Forte Financial Blog

Wells Fargo Enhances Corporate Mobile Offering to Include Wires and Positive Pay

My previous post on Wells Fargo's mobile banking for corporates was very popular, so I imagine Forte Blog readers will be interested in these recent updates to WF's CEO Mobile service:

Wires: CEO Mobile users now can initiate and approve wires from wherever they are and are no longer tied to their PC in the office. Corporate treasurers rejoice!

Positive Pay: Image positive pay gives mobile customers the ability to view exceptions, including the check image -- an important protection against fraud -- when deciding to pay or reject check exceptions.

In addition, a number of other features are being piloted:

• Manage and decision potentially fraudulent ACH transactions
• View even more balance and reporting information
• and company administrators can perform tasks such as resetting user's passwords.

GTNews: Corporate Payments & SEPA & SWIFT

A couple articles of interest at GTNews this week:

Payments in Need of Standardisation
Jonathan Williams, Experian Payments
Corporate treasurers are facing pressures to consolidate and standardise their processes - how can they balance these requirements?

SEPA Security - Lessons Worth Learning from the Past
Steve Brunswick, Thales e-Security
SEPA security should not be regarded as a daunting task but instead corporates should learn from the experience of previous large security projects.

The Latest Shift in Payments
Rohan Padhi, Cognizant Technology Solutions
This article considers the impact of SEPA and corporate access to SWIFT and how banks are tailoring their offerings to meet client needs.

Plus, AFP's Global Corporate Treasurers Forum just wrapped and there is a recap of the major themes. Not surprisingly, liquidity was a a hot topic. Vendors take a look to see what CFOs and Treasurers are worried about (in addition to their careers, that is).

Commentary - How to Optimise Treasury Strategy and Your Career
At the AFP's recent Global Corporate Treasurers Forum in Chicago, topics such as treasury strategy, organisational structure and career progression took centre stage, against the backdrop of the liquidity crisis. .

There's plenty more at GTNews.com

Managing Cash in Tough Times / Receivables Strategies

The June CFO Magazine advises corporate treasurers on how to manage cash during difficult times. One specific suggestion is to keep a close eye on receivables:

Encourage quicker payment of accounts receivables by (1) not compensating salespeople until an order is paid for, (2) calling overdue customers when a bill is one day overdue rather than seven days overdue, and (3) using stop shipments with customers who haven't paid.

Yet most A/R departments are struggling to identify what their customers are paying for (because most payments and remittance information remain stubbornly paper based, e.g. checks and printed lists of invoices, deductions, etc.) and have arduous, manual processes to apply payments to their customers accounts. Thus the availability of A/R data is often delayed, making the data difficult to act upon in a timely manner. Many of the companies I know would gladly take the steps recommended in the article, if they could be certain that they had applied their customers payments in a timely manner and weren't calling  to seek payment or cutting off shipments while payment was stacked on an A/R clerk's desk. (Tying sales compensation to paid orders is one surefire way to get funding to revamp AR technology!)

The economic downturn will make these shortcomings painfully clear as corporate finance grapples with the painfully slow receivables process (and the data trapped within it). Perhaps the liquidity crisis is just what is needed to motivate more companies to consider electronic payment.

Corporate Mobile Banking: Separating Hype from Reality [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

Corporate Mobile Banking: Separating Hype from Reality [NACHA Payments]

Jacob Jegher
Senior Analyst, Celent

Amy L. Johnson
Vice President, Wells Fargo

Synopsis from Conference Program

Mobile banking is generating a wave of excitement in the North American marketplace. While much of the emphasis is on the retail market, corporate customers stand to benefit tremendously from this nascent channel. This session provides an overview, based on independent research from Celent, of the latest corporate mobile banking technology trends. The state of mobile cash management solutions is examined through a different lens, by distinguishing hype from reality. This session provides a detailed picture of what future mobile cash management solutions will look like, as well as descriptions of key features and functionalities that will attract users to this blossoming technology. Finally, it will help banks to ensure that their corporate mobile customers are provided with the proper security and authentication mechanisms while maintaining ease of use. A case study is presented by a pioneering institution in the mobile banking service for business sector, including an overview of its solution, descriptions of functionalities, lessons learned and business benefits.

My Observations & Comments

This was one of the best sessions I attended - an ideal balance of research/industry observations from Celent and real-world experience from Wells Fargo.

Celent

Eighty one percent of corporate executives are linked to their office through a mobile device. However, in the US 40% of business people are connecting to their corporate email using a personal device (an iPhone or other smart phone that they themselves purchased). This poses security challenges for corporate IT and those that seek to promote mobile banking and payments for corporates.

Mobile is proven to be effective in driving productivity, enabling remote work, and connecting disbursed teams. According to Celent four trends will drive the adoption of mobile banking and payments for corporates: 1) the evolution of full featured devices, 2) "BlackBerry mania", 3) Faster networks that provide a better user experience, and 4) the increasing prevalence of data plans.

