In our March FedFocus issue, we continued the domestic best practices discussion in “Save time, reduce costs and expedite reconciliation by speaking the same language.” We focused on key concepts that originators can implement to help facilitate end-to-end processing. The Wire Transfer Extended Remittance Information (ERI) - Domestic Best Practices document that we featured was developed to provide guidance to corporations and financial institutions for sending and receiving ERI in the United States.
The new remittance format allows for several options, which provide flexibility for transmitting ERI, but which also create challenges for institutions that may receive ERI in multiple formats and then have to translate and report that information in the beneficiary’s desired format. The options include:
The new Fedwire Funds Service format will be available by opening of the funds transfer business day for November 21, 2011. All institutions must be able to receive the new format, but some institutions might not take advantage of the new format when they originate funds transfers. In addition, certain institutions that receive ERI may decide, for whatever reason, not to pass on that information to their customers, or they may choose to support ERI for some channels or formats but not others. Institutions' decisions will therefore influence whether ERI reaches the beneficiary of the funds transfer.
It really boils down to proactive communication between parties to the funds transfer. If all parties follow the recommended best practices, they increase the likelihood of facilitating end-to-end, straight-through processing. The diagram below illustrates key steps each party to a funds transfer can take. It starts with the originator determining whether the beneficiary of the funds transfer (in this example, a supplier) can receive ERI from its financial institution and post that information to its accounting system.
By following the recommended market practices summarized above, institutions will increase the likelihood that ERI will travel in a way that can be received by the next party to the funds transfer and thereby facilitate end-to-end processing of ERI.
For background information, guidance on preparing for the new ERI format, testing and implementation details, visit our online resource center. Sign up to stay informed about the new message format that accommodates ERI. If you have additional questions about our Fedwire Service Offerings, contact your account executive. Your designated Wholesale Operations Sites and Wholesale Testing Units can also help answer questions regarding these changes and their impact on your institution.
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