Banking Invoice Insights 101: Untangling the Complexities

15th October 2018
Jenna Birch
Jenna Birch

Do you find reconciling your banking invoices an impossible task? Is managing multiple supplier relationships a headache for your internal team? Do you find deciphering your banking invoice codes challenging? Once you have taken the time to figure out what you are paying for, do you struggle to compare the rates you are paying against your peers? If you answered yes to any (or all) of these questions you aren’t alone!

Deciding on a banking partner with branches near your store locations or vaults that align with your armored transport providers, in a country as geographically vast as the U.S., is not an easy task. It’s not uncommon for U.S. merchants in search of the perfect banking solution to have 10+ banking partners, and we’ve even come across some merchants with over 35 different banks servicing various regions of their estate.

Making sense of a single invoice can have its challenges – line item codes and descriptions are often opaque, and charges may be bundled together – but when you try and reconcile numerous invoices for each store location across dozens of different banking partners, the complexity increases exponentially. Decoding that complexity and understanding the intricacies of your invoices is the first step to optimizing your banking arrangements. There are significant savings available for those who get their banking arrangements right, but merchants must first understand the intricacies of their invoices.

Uncomplicating Your Cash Orders

Different banks have different formats of reporting your cash orders – and understanding how these differences are reported across your invoices is challenging. Prices vary depending on if the order you placed is the same each time or if it was an ad-hoc order, and the method used to place the order (telephone, online, etc.). Each bank will have a different way of presenting charges for note orders – with some charging per strap, per $100, per note, or on a volume basis. Coin orders can fluctuate depending on whether your ordered bulk/loose, half box, full box, or rolls. Reconciling and comparing costs between suppliers is difficult, so knowing whether your charges are accurate – or industry leading – is almost impossible for any merchant.

Decrypting Your Deposits

Deposit charges, like cash orders, can be hugely varied across the banking industry. Your fees will differ invoice-to-invoice and bank-to-bank depending on whether your cash is deposited in branch, via cash vault, or through an extended network. Banks would like to avoid branch deposits – they are time consuming for tellers and, just like a store employee working in the back office, they pull staff away from their customer facing role. Banks will often price vault banking more competitively than the equivalent services occurring within a branch.

Volume also plays a role here, so understanding whether a large deposit at one bank is competitive against a similar sized deposit at another bank can be helpful in optimizing your arrangements. Banks vary charges by deposit type (line items can be listed as cash and check mixed, cash only, check only, paper/electronic credit, deposits processed, cash vault deposit, cash only/check only deposit) so understanding your deposit profile is key to decrypting your charges.

There is little standardization in how banks invoice, with no regulation requirements for how statements must be presented, so understanding the function of your banking partners’ reporting system is key. Your invoices are complex. So are your monthly reports. Reconcile and standardize wherever possible to ensure consistency across your estate.

Jenna Birch | Product Manager

Reconciling Your Reports

Banks often have their own internal systems for reporting, and some offer portals for merchants to access reports and management information directly online. These are often very different from bank-to-bank, so understanding and reconciling the information provided to you on a monthly basis is complex. You may receive electronic statements from some suppliers, paper statements from others, and have portal access from others.

Decoding Your Code Complexities

Banking codes are a headache for even the most experienced cash management professional. Different banks all use different codes and descriptions, and the 2,500+ industry-standard Association for Financial Professionals (AFP) codes are either not used at all or used incorrectly by many suppliers. Line item codes and descriptions lack standardization across the industry – so what one of your banking partners may name a ‘cash vault deposit’ on one invoice, will not match up with the description used for the exact same type of deposit by a different banking partner (see invoice comparison table below). Having visibility of the bottom-line costs for banking services across your estate is impossible for merchants unable to reconcile their line items.

In Summary

Overcoming these challenges, optimizing your banking arrangements and successfully managing your numerous relationships can yield significant savings and process improvements throughout your estate. Banking invoices are notoriously difficult to interpret. The amount of time and resource needed to audit and accurately understand your invoices can be too extensive for internal teams, so consider a holistic banking review using external specialists.

At CMSPI, we are experienced in improving banking arrangements, providing visibility of your invoices and charges, and delivering substantial six and seven-figure savings through banking optimization projects. Our analysts will help untangle the complexities of your invoices, offer advice on where your arrangements could be improved, and work with your supply chain to implement any changes you decide to make.

For more information on the rising costs of cash, read our recent Payments Intelligence article here.

Want to discuss your banking invoices?