Yet banks are slow to adopt new technologies, and mobile banking is no exception. Many banks are cautious about mobile banking in general, let alone offering mobile services for corporate customers. Security is obviously a major concern. Moreover, most vendors focused on corporate payment solutions do not feature mobile solutions and most mobile vendors are focused on consumer solutions. And mobile solutions are still immature. It is not clear whether text messaging, mobile browser, or device applications will be the dominant interface (or some combination). Celent predicts that mobile applications will be dominant, despite the challenge of developing multiple versions for each phone model and wireless carrier. And, thus far, corporates are not clamoring for mobile banking.

Demand for mobile banking:

Wells Fargo is the first bank to offer mobile banking to its corporate customers. Celent expects that seven additional banks will launch corporate mobile banking this year, and 6 more next year.

Wells Fargo

Wells Fargo believes that mobile banking and payments are inevitable and intends to lead in the mobile space. Their customers demand it and they have a mobile product road map to guide their progress. They are relying on text messaging and mobile browser for now, avoiding mobile applications (they are less enthused about applications than Celent is).

Mobile is particularly valuable for corporate clients as the need for dual controls and fraud prevention increases the number of approval steps for day-to-day payment activities. As the workforce becomes busier and virtual it is increasingly likely that corporate finance managers are away from their office (if only in a meeting down the hall) when they need to approve a payment or resolve a discrepancy/inquiry.

Wells Fargo's corporate mobile approach targets four types of transactions:

"Snack sized" functions (a Gartner term) - discrete tasks that take less than 5 minutes. The don't require enough time for it to make sense to boot up your laptop. You can do them while you stand in line, in between meetings, or waiting for your flight.

Time sensitive tasks - deadlines looming, expiring rates, or payments due.

Dual Control tasks - those that require two or more approvers, increasing the odds that one or more approver is away from their desk.

Fraud detection - utilize mobile to alert customers that there may be a real time fraud risk. Send just enough information to make a decision, or at least give manager an alert to phone the bank and learn more.

Wells Fargo is taking  an incremental approach, rolling out "a little something every quarter" and involving its customers to get continuous feedback. The solutions are very simple and elegant. For example, if you are approving a wire using the web browser on your mobile phone and have a question about it, the phone number of the person in your company is included in the record so you can click to dial that person directly and ask a question. When you conclude the phone call, the browser session resumes so that you can seamlessly approve the transaction. 

Lessons learned:

1) Involve customer service early. Train them to handle phone calls.

2) Do not expect high usage at first. It is a big shift for the customer. Use patterns vary from daily to occasionally.

3) Get your SMS short codes lined up early (lots of lead time necessary)

4) Be prepared to be nimble

>> Return to index of my posts from NACHA Payments 2008

Is Your Money Market Fund Safe? Examining The Crisis in Cash

Last night the San Francisco Treasury Management Association (TMA), the Silicon Valley TMA, and the Peninsula TMA (all local affiliates of the Association for Financial Professionals, or AFP) hosted Peter Crane, of Crane Data at our annual dinner meeting.

Over steak frites at Left Bank in San Mateo a packed house listened intently as Crane evaluated the safety of money market mutual funds and reviewed the most recent crisis in the money markets. He addressed various money market securities, including asset-backed commercial paper and CP, with a focus on what has gone wrong and what could go wrong.

"Mr. Crane thinks investors have lost far more money by flocking to Treasury money funds, due to their lower yields, than they would have from the threat of exposure to problem securities...sacrificing two percentage points in yield to avoid the remote chance that you may lose 1% to 2% in principal… it's silly." – Financial Week

Learn more:

• Crane Data
• Crane Data's Money Fund Blog

GTNews: The Road to Treasury Excellence

This week GTNews has cobbled together a somewhat disjointed collection of articles relevant to corporate treasury and payments. Topics include liquidity management, e-trading developments, portal technology, payments STP, TMS trends, the credit crunch and its impact on corporates as well as the business environment in Turkey (not sure how that last one slipped in).

How to Reduce Bank Costs with Straight-through Processing
Malcolm Taylor, Accuity
How can corporates improve efficiency in their payments straight-through processing (STP) rates?

The Road to Treasury Excellence
Karsten Kohl, BearingPoint
This article considers trends in the TMS space such as treasury's expectations of the systems they use.

Credit Crunch: Impact on Corporates
Olivier Brissaud, Volkswagen
Opinion and comment on the sub-prime banking crisis and its impact on corporates.

Bridging the Mid-corporate Divide With E-trading
Helen Woolcomb, Lloyds TSB
Mid-sized corporates could find themselves at a competitive disadvantage if they do not fully understand how e-trading could work for them.

Why You Should Want to Invest in Liquidity Management
Tuija Sipila, OpusCapita
Effective liquidity management is about being ready to do things differently, so what should corporates focus on?

