Published: November 01, 2010
The Single Euro Payments Area (SEPA) has been a hot topic in the banking industry for several years now. With the launch of the Direct Debit scheme (SDD) last year and the expected announcement of an enforced end-date for domestic direct debit schemes the conversation on SEPA is now heating up for businesses of all sizes across Europe.
A few early adopters have already made the switch to SEPA and are experiencing the benefits offered by the scheme. However, deciding to migrate to the scheme and how to manage the migration is a project in itself.
ING and Sentenial, who have partnered to offer SEPA Direct Debit migration and management services to corporates across Europe, recently completed a pilot of the system with a number of customers in the Benelux region. The pilot of the system itself was very successful and as part of the process Sentenial and ING are developing a set of best practices for corporates who want to adopt the scheme. These best practices will help corporates to ensure that they are ready to make the switch — when a business is really ready SEPA adoption can be a smooth process.
The first step any business needs to take when contemplating switching to SEPA is to decide how it wants to approach the project.There are several options, including developing a bespoke solution, working with an existing supplier or working with a specialist SEPA provider.
Many businesses are moving forward with solutions offered by their ERP vendors.What is important to keep in mind is that ERP providers are specialists in ERP systems and not SEPA Direct Debit.While they may be able to deliver base functionality, businesses who adopt these types of solutions are likely to face frustrations during the adoption phase as well as on an ongoing basis when they find they have to engage in manual processes because their solution is feature-light.[[[PAGE]]]
At the onset of the project it is important to develop a SEPA Adoption Checklist to ensure that all aspects are considered otherwise revenue could be lost or delayed once the switch is made. Of primary importance is to engage with SEPA experts. SDD is a complex scheme where not everything is quite as the rulebooks would lead you to believe. For example, some countries have their own specific requirements and some required functionality lies outside of the rulebooks and is non-standardised.
Another key consideration is functionality. There are a lot of SDD solutions on the market, some are complete end-to-end solutions and some are merely BIC/IBAN converters which require significant manual assistance.
The businesses who participated in the recent pilot run by ING and Sentenial chose the solution Mandate Manager because it offers full functionality, is provided as a hosted service to support rapid on-boarding and is available on a pay-per-use model. One of the key challenges some early adopters face is low transactional volume. It is difficult to justify spending large amounts of budget on a system that for the first year will see low numbers of transactions passing through it.
Broadly speaking a SDD project will cover three phases: the migration from domestic schemes, the on-going management of data and mandates and the processing of transactions.
The migration phase can be very challenging. One of the key elements to making the migration phase run well is ensuring that all customer data is clean before the project kicks off. In the recent pilot, Sentenial uncovered issues with missing and incomplete data. The data, which had been extracted from the corporate’s ERP system was missing some account numbers and in some cases the account numbers were associated to the wrong debtor.
This is a common problem; to overcome this hurdle Sentenial worked closely with the customer to attain the missing information from the national bank.Sentenial has also developed a data validation procedure which it is making available to all future customers.
Another challenge most corporates adopting the SEPA B2B scheme can expect to experience is a low rate of return of re-authorised mandates. Under the SEPA B2B scheme debtors need to re-authorise mandates via signature.While this re-authorisation is crucial for the corporate it isn’t likely to be near the top of the priority list of every debtor.
To help speed things along, Sentenial offers an automatic reminder service.Mandate Manager checks to see which mandates have been returned, and for those outstanding reminder letters are automatically posted to the debtor.
While SEPA has been a hot topic for the banking industry over the past few years, it is only just heating up for business across Europe. While adopting SEPA can seem a daunting task, it doesn’t have to be. Businesses who choose to work with experienced SEPA experts will find that they can make the switch to SEPA in a business-as-usual manner.
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