What Functions Does a Treasury Aggregator Perform?
Treasury Aggregators seek to perform the tasks and functions associated with the funds transfer and information reporting processes that occur between a corporation and their banks. While this might sound easy enough, there are a multitude of steps that must be completed for these processes to occur smoothly, such as sanctions filtering, data validation checks, security precautions, message format conversion, and finally, establishing connections to the appropriate banks.
- Funds Transfer Cycle: Treasury Aggregators begin the funds transfer process by taking in payment instructions from any department within an organization, such as payroll, accounts payable, and treasury. The payment instructions sent by each of these departments can be originated in the preferred format of the initiator, such as an MT101, EDI820, or pain001 message. The payments system provided by Treasury Aggregators allows clients to set up approval processes that can require dual signatories for payment initiation or that can generate alerts for payments that exceed a designated amount.
- After a payment has been approved, Treasury Aggregators will then screen and validate the message to ensure that it does not violate any known sanctions lists and that the information contained within the message is accurate and complete. During this process, any message that is flagged as errant will be sent to a resolution queue, and a notification will be sent to the client requesting further action. The Treasury Aggregator then reformats the message into the format required by the client’s bank. This can include converting MT messages into pain messages, pain messages into a bank-specific proprietary format, and vice versa. Finally, the Aggregator will deliver the message through the appropriate channel and to the required bank.
- Information Reporting Cycle: The steps that Treasury Aggregators perform to deliver balance reports and other information from banks to their corporate clients is very similar to the funds transfer cycle, only it occurs in the opposite direction. For information reporting, Treasury Aggregators receive reports sent by all of a client’s banks in the bank-originated format (MT940, BAI2, camt, etc.). After performing data validation checks on each message, they then convert the messages into the desired format of the corporate and deliver them to the end system (TMS, ERP, etc.). As with payments, Treasury Aggregators ensure that all balance reports and other reporting information delivered through their system remains secure.
- Additional Functionality: In addition to the funds transfer and information reporting cycles, Treasury Aggregators can provide other functionality related to cash positioning, forecasting, and bank account management. Once an Aggregator has connected a client to their banks and is facilitating the exchange of information, they are then able to provide real-time updates on cash positions and balances across all banks, bank accounts, subsidiaries/branches, and regions, which drastically increases visibility. Many Aggregators can also keep track of account information for clients, such as signers on accounts and bank documentation, and prepare reports on compliance activity as part of their Bank Account Management (eBAM) offering.
The next post will discuss the benefits that are provided by Treasury Aggregators.
To learn about some of the different Treasury Aggregators available, download the 2016 Treasury Aggregator Analyst Report here.