All Eyes Set on Turkey
Paul Wouters, Bener Law Office
The business environment in Turkey and impact of the credit crunch.

Transform Treasury Through Portal Technology
Kirk D. Black, The Bank of New York Mellon
What can investment portal technology offer corporate treasurers?

There's lots more at GTNews.

GTNews Explores How the Corporate-Bank Relationship Is Evolving

Five new articles at GTNews this week explore how the Corporate-Bank relationship is evolving:

The Changing Nature of Today's Corporate-to-Bank Relationship
Suzanne Hurt, Bottomline Technologies
How can banks balance meeting the needs of clients with charting the right course for their business?
http://www.gtnews.com/article/7234.cfm

What Do Corporate Treasurers Expect of Their Banks?
Vesa Kalliokoski, OpusCapita
What expectations and requirements do CFOs and treasurers currently have of their banks?
http://www.gtnews.com/article/7230.cfm

Driving Forward Corporate Adoption of SEPA
Andrew Reid, Deutsche Bank
How can banks bridge the gap to make migration to SEPA as painless as possible for corporates?
http://www.gtnews.com/article/7233.cfm

Single Bank Model At Any Price?
Peter Cunningham, Citi
A framework to help corporates compare the single bank model with the multiple bank model.
http://www.gtnews.com/article/7232.cfm

B2T: Banks Thinking Outside the Box
Sanna Outa, Exidio
This article argues that banks must really understand what corporates want in order to survive in today's market.
http://www.gtnews.com/article/7231.cfm

There's lots more at GTNews

Ranking Treasury & Cash Management Providers (Global Finance Magazine)

Each year Global Finance magazine ranks the best treasury/cash management banks by region and by service category. The March 2008 issue arrived on Friday (just in time to land on the top of my weekend reading pile) and here are the highlights:

Bank Rankings

CITI

Best Overall Bank for Cash Management (Global Winner)
Best Bank for Risk Management (North America)
Best CLS-Linked Bank Offering (North America)

Global Finance praises Citi for innovation and its close collaboration with technology providers to help companies re-engineer their treasury and cash management processes. Highlights include the Citi TreasuryVision portal providing treasurers with greater visibility into their cash, investments, and liquidity and its new Managed Identity Services solution that enhances and streamlines security and identity management in high value corporate payments. Citi is one of the few banks that supports ISO 20022 XML standards. Citi has a 38% share of the third party Continuous Linked Settlement (CLS) system, simplifying foreign exchange processing and allows non-CLS settlement members to access its CLS settlement services through its online portal, CitiDirect.

JPMORGAN CHASE

Best Bank for Cash Management (North America)
Best Bank for Payments & Collections (North America)
Best Bank for Liquidity Management (North America)
Best Provider of Money Market Funds (North America)

JPMorgan Chase withstands increasing competition from foreign banks in US Market, and wins based on its integrated receivables offering, liquidity management, and order-to-pay processes. Its network of 15 image-enabled lockbox processing centers is linked with Receivables Edge (see my earlier post) a web-based interface for consolidating payment and remittance info for ACH, wire transfer, and EDI payments. JPMorgan is expanding its remote capture deposit services to include document image capture and promoting Back Office Check (BOC) conversion.  In addition, the acquisition of Xign enhances JPMorgan's payables and procurement capabilities. Global Finance lauds JPMorgan as an early pioneer in liquidity management, building on early innovations by providing third-party sweeping capabilities and "double sweep" which provides intra-day and end-of-day sweep and automated sweeps of excess funds into a centralized consolidated account, available for investment in a wide range of vehicles. JPMorgan Asset Management funds are well integrated into the banks liquidity management solutions and the bank is positioning itself to support special classes of investors such as central banks and sovereign wealth funds. As the leading ACH originator (by an overwhelming majority) and largest US dollar clearing bank JPMorgan is well positioned to serve its commercial customers.

Systems & Services Provider Rankings

Global Finance also reviewed Treasury and Cash Management systems and service providers to determine the best solutions in eleven categories. The winners are:

BOTTOMLINE TECHNOLOGIES

Best Accounts Payable Services

Working capital efficiency is driving the effort to automate and streamline order-to-pay. Global Finance is impressed by Bottomline's strong exception management and workflow tools that enable companies to accelerate the invoice approval process and increase the number of payments eligible for early payment discounts. Bottomline recognizes that paper is not going away anytime soon, and provides outsourced invoice data capture (not just invoice images).

SUNGARD AVANTGARD RECEIVABLES

Best Accounts Receivable Services

SunGard has one of the most comprehensive accounts receivable solutions on the market, according to Global Finance. User lower their days sales outstanding (DSO) by reducing disputes and streamlining the receivables process. Features include credit risk management, collections, dispute resolution, electronic invoice settlement, cash forecasting and analysis and reporting.

