9 October 2013
SEPA ready? Now what’s next?
The February 1st 2014 deadline for migration to SEPA is fixed. However, this doesn’t mean that after this date companies can lean back and leave all payment issues as they are. On the contrary, rules for payments are about to change fundamentally. Standardisation in payments means that there will be no differences between the various EU countries anymore. Roderick Kroon, Executive Consultant at Enigma Consulting, expects that a lot of organisations will implement temporary solutions in order to make the deadline and will need to replace these solutions after February 1st 2014. But this deadline is not the end of SEPA. There are a lot of developments taking place in the payments industry and organisations need to act accordingly. Kroon presents some points that should be taken into consideration by all parties involved.
New laws and regulations
The changes in the payments industry are not finished after migration to SEPA. The European Union’s ambitions go far beyond cashless payments. Besides the yearly SEPA rulebook updates, the European Commission developed a vision about the use of cards, internet and mobile payments. This vision influences the ways companies drive their businesses and the distribution model of organisations. Tip: Its important to make sure that key people within the organisation are informed about the new rules and regulations and prepare the organisation for the future.
Use SEPA opportunities to the full extent
Most organisations consider SEPA as an obligatory issue and forget about opportunities the migration has to offer. Organisations can benefit from various advantages, for example, through an effective restructuring of the current bank, account structures and the operational organisation. Tip: The migration to SEPA is the perfect occasion to restructure administrative processes.
Despite the extended SEPA rulebooks on payment formats, there are in fact interpretation differences with banks and system providers. Often after going live it seems that new processes or used payments systems do not work efficiently. For example, this is the case with Order-to-Cash by improvement of reconciliation processes and digitisation of sales processes. Tip: It is important to prepare time to optimise SEPA processes after the SEPA the implementation.
Besides the SEPA rulebook updates and aftercare there are additional developments that need to be prioritised. For example, the introduction of e-mandates and whitelisting for banks (in 2015) needs thorough preparation. Tip: In case an organisation has offices in several countries, it’s wise to gather information about specific exceptions for the different states (waivers). Also, non-Euro European countries will need to implement SEPA.
Replace temporary solutions
Enigma Consulting expects that many organisations will implement temporary solutions, like temporary banking links, the obligatory BIC, the use of BBAN-IBAN convertors or converting from CLIEOP- to XML formats to stall. Tip: These solutions need to be replaced by structural solutions that fit the vision of the payment architecture of the organisation.
XML is the standard
XML ISO 20022 is the standard format that will be used after the full migration of SEPA. However, several banks can deliver non-SEPA regulated payment flows like urgent payments and foreign payments, in pain.001 format (for example the Common Global Implementation Guidelines). Tip: XML Cash Management formats offer more information to optimise the further reconciliation of payments.
Payment innovations keep on coming
SEPA, by no means, ends all payment innovations. In fact, further innovations are expected to be introduced by the non-banking industry. New parties like iDeal and MyBank are entering the payments market, as well as new payment methods. It can be very useful for a sales team to use these innovations to increase sales through simpler payment options. Tip: The finance, marketing, sales and purchasing departments need to be aware and ready for new innovations on the market.
Knowledge retention payment traffic
After SEPA projects come to an end, external consultants leave the company and internal knowledge owners return to their normal function, which is most cases is not related to payments. This means there is a fair chance payments become a purely operational activity in companies, which makes it harder to control changes. Tip: Make sure the company vision on payments includes knowledge retention and direction for the entire payment chain.