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Ready or Not, Here I Come – an 11th Hour Checklist for SEPA Migration

by Jonathan Williams , Director of Strategic Development, Experian

How long is a SEPA migration process likely to take?

The answer to how long it can take to comply is dependent on many variables: in which countries a business operates, how centralised the finance and treasury functions are, what sort of payments are made and finally whether the migration project is purely technical compliance or is scoped to include deriving benefits from the SEPA project. Businesses that take a more strategic view of SEPA tend to find that projects run for 12-18 months and include consolidation of operations, rationalisation of bank accounts and harmonisation of processes and data. At the other end of the spectrum, businesses can take advantage of conversion services to enable them to meet the deadline, but these projects will deliver little benefit if any at all. Businesses that opt for the easy conversion option will be dependent on their bank or third-party service provider to handle the migration of data and payment files to the new SEPA standards, however they must be prepared to handle the exceptions caused by out-of-date or poor quality data in existing business systems.

What steps must a business take to become SEPA compliant?

There are three key parts to SEPA compliance: systems, processes and data. Upgrading business and electronic banking systems to be compliant with SEPA tends to be the longest part of the migration with large ERP applications typically having upgrade roadmaps stretching out for years. In addition, web applications and forms also need to be made compliant. Processes need to be reviewed for compliance with SEPA schemes which may involve using the new pan-European Business-to-Business Direct Debit service and/or re-issuing Direct Debit mandates. Finally data must be compliant with both the International Bank Account Number (ISO13616) and the ISO20022 XML payment file format, using Bank Identifier Codes in a few countries that have opted to keep them until 2016. A key part of ensuring data is ready for SEPA is to ensure the current account information, typically held in billing systems and master data files, is valid and can be converted to the IBAN format. Without validation of this information, incorrect, new data will be formed and payment failures can be almost guaranteed.

If a business has not already started migrating its data to SEPA compliant formats, can it still meet the deadline? If not, what can be done to minimise damage that could be caused?

A business which has not started must immediately create a plan for each of the key three steps listed above and decide whether systems can be upgraded, processes changed and data validated and converted. If this cannot be achieved, conversion services may provide a short-term solution and these may be on offer from banks or other providers, but the two key things to do now are to create a full plan of items requiring work and to complete validation of the existing payments data. A business can then at least continue to pay and collect while it makes its systems and processes completely compliant.

Should third parties be used to help speed up the migration process?

Businesses that are still migrating should first allocate their internal resources where they are critically needed and then look for external providers to assist in their areas of expertise: mandate management services, data validation and payment file conversion are some of the more common areas. In some cases payment consultants may also be able to facilitate a corporate’s assimilation of the SEPA needs and accelerate the migration.