The authority to open and close bank accounts is often delegated directly from the enumerated powers of a governing board to the treasury team(1). It is an essential prerequisite for effective cash management since treasury uses bank accounts to collect, disburse, and ideally concentrate funds. Managing the funds in the accounts requires financial information from the banks.
Governments get their financial information from their banks. Bank polling is the process of accessing cash management information from the bank's financial system. Retrieving bank information reporting is at the core of cash management. This is why bank polling is one of the top tasks for a treasury team, according to the AFP. On the operational level, polling the bank to retrieve prior and intraday (current) reporting helps generate a cash position. Having visibility of an organization’s daily cash position is the foundation of cash forecasting and plays a crucial role in fraud prevention.
Bank Portals
To poll bank accounts, treasury teams connect to their bank’s systems via secure methods to protect the delivery of cash management data. The most common method is through web-based bank portals. Developed in the 1990s, portals are built and maintained by the host bank. In addition to the cash management reports, the bank portals can provide a wide range of products including payment services like wire transfers and ACHs. Most are now accessible both via desktop and mobile applications.
Bank portals are useful but have some drawbacks. The main advantages of these portals include convenience and cost. They are easily accessible with login credentials. However, retrieving and analyzing the financial information is a manual, time-consuming process. It can quickly become a disadvantage for organizations with multiple banking relationships. Each portal will have their own login and security requirements. Despite availability of industry standards, information reporting formats may differ from bank to bank, making cash positioning more onerous if accounts are spread across different banks.
Automation via Host-to-Host
Accessing account balances and transactions can be automated. There are two key considerations in automating bank connectivity: Protocols and Formats.
APIs, XML, and BAI3
Coming soon ...
TL;DR
In summary, choosing the right banking partner is a key decision for treasury to make, which will drive the protocol(s) for accessing financial information for the years or decades to come. Protocols determine whether the process is manual or automated. If automated, the treasurer can speed up the flow of information and create better cash visibility.
(1) In fact, documenting and regularly reviewing the delegation of authority is a best practice. The documentation is often required by banks for opening new accounts or adding new services. It's sometimes accepted in lieu of a board resolution especially if the delegation of authority is reviewed and renewed regularly. Ideally, the delegation can be traced from the enacting statute or other legislation to the governing board to the officer(s) of the government and/or to the treasurer or other responsible officer.
Last major update: TBD 2024
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