“Do not hesitate to ask your banks for information about their fees — and even ways to lower them. They’ll respect you for it.” This was the advice imparted by experts leading an AFP 2020 Virtual Experience session addressing strategies to ensure fees are competitive and how to reduce them.

The panelists quickly dispelled myths that can inhibit treasury executives from assuring bank fees are under control, including the concern that issuing RFPs could damage the relationship with lenders and renegotiating fees will prompt banks to raise them elsewhere.

Before approaching its banks, however, a corporate must get its “house in order,” since that will provide leverage in negotiations. That means collecting data on current bank services and fees, according to Barbara Quiroga, assistant treasurer at Delta Airlines. This includes taking stock of all the bank accounts, a task that is usually easier for centralized treasuries.

Also important is a service utilization review, which session moderator Hélène Shen, head of treasury advisory Americas at Redbridge DTA, defined as “understanding what is actually being used and the cost.

Marsh & McLennan’s treasury team uncovered large blocks of expenses for daily data feeds that weren’t being used by anyone, at least not regularly, said Ferdinand Jahnel, group treasurer at the risk-management firm. He called the discovery process “quite eye-opening,” since it enabled treasury to focus on exactly what the company needed going forward.

“It’s not just about negotiating lower fees but discussing with banking partners what exactly you really need,” Jahnel said.

Providing tips on what to look out for, Shen pointed to inconsistent services that probably should never have been set up to begin with — disbursement controls on an account that doesn’t disburse checks is common, she said, as well as redundant and inefficient services.

Once the review is complete, treasury must map the data to compare services across different banks and geographies. “Creating those categories and mapping to understand the data is the really challenging part,” Quiroga said, but it provides significant leverage in negotiations.

Shen noted that bank fee statements are readily available from U.S. banks, but their granularity and the slight differences in how banks may interpret fee guidelines can make it hard to compare the data. Non-U.S. banks, instead, tend to bundle fees, often for different packages services, providing a different kind of comparison challenge.

“Don’t feel you can’t challenge your banks,” Quiroga said. “We sat down with our banks and went through line item by line item on each of the bank fees.”

Delta’s treasury faced limited time and resources to address bank fees, and it was “very happy” with its current bank relationships, Quiroga said, so her team issued RFPs to only existing banks. “It was really more of a benchmarking exercise, to make sure what we were paying was at market or even below market.”

Marsh & McLennan, on the other hand, had not analyzed its bank fees in many years, so it sent out RFPs to not only current banks but those that had been knocking at the door for business. “We included them to have a broader perspective on what’s available and at what cost, and their technology,” Jahnel said. “We concluded that for many years we paid too much to banks.”

Jahnel added that his company’s credit relationships with existing banks did not suffer, since they knew exactly what his team was looking for and communication was “very professional.”

It is important to remember to collect data on current bank services and fees, know what your company needs, and communicate those needs to your bank. By following this advice, you too can ensure the bank fees your company is paying are competitive.

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Looking for more information on bank fees? Download the AFP Treasury in Practice Guide: An Opportunity to Shine: Improving Bank Fee Analysis.

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