For leadership at community financial institutions, the search for non-interest income often leads to complex new product launches or expensive technology overhauls. While innovation is necessary, significant revenue often sits dormant within existing portfolios. This dormant revenue is not the result of a lack of effort; rather, it is the cumulative effect of fee leakage. Fee leakage occurs when Treasury Management services are provided but not fully compensated due to legacy pricing, unmonitored waivers, or outdated Earnings Credit Rate (ECR) structures.
Community financial institutions (CFIs) are uniquely positioned to capture this lost income. Unlike larger national banks that rely on automated, rigid billing systems, CFIs have the advantage of relationship-driven data. However, that same relationship-driven approach can lead to handshake pricing that never evolves alongside the cost of providing the service.
The following 30-day audit is designed to help Treasury Management leaders at CFIs identify, quantify, and recover this leakage. This process does not require new software or external consultants. It requires a disciplined look at the data you already possess and a strategic alignment with your Relationship Managers (RMs).
The Philosophy of Value Alignment
Before beginning the audit, it is vital to establish a defensible point of view. This is not about a price hike for the sake of padding margins. It is about value alignment. Treasury Management is the operational backbone of a business client’s relationship with their CFI. When a CFI provides sophisticated ACH origination, Remote Deposit Capture, or fraud prevention tools, they are providing infrastructure that allows the client to scale.
If the pricing for these services has not been reviewed in three to five years, the CFI is likely subsidizing the client’s operations. This subsidy limits the CFI’s ability to reinvest in better technology and higher service levels. An audit is an act of stewardship for the institution and, ultimately, a way to ensure the long-term health of the client relationship.
Week 1: The Data Foundation
The first seven days are dedicated to gathering the raw materials. You cannot manage what you cannot see. The goal is to create a snapshot of your most significant Treasury Management relationships.
Step 1: Define the Scope- Do not attempt to audit every single account in the first 30 days. Focus on your top 50 to 100 Treasury Management relationships by revenue or volume. This Top 100 list typically accounts for 80 percent of the fee potential and leakage risk.
Step 2: Pull the Variables- For each relationship in your scope, you need four specific data points:
Current Fee Schedule: What is the client actually being charged for each service line item?
Standard List Price: What is your institution’s current approved pricing for those same items?
Waiver Status: Are there hard-coded waivers in the system? Are fees being waived manually by RMs each month?
ECR and Investable Balances: What is the current Earnings Credit Rate being applied to their balances, and how much of their fee total is being offset by these credits?
By the end of Week 1, you should have a raw data set that shows the delta between what should be charged and what is actually hitting the general ledger.
Week 2: Identifying the Leaks
With the data in hand, Week 2 is about diagnosis. You are looking for patterns of inconsistency. In many CFIs, pricing is sticky. A client signed in 2019 may still be on 2019 pricing, even though the cost of compliance, technology, and labor has risen significantly.
The Three Primary Leakage Points:
Outdated Exceptions: Look for clients whose pricing was discounted during the initial onboarding phase as an incentive. Often, these introductory rates are never revisited. If a client has been with the CFI for three years and is still paying 50 percent of the list price, that is a primary candidate for adjustment.
The ECR Gap: In a fluctuating interest rate environment, ECR management is critical. If your CFI has raised its base ECR but hasn't reviewed the exception ECRs granted to specific large depositors, you may be over-crediting. This results in the CFI effectively paying the client to use Treasury Management services.
Service Expansion Without Billing: It is common for a client to start with basic ACH services and later add Wire Transfer capabilities or Positive Pay. If the RM or the implementation team failed to update the billing profile, the client may be using these high-value services for free.
Week 3: Sizing the Opportunity
Week 3 moves from observation to quantification. This is where you build the business case for change. You must be able to tell your executive team exactly how much annual revenue is being left on the table.
The Recovery Model Create a simple spreadsheet to model the upside. The formula for recoverable income is straightforward: (Standard List Price - Actual Price Charged) x Monthly Volume = Monthly Leakage.
Multiply this by 12 to find the annual impact.
Example Calculation: If a CFI has 50 clients receiving a $0.10 discount on ACH items, and each client originates 2,000 items per month, the math looks like this: ($0.10 x 2,000) x 50 = $10,000 per month. Annual Recoverable Income: $120,000.
