When commercial wire payments arrive at Cox Enterprises, the groans rise. That's because, all too frequently, these payments from vendors don't specify what the money is for.
A business-to-business wire allows for a 140-character message-the same length as a tweet. It might have a reference number, but no special instructions or remittance details used in other electronic payments. Matching the payment with an invoice is a chore. "We can't process these without follow-up phone calls and getting more information," says Anita Patterson, treasury services director for the Atlanta-based media company. "And a good many of them are that way."
It's a common complaint. According to a 2009 corporate treasurer survey from the Association of Finance Professionals, 17 percent of allbusiness-to-businesswire payments are re-routed as exception items. Manual processing adds $35 to the cost to each payment, which adds up for large companies that handle 150,000 to 350,000 incoming wires annually.
By yearend, these problems may lessen, as the Federal Reserve and The Clearing House Payments Co.-operators of the two primary wire funds transfer networks in the U.S.-expect to complete a revamp of wire remittance standards for B2B payments. Originators of wire payments will be able to use amessage format that can handle up to 9,000 characters through the Fedwire Funds Service and The Clearing House's CHIPs service; so information such as invoice numbersand negotiated early-pay discounts can be included in automated reconciliation. Patterson says Cox would save 256 monthly staff hours without manual work on wires.
Banks and payment vendors must upgrade processing systems and treasury workstations to handle the new format, a prospect that concerns treasurers like Patterson. "I'm afraid with lot of things on banks' plates, this may not be on the top of their agenda," says Patterson, who is also a director with AFP. "That's bothersome."
Bank and payments officials don't see technical hurdles on their end, butdoubt speedy change. "We're not quite sure, initially anyway, if adoption will be all that robust," says Greg Murray, executive director for U.S. dollar clearing at JPMorgan Chase & Co. Treasuries. Some corporate e-payments use automated clearing house networks, but wire payments should gain some of that volume due to key advantages-foremost among them being immediacy and finality of wire, says Frank Behlmer, executive vice president and chief operating officer for global operations at Bank of New York Mellon.
A shared goal for banks and clients is to put a dent in B2B paper check volume, which accounts for 70 percent of all transactions.
In the survey, 61 percent say they would use the remittance standard for outgoing wires, "in part to reduce the number of inquiries from the receiver of the wire transfer," the AFP reports.
Whether for ease of use, or ease of receipt, companies will adopt B2B wire payments if the banking and payments industries can make the processing and remittance seamless, says Rossana Salaris, senior vice president of The Clearing House. "They said make it as easy as writing a check. Everybody gets what they need. With no hassle."
