What are Analyzed Charges?

From my experience, banks send service charges one of four ways: analyzed, hard, waived, or debited.  Usually, most bank services are sent as analyzed charges on an account analysis statement but what does this mean?

Analyzed means the charge for this bank service can be offset by any earnings allowance the account has earned for the period.

If your account's total analyzed charges for the month is $343.23 but your earnings allowance is $51.84 then that means you should owe the bank an amount of $343.23 less $51.84.

Analyzed Charges are sent on an account analysis statement as Service Charges - Balance Compensable.  All analyzed charges for one account during a particular time frame should be shown as this balance.  This balance is always a positive number but does not include any adjustments.  It is pre-adjustments, if applicable.

Why are Analyzed Charges important to know for Account Analysis?

First, most Treasurers' job responsibility is to lower costs namely those of bank fees.  If the cost of bank services at one bank makes the earnings allowance worth it since this earnings allowance can be applied towards total analyzed charges, then why would this charge NOT be important?

Since the Great Recession, we have seen Earned Credit Rates (ECR) plummet to barely anything worth mentioning.  Due to this lowered rate, balances kept in accounts are often not worth the charges incurred for the bank services.

Since the ECR determines the amount of earnings allowance which in turn determines how much money a company can save on their bank fees, this can help better estimate how much fees to incur per account to offset those fees against your estimated earnings allowance.

Why spend more than you have to??

Now, there are different suggestions to consider which can eliminate certain bank fees or even get you better rates for those bank services but that's another topic...and totally strategic.

Until then...Happy Analyzing!