ARIBA

Best Invoice Presentment & Payment

Ariba provides both payments and remittance management. It is partnering with Orbian to provide supply chain financing. Over 120,000 suppliers are in the Ariba network, and efforts are underway to increase that number.

ORACLE

Best Payroll Services

Global Fiance notes that by consolidating various acquisitions Oracle delivers rules based payroll management that allows users to easily and dynamically control changes to employee benefits. It has modules for country-specific payroll needs, providing a global solution.

MASTERCARD WORLDWIDE

Best Corporate Cards & Expense Management

Expense cards provide efficiency, but the real value comes through transaction reporting, data integration, and authorization management - areas in which MasterCard has invested heavily over the last year. Sophisticated authorization, transaction routing, and alert controls can be customized using MasterCard inControl. SmartData offers enhanced spend data reporting, and Travel Dashboard provides travel program business intelligence.

FISERV/CHECKFREE

Best Electronic Commerce Provider

CheckFree claims that a significant percentage of the 14 billion annual ACH transactions are processed using their software. CheckFree has an EFT network, bill presentment and payment solution, too. Fiserv aims to combine CheckFree's capabilities to its own core banking solutions for small and mid-sized banks.

SUNGARD AVAILABILITY SERVICES

Best Loss Prevention /Business Services Provider

Global Finance is impressed by SunGard's comprehensive Availability Services that address all aspects of business continuity planning - data, IT, networks, and people - and enable companies to restore business as usual after a calamity.

CPAS SYSTEMS

Best Pension Plan Administration Services

Pension software from CPAS is used to administer thousands of pension plans around the world. Global Finance praises the solution's strong workflow and data management capabilities, web-access and self-serve features. An Express version is pre-configured for rapid implementation.

EDS

Best Technology Service Provider

Acknowledging stiff competition from Indian high margin business process outsourcing providers, Global Finance still thinks EDS is tops for remote infrastructure management via its utility based model and large geographic footprint.

SUNGARD AVANTGARD

Best Treasury Workstation Provider
Best Treasury Management Software

More than 1,600 companies use SunGard AvantGard for treasury and risk management. Recent focus on straight-through-processing and collaborative financial management in order to increase efficiency in the end-to-end supply chain. SunGard was an early champion of ASP and hosted solutions, providing an answer to companies without a dedicated treasury management system. Acquisition of ZRT's Globe$ and TWS solutions provide comprehensive data to support treasurer's risk and cash forecasting solutions.

 

Source:

Global Finance
World's Best Treasury Providers 2008
March 2008 (pages 40-57)

Remote CASH Deposit?

Cash processing is not only time consuming but fraught with security challenges (and associated high costs of dual custody, surveillance, etc.). The astounding success of remote deposit capture of checks has prompted interest in remote CASH deposit services.

Bankers are attracted to the ability to serve customers in areas where they do not have branches (much the same appeal as remote check deposit) and merchants receive faster availability and are able to tap into cash that is otherwise unavailable or "trapped in the system."

BofA and Fifth Third Bancorp are experimenting with specialized safes that allow customers to receive immediate credit for funds that have not left the customers' store locations.

Fifth Third Bank

• Fifth Third Bank is partnering with Brinks to service an unnamed fast food chain and has 400 safes in use nationwide (and expects to have over 500 deployed by year end).
• The product is called "Remote Currency Manager" and has been available since the second quarter.
  
• The bank does not assume liability until the funds are delivered to the bank by Brinks.
• The bank charges a monthly user fee for the safe as well as a cash servicing fee.

BofA

• So far, BofA is piloting with Chick-fil-A, a restaurant chain in Atlanta, but intends to test with five other companies, including a major department store chain and a boutique retailer. BofA says it will offer the service widely in the first half of next year.
• BofA accents responsibility for the funds once they are in the safe.
• Merchants are able to "withdraw" currency from the safe when they need cash.
• BofA has not determined fees for its as yet unnamed service.

Learn more:

Remote's Next Capture: Cash
Fifth Third, BofA eyeing business deposits
American Banker
Tuesday, October 23, 2007
By Will Wade

New Benchmarking Program from AFP, IBM, and Deutsche Bank

In Boston at its annual conference the Association for Financial Professionals (AFP) announced a partnership with IBM to develop a comprehensive treasury benchmarking program. The multi-year project is being underwritten by Deutsche Bank Global Transaction Banking, which will also promote the program through its global network. The first study in the program covering treasury operations will be launched in March 2008 and results will be announced at the 2008 AFP Confernce in Los Angeles next Fall.

Press Release

Corporate Treasury: Focus on Internal Efficiency & Improving Technology

Business Finance magazine and JPMorgan Chase surveyed 500 corporate Treasurers to better understand the trends impacting their departments and what keeps them up at night.

