The chief financial officer may not be cognisant of the terms or costs of a bank relationship according to Stephen Cheesewright, Director of Financial Risk Management for KPMG.
Many organisations have banked with their transaction bankers for decades.
Because the relationship has evolved over many years, the chief financial officer (CFO) of the client organisation may not be cognisant of the terms or costs of the relationship.
For example, how much does the organisation pay in bank charges? When the CFO investigates this they may be surprised not at only at the cost but also that there is no formal agreement with the bank.
Further, if the organisation is large it may be paying for services it is no longer using.
Reviewing banking services provides opportunities to reduce costs, remove redundant services and use alternative banking products that offer efficiencies and reduced costs.
These are questions and steps for CFOs to consider:
Map the bank account structure - often organisations are surprised to find that they have many more accounts than they were aware of and with different terms.
What are the credit and debit interest rates associated with these accounts?
Is the bank charging an offset margin?
Review transaction volumes and transaction types. Using this information, the organisation can determine its banking costs.
With this information the organisation can then plan its future transaction banking in preparation for a discussion with the bank or in preparation for a banking tender.
CPA Australia through its Finance and Treasury Centre of Excellence provides a resource to members online.
For more information, view the guide to reviewing your bank accounts and facilities from the Managing Your Business section of the website.
