Untangling Pricing Issues in Account Analysis

Strategies for Financial Clarity

In the intricate web of financial management, businesses often rely on account analysis to gain insights into their financial health. It’s a process where a bank or financial institution examines the activity in a commercial account to determine service fees or compensate for services rendered. While this practice is vital for businesses to understand their banking costs and rewards, it’s not without its challenges, particularly when it comes to pricing.

Pricing issues in account analysis can stem from various factors, including complex fee structures, ambiguous billing practices, and evolving financial regulations. Addressing these challenges requires a nuanced understanding of the intricacies involved and implementing strategies for transparency and fairness.

Complex Fee Structures:

One of the primary sources of pricing issues in account analysis is the complexity of fee structures imposed by banks and financial institutions. These fee structures often involve a multitude of charges for various services, such as account maintenance, transaction processing, and overdraft protection. However, deciphering these fees and understanding how they apply to specific account activities can be daunting for businesses.

To navigate this complexity, businesses should proactively engage with their banking partners to gain clarity on fee structures. This includes seeking detailed explanations of each fee, understanding the criteria for fee assessment, and exploring opportunities for fee negotiation or customization based on the business’s needs and usage patterns.

Ambiguous Billing Practices:

Another common challenge in account analysis pricing is ambiguous statementing practices, where statements can lack transparency or detail regarding the calculation of fees. This ambiguity can lead to confusion and frustration for businesses, as they struggle to reconcile their bank statements with the charges levied by their financial institution.

To mitigate this issue, businesses should advocate for transparent pricing and billing practices from their banking partners. This involves requesting itemised statements that clearly outline the basis for fee calculation, including the volume and type of transactions assessed, any exemptions or discounts applied, and the corresponding rates or pricing tiers. By promoting transparency in pricing and billing, businesses can ensure accountability and accuracy in their financial transactions.

Evolving Regulatory Landscape:

The regulatory landscape surrounding banking and financial services is constantly evolving, with new regulations and compliance requirements being introduced regularly. These regulatory changes can have significant implications for account analysis pricing, as financial institutions may adjust their fee structures or policies in response to regulatory mandates.

To stay ahead of regulatory changes and their impact on pricing, businesses should maintain open lines of communication with their banking partners and stay informed about industry developments. Additionally, businesses should conduct periodic reviews of their account agreements and fee schedules to identify any changes or updates necessitated by regulatory requirements and insist on regular service charge reviews and re-pricing activities based on usage and forecasts. By proactively monitoring regulatory developments, businesses can adapt their pricing strategies accordingly and ensure compliance with applicable laws and regulations.

So what have we learned?

In the realm of account analysis, pricing issues can pose significant challenges for businesses seeking financial clarity and transparency. However, by addressing the complexities of fee structures, advocating for transparent statementing practices, and staying abreast of regulatory changes, businesses can navigate these challenges effectively.

Ultimately, fostering collaborative relationships with banking partners and prioritizing communication and transparency are key to overcoming pricing issues in account analysis. By working together towards mutual understanding and fairness, businesses and financial institutions can cultivate trust and confidence in their financial relationships, paving the way for sustainable growth and success.

Moving forward.

If you have Account Analysis challenges, the read on.

ArcOne has re-imagined Account Analysis which has resulted in a new product called Enterprise Pricing Modernization. This product has been built for cloud from the ground up using micro services. The solution follows all parts of the customer journey from quote to cash and models deals, onboards clients, and manages pricing and service usage in line with service agreements.

As customers transact, the solution manages balances and rates, and the customers billing statements or invoicing process with a full collections capability built on top.

The product has a feature rich rules engine with full end to end workflow and as you would expect from a modern application, it is fully secure.  There is also an analytics engine so we can provide real time insight into customers transactional behaviour. And if you can understand a customer’s buying behaviour, then you can influence it.

If that’s not enough, then the system has a full sub ledger capability, making finance simple.

There are many predefined dashboards that give you all your key KPI’s at your fingertips.  There is also a price simulation engine, so you can simulate pricing for your products, or customers – you can do that at individual transaction type level, so for example see the effect of rate changes for individual or groups of products and look at the overall impact to your business, so it is excellent for business modelling and strategic decisioning.

Of course, integration is all built around open API standards leading to lower implementation costs, and we are Core Banking agnostic.

If you need some help building the business case for change to get some investment spend, then get in touch.