Large Companies ($2 billion + annual revenue) vs. Smaller Companies (under $100 million)

79 percent of large companies identified internal efficiency as the factor of greatest importance in the treasury area. Among smaller companies, 73 percent identified the economy as the most important factor impacting the treasury function. M&As, the third-ranking factor, were cited by 61 percent of the larger companies but only 27 percent of the smaller companies.

However, the large/small dichotomy again showed in the responses to globalization, the factor ranking fourth overall. Globalization was cited as an important factor by 51 percent of larger companies but only 35 percent of smaller ones.

The Transition from Paper to Electronic

Although the paperless office will never happen in anyone's lifetime, companies continue to express interest in moving from paper to electronic processing. The three big drivers here are the opportunity to gain greater operational efficiency (cited by 70 percent of the respondents), the chance to lower the cost of electronic clearing (50 percent), and the ability to optimize the availability of funds (40 percent). Despite the recent attention on green business practices, only 11 percent of respondents cited environmental concerns as an influence.

Learn more:

Top of Mind
Survey: Tressury's Methods in Flux
by Alan Radding
Business Finance
October 2007

MasterCard's Latest B2B Offering Targets Mid-Market, plus Large Corporates

Today MasterCard announces its Payment Gateway enabling businesses to pay their suppliers with either Purchase Card or ACH transactions and deliver remittance data. Unlike rival B2B services launched this year by AmEx and JPMorgan Chase, MasterCard is targeting small and mid-sized companies as well as large corporates, and it is selling the product through financial institutions that have the option of customizing the service to meet the needs of their business customers. Wells Fargo is piloting the new service under its own brand name and MasterCard is currently using it with its own suppliers. The Payment Gateway interfaces with ERP packages from Oracle and SAP.

Buyer Benefits

Improves Bottom Line.
Through one simple, efficient payment interface, payments are processed faster, enabling you to take advantage of significant discounts and freeing resources for other revenue-generating activities, enabling you to optimize working capital.

Reduces Costs.
The MasterCard Payment Gateway reduces paper check processing errors and expenses.

Leverages Existing Technology Investment.
Enhance control, tracking and security with no new technology investment. The MasterCard Payment Gateway integrates easily with your existing infrastructure, leveraging existing controls in your A/P process such as 3-way match. Additionally, payment is always buyer-approved and buyer-initiated.

Supplier Benefits

Shrinks Costs. Grows Profits.
The MasterCard Payment Gateway isn’t only a tool for your customers, it can also help you improve your bottom line. It can help to grow profits by optimizing working capital (reducing Day Sales Outstanding), reducing chargeback and fraud risk, and operational costs associated with paper check processing.

Go Faster Easier Than Ever.
The MasterCard Payment Gateway processes payments automatically. No more manual, paper-based processing. And reconciliations are much faster with the enhanced remittance data provided by the Gateway.

Build Your Business.
When you enroll, you’ll be included in a B-to-B Supplier Directory that puts you right at the fingertips of new and current customers. The directory is super easy for them to use. Fortunately, we’ve made enrolling just as easy for you.

Learn more:

• MasterCard Payment Gateway website
• American Banker coverage

$90K in Personal Expenses on Company Credit Card

How effective is your purchase card audit process?
Hopefully stronger than this company's:

The travel manager of a Silicon Valley high-tech firm was charged with wire fraud today in federal court for allegedly charging $90,000 in personal expenses to a corporate credit card, including private-school tuition for her son.

Read more:

Silicon Valley boss accused of expensing son's tuition
Henry K. Lee
Chronicle Staff Writer
Tuesday, September 25, 2007

Wells Fargo Offers Mobile Banking for Business Customers

As anticipated (after Steve Ellis' not so subtle hints at the NACHA Payments conference last month), Wells Fargo has announced mobile banking service for business customers. This is a first in the industry as all other mobile efforts have been targeted at consumers. And from my perspective, it is a wise move on Wells' part, as business customers are more likely to tolerate a fee for mobile access than their consumer counterparts.

Wells Fargo press release:

Wells Fargo & Company (NYSE:WFC) has introduced its CEO Mobile (SM) service to a select group of customers, becoming the first major U.S. financial services company to offer mobile service for businesses.

The initial version of the CEO Mobile service, made available to a small number of business customers on April 30, delivers key treasury reports through a secure browser session. Functions that Wells Fargo plans to add later this year include wire approvals, image positive pay exceptions, and administrative tools such as password resets.

"Mobile service makes executing financial transactions more convenient and flexible for our business customers," said Megan Minich, who leads the Mobile Technologies team for Wells Fargo's Wholesale Internet and Treasury Solutions. "With each new step, we'll gather customer feedback and refine our interface to ensure it's usable, streamlined and simple."

Wells Fargo has extended the same strong security features to its CEO Mobile service that it employs for its Commercial Electronic Office® (CEO®) portal, including:

    * Authenticating users with the same credentials they use on the CEO portal,
    * Protecting data with 128-bit Secure Socket Layer (SSL) encryption, and
    * Enforcing session time-out rules.

