Harmonizing data formats is an in-house problem, too. Witness P&G, which operates shared-services centers around the world that all use slightly different versions of BAI coding from a bevy of international banking partners. As a result, the company has to build data tables and systems infrastructures so it can translate the myriad coding into a single usable format that will work with its corporate ERP system. "One of the things that we would like to see evolve out of this project is one set of [standards] that we can use around the world," says Lundeen.
Global Convergence?
For all of its evolutionary shortcomings, BAI, which is essentially a U.S. proprietary standard, remains an indispensable tool for most American companies. For one thing, it is used to reconcile accounts on a daily basis. The transaction information is also fed into ERP systems that generate information for regulatory filings prepared by public corporations and banks.
Many companies outside of the United States are using the relatively new ISO XML cash-management reporting standard, which is similar to the BAI format. With that in mind, the X9 committee says it will develop the new BAI standards with an eye toward converging them with international standards in the future. But replacing one with the other is not an objective.
BAI coding also aids cash-management planning, especially with respect to outbound corporate payments, says Lundeen, as it allows P&G to reconcile millions of transactions "almost automatically." To appreciate the scope of P&G's processing efforts, consider that in one year the company sends out 5 million invoices alone, most of which involve multiple payments.
But what Lundeen is looking for from his bankers, and, by extension, from the X9 project, is better ways to understand incoming payments and track the funds as they wend their way through the transaction process. "I'd like visibility into what payments are coming to me before they show up on my account statement," he says.
For example, when a company sends out an ACH (automated clearing house) payment, there is a one-day settlement cycle for the transaction: the payment is sent out today and paid tomorrow. As soon as the company sends the instruction that it is trying to pay a creditor, information is pushed out into the market. "I would like to know when people are trying to pay me," says Lundeen. "That kind of strong visibility would enhance my ability to use my own liquidity in a much more efficient way."
The Legacy Issue
One of the biggest challenges the X9 committee faces is the legacy issue. BAI, in its various flavors, "has been around for more than 30 years," says Wills of SWIFT. "It is in every mainframe and bank system, so it is deeply embedded in the way business is done." Accordingly, the project managers must protect existing systems from compatibility problems with a new standard, and assure that there is no destruction of intellectual capital that has been used to customize systems over the years, says Schuurman.
Wills, who along with Lundeen and Schuurman is leading the X9 effort, says that the working group had 40 members when it launched, and continues to grow. The bigger the better, reckons Wills, who wants to hear from a healthy cross-section of constituents and says the added participation trumps any consensus-building snags a larger committee might encounter.
Once cash-management reporting standards are approved by ANSI, the costly cycle of customized tweaks should stop, as formal standards undergo continuous maintenance to keep pace with technology and market changes. While there is no regulatory mandate for companies to use the ANSI standards, market pressure will likely dictate such use.
So the key for corporate cash managers may be to get involved now before the formal standards are introduced without their input. Doing so may not be quite as exhilarating as defeating a supervillain, but it could help make the world of business a better place.
Marie Leone is a senior editor at CFO.com.
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