The task of getting remittance advice to arrive with bulke-payments is never ending.
During a call last month with treasury technology solutionmanagers from NeuGroup member companies, one participant on the call noted a recentmeeting with a major global transaction bank suggesting a solution tocentralized collection woes in Europe. Despite every effort to create a SingleEuro Payments Area (SEPA) using the latest XML standards to allow remittanceadvice (including receive on behalf information) to flow through the paymentsarea along with the payment, the practical reality is that this informationstill gets cut off or overwritten as it goes through certain SEPA countryclearing systems. To get around the problem, the global transaction bank inquestion was proposing a solution to use the unique identifier to reunite thepayment with the remittance advice routed separately.
Dealing with this type of workaround is at leastas old as our publication. In the April 4, 1994 issue of International Treasurer, the third edition, we wrote about the“Financial Information Superhighway” seeking to link “dollars and data”electronically via Financial Electronic Data Interchange or FEDI (an EDIprecursor to XML and the XML standards underlying SEPA).
The goal then was to replace Byzantine paper processing with IT.
“In our industry,” explained Michael Munisteri, then managerfor treasury planning at Colgate-Palmolive, “where we are selling to majorretail chains, each check we receive can be accompanied by 22 pages ofdocumentation explaining what the check is for and why it is in the amount itis.” Obviously, the automated delivery of 22 pages of remittanceinformation per check cuts administrative costs significantly for both parties.
There were also benefits for reorganization of the ARfunction and better controls, particularly for companies that were not merely “puttingan electronic front-end on a 19th-century bureaucracy,” as BruceLynn, then a consultant with Greenwich Treasury Advisors noted.
Back then, the problems of achieving FEDI across borderswere acknowledged as sizeable and a timetable for short-term implementationdeemed unrealistic. For one AT, for example, speaking about his goals for Asiaat the time, the objective was simply to educate customers on what informationto provide with payment and then “address it to the right PO box.”