Despite the recent six-month extension of the migration deadline to 1 August 2014, organisations should not delay the work towards compliance with the single euro payments area, says m-hance.
The business software provider outlines the key reasons for compliance, citing recent statistics from the European Central Bank (ECB) highlighting that migration to SEPA gathered momentum leading up to the original 1 February 2014 deadline.
Seventy-four per cent of credit transfers (SCTs) were SEPA-compliant at the end of December 2013 (from 64% in November). SEPA-compliant direct debits (SDDs) also rose sharply to 41% in December, from 26% the previous month.
“Although more businesses are becoming SEPA compliant this was anticipated as the original 1 February deadline was looming,” said Andrew Hayward, chief operating officer (COO) of m-hance. “More than half (59%) of euro payments still need to be migrated to SDD so there is still some way to go before businesses are fully SEPA ready.
“Businesses cannot afford to be complacent as the EU Commission has stated that the transfer period will not be extended after 1 August, that’s just 133 working days away. Those who take proactive action now to ensure their financial management systems are SEPA-ready stand to gain significant cost and productivity savings, beyond just complying with new legislation.”
Hayward highlighted several key reasons why businesses should ensure their existing financial systems are SEPA compliant:
- Maintain business continuity:
Businesses within the SEPA area will no longer be able to process high and low-value payments, supplier payments and consumer payments using systems that do not conform to the new standardised formats. Non-compliance could place the entire business at risk through inability to make or collect payments, in addition to impacting relationships with customers and suppliers.
Being able to reconcile transactions from multiple sources using a financial management solution with an integrated SEPA module will give peace of mind when 1 August arrives. Furthermore, time spent on manual, administrative tasks will be considerably reduced, giving greater control over the business’s finances, making it possible to focus on other important tasks. As an example, international jewellery retailer Anthony Nichols Group saved up to 10 working days each month by implementing m-hance’s bank reconciliation solution, which includes an integrated SEPA module.
- Grow new revenue streams with simplified payment processes:
Getting to grips with varying national payment methods can be significant barriers for businesses seeking to expand their revenues in foreign markets. In contrast, the simplified and standardised SCT and SDD payment schemes streamline payment processing for any company, irrespective of whether business is being conducted domestically or overseas. By taking advantage of this welcome unified payment structure, businesses can better plan and grow their international revenues by gaining easier trading access to new lucrative markets.
- Improve cash flow through faster settlements:
Organisations that take advantage of SEPA can free-up more day-to-day finances by capitalising on faster and cheaper euro payments, while centralising accounts payable and receivable functions. This will enable businesses to conduct and manage payments and collections more efficiently, while benefitting from holding fewer euro accounts, which could result in reduced working capital requirements and more efficient liquidity management. SEPA will also improve your business’s supply chain by making it much more seamless and faster to facilitate electronic payment and in turn reduce administration costs and boost cash flow.
- Cut administration time and costs:
SEPA-compliant software solutions enable organisations to reduce costs associated with the processing of multiple national payment formats and inefficient administrative procedures. In addition, organisations that are compliant can make significant savings by eliminating costs resulting from delayed payments, as post-SEPA deadline failed payments could potentially cost up to €50 per failed transaction.
“Businesses that continue to overlook the benefits of SEPA-compliant business software may find that their out-of-date systems will be responsible for an unacceptable number of errors, resulting in delayed and rejected payments, and failed transaction costs, adds Hayward.
“Integrated finance solutions with tailored SEPA modules not only provide peace of mind ahead of the 1 August deadline, they also offer businesses a faster, more efficient way to reconcile transactions and provide significant efficiency savings by replacing manual processes.”