This calculation should be performed for every service line item: Wires, Remote Deposit Capture, Positive Pay, and Account Maintenance. When you aggregate these numbers across the Top 100 relationships, the figure is often surprising. It provides the "defensible point of view" needed to move forward. You are not asking for more money; you are asking for the agreed-upon value of the service provided.
Week 4: Preparing for Conversations
The final week is the most critical. This is where the audit moves from a spreadsheet to a strategy. The greatest hurdle to recovering Treasury Management fees is often internal: the fear that RMs have regarding client pushback.
The One-Page Relationship Summary- For each of the clients identified in the audit, create a one-page summary for the RM. This summary should include:
A list of all Treasury Management services the client currently utilizes.
The date of the last pricing review.
The current value gap (the difference between list price and actual price).
A comparison of the client’s current ECR versus the market standard.
Empowering the Relationship Manager- RMs need to feel that they are bringing value to the client, not just a bill. The conversation should be framed around the CFI’s investment in the client’s success. If the CFI has recently upgraded its mobile banking app, enhanced its fraud detection tools, or streamlined its wire process, these are the "hooks" for the conversation.
Sample Talk Tracks for Value Alignment:
The Infrastructure Approach: "To ensure we continue providing the level of security and technical support your business requires for ACH origination, we are aligning our Treasury Management pricing with our current service standards."
The Standardization Approach: "We are conducting a standard review of all our commercial relationships to ensure our pricing is consistent and fair across our entire client base. Your current structure hasn't been updated since 2020, and we need to bring it into alignment with our current offerings."
The Value-Add Approach: "We’ve recently added several new features to our Positive Pay and reporting tools. As part of these enhancements, we are updating our Treasury Management fee schedules to reflect the increased capabilities available to your team."
The Audit Blueprint: Spreadsheet Columns
To execute this audit effectively, your working document should contain the following columns:
Column A: Client Name. The legal entity name.
Column B: Relationship Manager. The primary point of contact.
Column C: Service Category. (e.g., ACH, Wire, RDC, Information Reporting).
Column D: Monthly Volume. Average volume over the last three months.
Column E: Standard List Price. The current board-approved rate.
Column F: Actual Price Charged. What the client paid in the last billing cycle.
Column G: Monthly Leakage. (Column E - Column F) x Column D.
Column H: Annual Leakage. Column G x 12.
Column I: Last Review Date. When the pricing was last modified.
Column J: Action Plan. (e.g., reset to list, reduce waiver by 50%, adjust ECR).
Conclusion: From Audit to Culture
A 30-day audit is a powerful tool for a quick win, but the ultimate goal for any Treasury Management leader at a CFI is to move from a one-time event to a culture of value. Fee leakage is a natural byproduct of growth and relationship-building. However, left unchecked, it erodes the ability of community financial institutions to compete with larger entities that have more aggressive billing practices.
By quantifying the leakage and providing RMs with the tools to have confident, value-based conversations, you transform Treasury Management from a support function into a primary driver of institutional profitability. The revenue is already there. You simply have to stop the drip.
Frequently Asked Questions
1. Will auditing and adjusting fees cause our best clients to leave for a competitor?
Experience shows that clients rarely leave a CFI solely over a Treasury Management fee adjustment, provided the service levels are high and the communication is transparent. Most business clients understand that the cost of doing business increases over time. If the CFI is providing essential operational value, a fair alignment of fees is viewed as a standard business practice.
2. Our data is currently stored in multiple legacy systems. How can we run this audit without a centralized dashboard?
This is why the audit focuses on the top 50 to 100 relationships. While a full-portfolio audit might require automated tools, a manual pull of the top relationships is manageable for a small team over the course of a week. Start with the largest revenue contributors; the manual effort is justified by the scale of the potential recovery.
3. How do we handle RMs who are resistant to talking to their clients about fee changes?
Resistance usually stems from a lack of data. When an RM sees that a client is paying 40 percent less than a similar client in the same portfolio, the "fairness" argument becomes clear. Providing RMs with specific talk tracks and a clear "Value Gap" summary gives them the confidence to lead with value rather than apologizing for a price change.
Take the Next Step
Identifying fee leakage is the first step; capturing it requires a strategic approach to implementation and communication. If you are ready to quantify the hidden revenue in your Treasury Management portfolio but want a partner to help refine your data or train your RMs for these conversations, we can help.
Contact us today for a no-obligation discovery call to discuss your current Treasury Management structure and how we can support your path to value alignment.
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