Q&A: Can My Bank Produce an EDI 822 File?

When I thought to write Q&A posts I assumed I'd run out of questions to answer but, from outside the field, very few Bankers or Treasurers understand Account Analysis so it has given me more to write about and - hopefully - this space remains informative.

Can my bank produce an EDI 822 file?

The first thing I ask when I get this question is, "who is your bank?"  It is safe to assume that the big banks of the USA are all producing an EDI 822 file for their Account Analysis customers.   There are some smaller, when compared to the Big Four, banks who have yet to move to an electronic file format for their Account Analysis.  Then there are some banks who would prefer their customers never find out an EDI 822 file exists!  Some banks will attempt to charge the customer requesting an EDI 822 an exorbitant initial set-up cost and/or try to appease by sending a MS Excel spreadsheet in place of or in addition to the paper Account Analysis statement. Usually, neither are good options which I will explain below.

Should my Treasury dept request an EDI 822 file?

The answer to this question depends greatly on what you plan to do with the EDI 822 file.  If you have already purchased and implemented an Account Analysis system, then an EDI 822 file is a must have.  It makes the capture, translation, and analysis of your EDI 822 file and even your BSB files easier and thorough.  However, if your Treasury staff does not have a software program which can capture and analyse the 822 data then how much benefit will an 822 file offer?

The comment I hear frequently from Treasury staff regarding an EDI 822 file is, "I can't read this thing!"  If you can't decipher what the file says and you do not have an Account Analysis system or module as part of your Treasury Workstation, then continuing to receive either a .pdf or Excel spreadsheet from your bank is a low cost alternative.  Always weighing the cost-benefit of any financial decision is a smart thing to do.

When would you recommend receiving an EDI 822?

Since the goal of Treasury is to cut costs and use money efficiently, my first response is when it helps your company achieve those goals.  Some Treasury departments are not fully staffed.  Even then, some are not staffed with an expert analysis team.  I have seen some pretty elaborate spreadsheets and macros used in MS Excel to calculate bank pricing, charges, volumes, fluctuations of either, and historical trends.  Since adding a new row for a bank service and/or account signifies an addition, the staff is aware of new services and accounts as well.

When the expert Treasury staff is not available, when the resources are just not there, and/or making the time to thoroughly analyse your bank fees is the last thing you attempt to do before the invoice must be paid; this is when I'd recommend an EDI 822 file.  Coupled with an Account Analysis system, it offers an efficient use of time which allows less focus on manually keying in data into a spreadsheet but more focus on analyzing that data.  Better management of your bank fees and cutting costs so your Treasury department's annual budget actually decreases with each passing year, should be the ultimate goal of any Treasury department.  How you get there depends on the individual needs of each company.

What about the BSB file?

The same would apply to the BSB file as well.  If your company has only domestic bank accounts denominated in the local USD currency, then a BSB is unnecessary.

With currency conversions, conversion rates, possible taxes, etc the BSB is slightly easier to read in its .xml format.  However, not all Account Analysis systems or Account Analysis modules of Treasury Workstations are TWIST BSB or ISO BSB/camt.086 message compatible so make sure you ask the right questions if you are deciding this is the right path for your company.

As always, if you have an Account Analysis question please feel free to email me: GirlMeetsAA@gmail.com. 

Happy Analyzing!

BSB Currency Types

The Bank Services Billing (BSB) is the international Account Analysis file which allows for various currencies.  Most companies have been receiving the BSB for some time now but do we really understand what each currency type tells us?

Below are 4 currency types you will see in a BSB file (their actual tag names may differ) along with some example balances.

• Account Currency - the currency in which the final account balances are denominated.
• Ledger Balance
• Float Balance
• Net Collected Balance
• Balance Subject to Reserves
• Investable Balance
• Etc.

• Price Currency - the currency in which the account's services are priced.  
• Settlement Currency - the currency in which the account's final bank fees are denominated and due. 
• Services Charges - Balance Compensable
• Service Charges - Balance Non Compensable
• Service Charges Net Due This Statement
• Total Service Charges Invoiced 
• Etc.
• Host Currency - the currency in which the account's taxes are due.

Most are already familiar with the account currency which usually ties to the home country's currency in which the account resides.  All the above currency types are important but since most Treasurers are more interested in what they owe, this makes the Settlement Currency very important.  Without it, it may be difficult to determine in which currency your final fees are due and how much is due.  

Important to Note:

• All 4 currencies may not be denominated in the same currency. Usually, there are 1-2 currencies per account statement but this may not always be the case.  
• The Account Analysis file must include a conversion rate.  This conversion rate is sent by the bank letting you, the Treasury staff, know what rate was used to convert one currency into its final settlement currency.  
• There is a Settlement Currency for both the Compensation Balances and each individual Service Charge.  You may see a Settlement Charge for your services in one currency which should align with the Settlement Currency of your total service charges due.  
• For individual bank services, Price Currency and Settlement Currency are different.  The currency in which your bank services are priced may be different from the charge in which your bank service fees are due.  
• Although Host Currency does exist I haven't seen many banks send tax information on their files.

FAQs:

1. Now that my bank sends a BSB, how do I make sense of its data?  
• Capturing and processing the data using some form of an Account Analysis system is the best approach.  It will allow you to easily read the BSB data, see your account balances, check service activity, and a host of other things. 
2. Most of our accounts settle in various currencies, how do I convert them into a single currency for reporting?  
• The bank should always send a conversion rate when the Settlement Currency differs from the Price and/or Account Currency.  This allows you to audit your bank fees due.  Your Account Analysis system or manual calculations using an applicable conversion rate according to an as of date will allow you to convert your multiple currencies into one for reporting.  
3. We receive the TWIST BSB; will the data differ when we begin receiving the ISO BSB?
• No. The tag names or formatting of the file may differ but your Account Analysis system should already be ISO BSB or camt.086 message ready.  The same data points will be sent so there are no major differences or changes your Treasury Dept should make to their process(es).  

This subject matter may not concern many companies whose accounts are all domestic but for the others, there were enough questions to make the post worthwhile.

Happy Analyzing!