Bank of America Merrill Lynch (BofA Merrill), which this month hosted a series of webcasts on the single euro payments area (SEPA), said that they highlighted the fact that preparations and interpretations differ across today’s SEPA-zone. Consequently, depending on a counterparty’s readiness, corporates could face a wide range of experiences.
According to Ad van der Poel, BofA Merrill’s regional head of payments and receivables, despite the recent spike in migration rates ahead of the original 1 February 2014 deadline, adoption continues to be a challenge. Earlier this month, corporates were given a further six months as the deadline was extended to 1 August.
“The European Commission’s [EC] recent announcement (extending the deadline by six months) has not changed the urgency with which we are treating SEPA conversion,” he said. “Our message to clients is to maintain focus and be fully compliant by the original end date so that from 1 February, direct debit and automated clearing house [ACH] payments can be made as SEPA transactions as opposed to legacy domestic ones.
“The advantage for SEPA-ready companies is that they are already reaping the benefits of value-added migration services, such as our international bank account number [IBAN] enrichment offering. But for others who were concerned about meeting the February deadline, there is now a transition window that can be utilised.”
For those companies that still have concerns, van der Poel noted that as well as technology and file formats, it is important to consider internal and external business partners such as customers, payroll vendors, human resources and employees’ banks. He also stressed the need for a contingency plan should companies be unable to make payments to vendors and employees or collect money.
Jennifer Boussuge, head of global transaction services, Europe, the Middle East and Africa (EMEA) for the bank, added: “Thinking beyond the SEPA migration date and its challenges, there are broad efficiencies to be gained from the regulation’s adoption.
“SEPA should be viewed not as a hindrance, but rather as a catalyst for visibility and control. For example, SEPA adoption provides an opportunity for automation, rationalisation and centralisation, which can then help with efficiency gains in all areas of business.”
Boussuge asked her webcast audience to imagine:
- Reusing the same standards and data elements in the invoice and in the purchase order, which will lead to enormous efficiencies in a corporate’s value chain.
- Creating an innovation such as a new mobile payment method where the underlying payment instrument covers the entire eurozone – meaning that the reach of an innovation is immediately expanded from one to 33 countries.
“While it’s challenging to predict what will influence your business a decade from now, through your actions today, you can shape and build the foundations for innovations in the years to come,” Boussuge said. “There is light at the end of the tunnel and numerous benefits to consider once the scheme is in full force.”
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