We want to be where our customers want us to be-at the office, in meetings, out of town, wherever-and provide information when they need it so they can act on it," said Steve Ellis, head of Wells Fargo's Wholesale Services Group. "Our business customers need to make decisions instantly, instead of waiting to get back to the office or calling someone to complete a crucial transaction."

Wells Fargo's pioneering effort in mobile banking for business customers is the latest milestone in the company's history as technology trailblazer. In 1995, Wells Fargo became the first financial institution to introduce access to banking accounts on the Internet. In 2000, the company launched the Commercial Electronic Office portal, the first financial services portal for mid-sized companies and large corporations.

Back Office Conversion: Opportunity for Merchants and Retailers

Check conversion via Back Office Conversion (BOC) has significant advantages, particularly over the Point of Purchase (POP) check conversion method, and is widely regarded as NACHAs reaction the merchant disappointment with POP transactions.

Back Office Conversion benefits for merchants and retailers are as follows:

Increased efficiency: Rather than converting checks one at a time at the point-of-sale retailers can scan batches of checks at regular intervals throughout the day or at the end of day. This streamlined deposit preparation vs. traditional paper processing. Avoid courier pick ups or visits to the local bank branch.

Less hardware: Because BOC deposits are scanned at the end of the day, store locations only need one scanner instead of multiple scanners in order to equip each cashier station.

Less training: With POP all cashiers needed training on the transaction process and check eligibility. With BOC a small number of employees need training.

Faster funds availability: Merchants that submit their back office conversion files directly to a bank (rather than via a third party provider) will benefit from faster funds availability compared to making a physical deposit at a local branch. In addition, the Sunday evening ACH clearing window will be a benefit for those retailers and merchants that receive a large number of checks over the weekend. They will now enjoy funds availability on Monday morning.

Optimized routing: Some banks will offer services that convert your entire deposit to electronic transactions, either via ACH or image clearing/IRD depending on the eligibility of individual items.

Reduced risk: BOC transactions are processed via the ACH network and settle the following day. Merchants and retailers will be notified of returned items the next day; returned item notification for paper checks can take several days. As ACH transactions the items are eligible for re-presentment, thereby increasing the odds that a transaction will be successful.

Opportunity to consolidate banking relationships: Back office conversion enables merchants to make deposits regardless of the distance between their store location and the closest bank branch. Merchants and retailers with limited cash deposits are more likely to achieve consolidation than those that continue to have cash processing needs.

Learn more about BOC.

Are you sitting on too much cash? What is your decapitalization strategy?

The spring issue of Strategy+Business wonders what corporations are going to do with the mountain of cash they've accumulated and evaluates options for spending/investing the cash:

Until recently, excess liquidity seemed like a smart strategy. It was insurance against risk and provided capital for growth. But now, with balance sheets largely mended, cash flow volatility easing, the outlook for corporate earnings generally improving, and interest rates on the rise, the benefits of keeping large amounts of cash on hand are less easy to discern. This leaves many companies facing a troubling dilemma: Just when the actual need for excess cash has decreased, they have too much liquidity. They’re hoarding capital instead of putting it to good use, wasting critical opportunities to benefit from it. And they’re making themselves vulnerable to corporate raiders — private equity firms and hedge funds that would like nothing better than to move in on an organization with large sums of money in the bank.

In this environment, a so-called decapitalization strategy that reduces the cash on hand to a sufficient amount for day-to-day business and growth — an approach that in turn can simultaneously enhance creditworthiness and return on equity — offers the most compelling economics. The purpose is not purely to minimize cash, but also to realistically determine how much liquidity is required for both routine and strategic operations and to wisely earmark the rest of the money for shareholders and debt reduction programs.

Read more:

Too Much Money
by Justin Pettit
Strategy+Business
Spring 2007

Available today: Back Office Conversion (BOC) simplifies check processing for merchants

Effective today, March 16, 2007, there is a new way to convert checks to electronic ACH transactions: Back Office Conversion (BOC).

This method joins Point of Purchase (POP)  and Accounts Receivable Entry (ARC) and fills a gap in check conversion options, particularly for retailers and other businesses that continue to receive a large number of check payments.

As check volume decreases checks are becoming increasingly expensive to process – for both merchants and financial institutions. Check conversion allows merchants and financial institutions to enjoy the efficiencies of electronic payment even as consumers continue to write checks.

BOC Addresses Shortcomings of Existing Check Conversion Options

Although ARC has been wildly popular it is limited to checks received via the mail or via a drop box. POP transactions at the Point of Sale have been much less popular because consumers are confused when they receive their check back at the checkout counter and merchants balked at the cost of having to equip all of their registers with scanners and train cashiers (see graph summarizing the three conversion transaction types).

