As of February 1st, 2014 SEPA (Single Euro Payments Area) comes into operation. SEPA requires all countries within the Eurozone to use the same European payment method and direct debit/collection method. This will not only be used for domestic payments but also for cross border payments and cross border direct debits. Those European countries that do not have the Euro as their home currency can use SEPA in parallel to their domestic payment method.
However, before SEPA payments can be made, businesses must have installed the latest software from their bank to handle the payments. Whilst on the face of it this may seem quite straightforward, in reality there is still a lot of confusion within the marketplace. This is mainly due to a number of companies currently being in the migration phase.
For example, if you have a large number of suppliers, you can’t migrate everyone onto the SEPA format overnight. So, to ensure that migration happens smoothly, you need to be operating an accounting system, together with software from your bank, that will allow you to run SEPA in parallel with both your existing domestic payment format and cross border format for foreign payments. This then means you can easily move suppliers on the domestic payment format across to the SEPA payment format smoothly and easily.
The challenge then is to decide your migration plan and select an accounting system with the flexibility to run all three formats. At Eclipse, our view is that SEPA is just another legislative process that needs to be adhered to. However, forward planning and preparation is key. We are already working closely with a number of our clients to advise them on the best strategy for SEPA migration in order to ensure they are ready and operational in good time ahead of the fast approaching 2014 deadline.
Feel free to get in touch with me on +31 20 658 6862 if you would like to discuss any questions you may have regarding SEPA.