Accounts Payable News^®

The Single Euro Payments Area (SEPA) will allow customers to make non-cash euro payments to any beneficiary located anywhere in the 13-member ‘eurozone’, using a single bank account and a single set of payment instruments. All retail payments in the ‘eurozone’ will thereby become “domestic”, and there will no longer be any differentiation between national and cross border payments within the euro area.

What it means for you

The introduction of SEPA on 1 January 2008 is the largest change in the structure of the European cards industry for over 30 years, and will ultimately mean cheaper and easier cross-border payments for consumers.

SEPA will see the removal of many commercial and technical barriers to entry in each of the participating countries, notably:

• Removing the frustrations of national restrictions for multinational banks, and 
• Giving retailers greater choice of payments solutions providers in many markets.

Under SEPA, merchants will eventually be able to choose their acquirer and processor from anywhere within the eurozone.

For more details, see here.

What are the immediate effects?

Although you may have decided not to start using SEPA-products actively, your customer could decide to pay the amounts due by means of a SEPA credit transfer, which might impact your reconciliation process. Changes within your ERP system may be needed – so your administrative staff will have to be informed timely and comprehensively in order to do their work accordingly.

How should you prepare?

Here is a general 14 point checklist of the necessary steps

• Appoint a project manager who coordinates the activities related to the introduction of SEPA 
• Design an action plan regarding the introduction of SEPA 
• Determine the company’s policy: decision per country or for the entire group (uniformity – optimisation of bank charges) 
• Draw up a financial budget for the introduction of SEPA 
• Determine whether opportunities arise for your company because of SEPA (new markets) 
• Determine a date when your company wants to actively switch to SEPA 
• Check all your banks for being SEPA-compliant

For Outgoing flows (payments), consider the following:

• Make an inventory of the country of your beneficiaries (in ‘SEPA countries’?) 
• Which payment methods do you use? (transfer, direct debit, cheque, cash, etc.) 
• Can these payments be switched to SEPA payments? 
• What is the impact of changing to the SEPA scheme for direct debits?* 
• What is the chance your supplier will force you to switch to direct debit? 
• What is the impact of changing to the SEPA scheme for credit transfers?* 
• Start collecting IBAN and BIC of your suppliers asap