BOC significantly improves efficiency by allowing batch processing of checks in the “back office” and eliminates the requirement for the customer to sign an authorization and the need  to return a voided check to the consumer. Under the new BOC rules, the merchant must post a notice that checks may be converted and allow customers to opt out. Merchants may require that customers who opt out of check conversion pay with a credit or debit card.

Initial consumer frustration with regard to no longer receiving checks in their statements has been mitigated as the volume of ARC grows and Check 21 image processing becomes more prevalent. Those consumers that persist in writing checks have realized that the processing environment has changed– they may not like it but they’ve realized times are changing.

    Adapted from NACHA educational materials

The rule change allowing BOC follows a rule change effective September 15, 2006 clarifying eligibility for check conversion. Up until that point business checks were excluded from conversion but there were no rules for identifying ineligible checks. The eligibility rules established last year for POP and ARC also apply to BOC. Checks are eligible for conversion as long as they are less than $25,000 and do not have an auxiliary on-us field.

Success Anticipated

NACHA anticipates a volume of 3 billion payments annually by the fifth year of BOC, nearly 50% of checks written at the point of sale.

Banks and retailers have been working over the past few months in anticipation of today's deadline and it is widely expected that merchants will being processing as soon as possible - some will start today - and volume is expected to grow quickly. We'll be monitoring the impact of BOC and report back here.

Learn more at the NACHA website:

BOC Press Release
BOC Fact Sheet
Educational Material for Businesses and Financial Instiutions

A Call to Action

Promoting Process Improvement Company-wide

Increasing responsibility for operations efficiency and performance management requires a more proactive approach than finance has traditionally held. Financial professionals have a uniquely analytical skill set and holistic perspective to share with colleagues.

The following strategies are useful when promoting process improvement company-wide:

SHARE OPPORTUNITIES FOR IMPROVEMENT
As a result of Sarbanes-Oxley process documentation efforts and traditional reporting and analysis responsibilities, the finance department has a uniquely holistic view of the organization. Leading finance professionals share opportunities for improvement that they’ve identified with business line managers – highlighting how the business units will benefit, of course.

ASSIST WITH PROJECT COST-BENEFIT ANALYSIS
Financial analysis skills are invaluable in analyzing potential projects and measuring their potential benefits. Coaching managers on calculating ROI and working with project sponsors to develop solid business cases that will obtain approval and project funding is a proven means of supporting process improvement.

LEND RESOURCES
Finance has honed process evaluation and improvement expertise as a result of Sarbanes-Oxley attestation efforts. Put these new skills to use to drive projects throughout the organization by loaning resources to support critical projects.

ENSURE BUSINESS UNITS ENJOY SAVINGS
By promoting internal policies that allow business units to keep and reinvest the savings they generate as a result of process improvement initiatives finance can build momentum. Project sponsors will be motivated by improvements to their own P&L.

Positioning Finance as a Process Improvement Resource

Finance has a broad mandate and an opportunity to promote process improvement throughout the organization. But other departments and executives will not turn to finance for assistance if they are unaware of the talent.

Take advantage of cross functional meetings and impromptu hallway conversations to let fellow managers know how the finance department can help them increase efficiency and improve performance.

SEC backs XBRL - are you ready?

The SEC announced Monday that it is planning a $53 million upgrade of its EDGAR database.  The overhaul will rely on data tagging via XBRL to make it easier for investors, analysts, and the SEC to search for and compare data.

SEC chief Christopher Cox has ambitious plans to overhaul the entire financial reporting system within 18 months.

"It's the basic mission of the SEC to provide quality disclosure to investors. There are really only two ways we can improve SEC regulation," said Mr. Cox, in an interview. "One is by reducing the costs of regulation. The other is to improve the quality of the output. Interactive data let us do both," he said.
[Excerpted from the Wall Street Journal]

The SEC intends to use "honey not vinegar" to attract companies to use XBRL, citing how the benefits outweigh the costs.

Rather than treating financial information as a block of text -- as in a standard Internet page or a printed document -- XBRL language provides a unique identifying tag for each individual item of data, such as company net profit, for example.

That will enable users to extract specific information more easily from SEC filings, run calculations and aggregate data as desired. Company revenue, for example, could be tracked over several years without having to open up and review multiple filings.

''The new system will make it easier both to file information with the (SEC) and to use it,'' Cox said. ''For investors and analysts, it will represent a quantum leap over existing disclosure technologies.''

Companies won't be required to use the new data system. But they will be encouraged to do so because it will make it cheaper and faster for them to make regulatory filings, Cox said. More than two dozen companies already have committed to use the system, according to the agency. [Excerpt from AP]

Benefits:

• Relatively small cost to convert financial reporting system to XBRL (SEC cites example of United Technologies, a $43 billion company that invested only $40,000 to make the switch)
• Establishes a common, global platform for financial data comparison aiding analysis.
• May increase analyst coverage of smaller companies by streamlining performance evaluation and providing better tools to obtain data.
• Reduce subscription cost for EDGAR by 37%

I'm relieved that hte SEC has committed $5.5 million toward finalizing XBRL taxonomies that define the data elements in order to speed development. Too often data standards lag behind technologies, wrecking havoc for all parties. Rapid consolidation of standards will ease implementation.

