US banks and clearing systems should introduce a standard format for remittance data to enable straight-through processing (STP) of funds transfers into corporate accounting systems, according to a new survey conducted by the Association for Financial Professionals (AFP).
There is currently no standard format for organisations to provide remittance information with wire transfer instructions and no assurance that data that is included will be received by the beneficiary.
The research shows that more than four out of five organisations waste time and money researching incoming wires that do not come with sufficient remittance data - such as customer account number and invoice number - to apply payments automatically to accounts receivable.
Survey results show that the largest organisations incur the heaviest burden. A firm with $5 billion or more in revenue typically receives 5000 wires a year and researches 950 of them at an estimated cost of $41 per wire. This amounts to $38,950 a year and 475 staff hours.
The typical company receives 750 wires per year and researches 128 of them, or 17% of the total. At a cost of $35 per wire, this costs almost $4,500 annually. The staff time to perform the research - 30 minutes per wire - adds up to 64 hours annually.
Thomas Selby, head of the AFP Payments Advisory Group's wire transfer task force, says: "These findings highlight the significant benefits to corporate customers if banks and clearing systems were to provide standards for remittance data to enable straight-through processing of funds transfers into corporate accounting systems."
AFP says it has been working with the Federal Reserve Bank of New York, which is responsible for Fedwire, to develop a solution to this problem.