-10T10:49:21-07:00

The Wall Street Journal explores incentive based wellness programs for workers that reduce company's health care costs and foster a "more collegial environment." As it turns out, healthy workers are less grouchy.

Excerpt:

Wesley Willows got help from Tangerine Wellness Inc., a Boston firm that designs incentive-based weight-loss programs. The retirement community now spends $20,000 to $30,000 a year on the program, Mr. Pratt says, including Tangerine's fees and cash rewards for workers. Employees earn $3 for every 1% of body weight they lose. In addition, at the end of a quarter, each member of the winning team receives as much as $50, and second-place-team members a little less. Health-insurance claims at the company, meanwhile, for the 12 months ended in August 2007 -- a period that includes the first six months of the program -- dropped 19% to less than $640,000. And for the 12 months ended in March 2008, turnover plunged 30% -- a benefit Mr. Pratt attributes to a more collegial environment.

Bankers More Pessimisstic than Businesses (American Banker)

2008-07-10T10:43:22-07:00

In conjuction with its Executive Forum, American Banker (subscription required) reports on two research studies conducted during the second quarter by Greenwich Associates indicating that bankers are more pessimistic than their business customers about the economy.

Courtesy of American Banker:

Economic Outlook

Borrowing:

Learn more:

Executive Forum 2Q '08
Bankers, Clients Views on Cycle Diverge
American Banker (subscription required)
Thursday, July 10, 2008
By Gary R. Crum

Jamie Dimon on Charlie Rose (video)

2008-07-10T10:26:45-07:00

This is really interesting - filmed last week in Aspen, aired on Charlie Rose Monday and continued on Tuesday.

Jamie Dimon on Charlie Rose (Monday July 7)

Jamie Dimon on Charlie Rose - continued; starts 43 min into the episode (Tuesday, July 8)

SWIFT in the City by the Bay

2008-06-30T09:33:17-07:00

According to Bank Technology News, SWIFT has opened an office in San Francisco (at the base of California Street) to better serve its 160 customers and potential customers on the West Coast.

Welcome SWIFT!