More information:

SEC website dedicated to Interative Data and XBRL Initiatives

SEC Financial-Reports Database To Undergo $54 Million Upgrade
By JUDITH BURNS and KARA SCANNELL
Wall Street Journal
September 26, 2006; Page C3

10-Ks, 8-Ks a Thing of the Past?
Marie Leone
CFO.com
September 26, 2006

AP via the NYTimes

Research Evaluates Remote Deposit Vendors

Celent has just published a new report evaluating the vendor solutions behind remote deposit capture products. The study includes both client and server capabilities. “Improvements in product functionality have been announced at a breakneck pace, exceeded only by banks’ interest in the solutions and their clients’ demand for them. So much so, that no single vendor captured highest marks across all four categories,” says Bob Meara, author of the report and senior analyst in the Banking group at Celent.

Graphic courtesy of Celent:

Remote deposit has taken the banking industry by storm and customers are clamoring for it. For further information refer to previous posts:

What is remote capture?
Small Banks Embrace Remote Capture
Remote Capture Grows and Grows

Visit the Celent site to get a copy of their research report:

Remote Deposit Capture Vendors: Crossing the Chasm
Report Published by Celent
July 18, 2006

100 Most Influential People in Finance

The June issue of Treasury & Risk Mangement features the magazine's annual list of the 100 Most Influential People in Finance. The editors spoke with executives, bankers, economists, technology vendors and consultants to determine finance movers and shakers over the last 12 months.

Finance leaders are recognized in the following categories:

VISIONARY CFOs: Plotting the Route to Sustainable Growth

STRATEGIC TREASURERS AND CONTROLLERS: Pushing for that Last Percentile of Efficiency

THE REFORMERS: Working to Change the System's Fundamentals

CORPORATE CLIMBERS: Looking Forward to What's Next

THE ENFORCERS: Maintaining a Slow, Steady Boil in Regulation

WASHINGTON WARRIORS: Negotiating the Big Fixes

BUSINESS INTELLIGENTS: Teaching Finance How to do More Than Excel

100 Most Influential People in Finance
Treasury & Risk Management
June 2006

CFO.com SOX 404 Coverage

CFO.com  has a new page consolidating their coverage of Sarbanes-Oxley 404 and the May 10 SEC roundtable discussions.

The 404 Debate
CFO.com Special Report

Linking the ACH and Check 21 Image Networks

Today's American Banker discuses the possibility to combining the new image clearing network (created as a result of Check 21) and the automated clearing house (ACH) network thereby increasing the number of collection endpoints for settling check images. This article is based on a panel discussion last week at NACHA's Payments 2006 conference.

One of the primary hurdles of Check 21 image clearing is the limited number of banks that are capable of receiving image cash letters from other banks. As a result, the Federal Reserve prints "IRD" copies of checks that were scanned and truncated upon receipt at the bank of first deposit.

The Tech Scene: New Project Could Link ACH, Image Networks
American Banker (subscription required)
Wednesday, May 17, 2006
By Will Wade

Small Banks Embrace Remote Capture

American Banker reports that smaller banks are honing in on remote capture as a means of retaining their merchant customers. Demand for remote deposit products has surpassed even the most optimistic industry expectations. Although initial marketing efforts focused on large corporate customers,  smaller companies are eager for remote capture's convenience.

Although smaller banks have less volume, and therefore reduced cost savings due to remote capture, the ability to attract deposits and retain customers through improved customer service reduce the need for scale.

Refer to my earlier post What is Remote Capture?

The Tech Scene: Small Banks Vie with Big in Remote Capture
American Banker (subscription required)
Wednesday, May 3, 2006
By Steve Bills

Remote Capture Grows and Grows

Two recent annoucements underscore the strong demand for remote capture products:

NetDeposit
Press Release, April 25

• NetDeposit generated a 190 percent increase over transaction volumes of the previous quarter and
• More than 1,000 new corporate end users have been added since January, 
• 24,406,641 Check 21 payments were processed during the first quarter of 2006. Compared to one year ago, this represents an astounding 1466 percent increase from the first quarter 2005 transaction volume of 1,664,756.   

Metavante
Press Release, April 28

Metavante Corporation, the financial technology subsidiary of Marshall & Ilsley Corporation, today announced its Image Solutions division has successfully implemented branch image capture for over 350 customers around the world. The Metavante Image Solutions customer base for branch image capture reaches every segment in the financial services sector and to financial institutions of every asset size – from community banks and local credit unions to service bureaus and data centers to the country’s largest regional banks and corporate credit unions.

Refer to my earlier post What is Remote Capture?