Delay the Yacht, Get on Board with SEPA
by Helen Sanders, Editor
Sharp-eyed readers, or those suffering from some obsessive compulsive disorder, may remember an article that I wrote last year entitled ‘SEPA: Are we nearly there?’. The year before that, I wrote something similar – and indeed the year before that, and so on. Indeed, I remember writing a SEPA piece in 2006 entitled ‘The road to 2008’. Well, 2008 (the year in which SEPA Credit Transfers were introduced) is certainly memorable, but not because we all saw the SEPA flag waving over our nearest European city. So for at least the past five years, articles about SEPA have, not surprisingly, been read by perspicacious readers whilst in some sort of déjà vu haze. Constant entreaties to get on with migration to SEPA and to use the opportunity to enhance payments and collections processes appear, however, to have fallen on almost deaf ears. With an overall Eurozone volume of around 10% SEPA credit transfers and a staggering 0.07% of SEPA direct debits, progress has been fairly pitiful. So five years on from the industry’s original exhortations to start planning for SEPA, many of us are still happy to pop it on a ‘to do’ list next to ‘sort out cash flow forecasting’ and ‘find yacht for retirement’ without any great expectation that we will ever get around to it.
Quick Guide to SEPA (click to enlarge)
Waking up to SEPA
Unfortunately for the dreamers and prevaricators, which I think comprises most of us, we probably have to leave our yacht-finding for another year, and start looking at SEPA. Really, I mean it, I don’t want to have to write yet another article on this next year, and definitely not the year after. With defined deadlines now set for the retirement of domestic payment instruments, to be replaced by SEPA payments, treasurers cannot reasonably expect to delay their migration to SEPA beyond late 2012 for credit transfers and 2013 for direct debits. “Why”, I hear you chortle, “that’s still 18 months away, hand over the yachting magazine!” Well, no.
To take full advantage of SEPA typically requires centralisation of financial processes.
Firstly, by waiting until the dying throes of the old generation of payment instruments, the most your banks or technology suppliers will be able to do is throw you a migration guide and wish you luck.
Secondly, migrating to SEPA may be quite a time-consuming task. The more countries in which you operate, and therefore payment instruments and formats that you use today, the higher the number of banking relationships, and the greater the complexity of your systems environment, the longer the migration to SEPA will take. And that’s just for credit transfers. Direct debits are a different proposition entirely, not least because of the complexity of the mandate management process.
The third reason for not delaying SEPA until the sun sets over the domestic payments horizon is that migration can be seen as either simply another obstacle in the otherwise smooth sailing that we hope to, but never do achieve in treasury; alternatively, it can be seen as a catalyst for change. The longer you leave it, however, the less likely it is that you can derive much in the way of benefit, and instead, you’ll invest in the migration process but have little if any return on investment. Spend a little more time and money, and you’re far more likely to reap the rewards.