Firms told: get up to speed on new payments system
IT'S been billed by lobby group IBEC as being as important for completing the single European market as the changeover to the euro.
Yet various surveys conducted earlier in the year suggested many businesses were not prepared for the introduction of the Single Euro Payments Area (SEPA) in February.
SEPA is a European regulation designed to simplify financial transactions and make doing business easier.
It has been introduced on a phased basis across 33 countries since 2008 and has important consequences for how businesses process electronic funds, transfers and direct-debit payments.
From February 1, existing national payment schemes will be scrapped and euro electronic payments will be processed through SEPA. Sort codes and account numbers will be replaced by an international account number (IBAN) and a bank identifier code (BIC).
In a nutshell, all euro direct debits and credit transfers within the 33-country area will be carried out under the same conditions, including everything from staff payroll to paying creditors or receiving a euro electronic payment from customers within SEPA.
It is hoped that it will lead to a more efficient, borderless payment area.
"It's a pretty big change as to how a business customer will conduct their finances, in terms of their IT systems, their own accounting platform, their payroll system," said Barry Manning, Danske Bank Ireland's head of cash management.
Separate surveys conducted by both Danske Bank and IBEC earlier in the year showed that businesses were not prepared for the migration. The IBEC study, released in April, showed that more than 40pc of firms hadn't begun preparations.
And it claimed that one-in-two were not aware of the impact that the SEPA system would have.
It's a vitally important issue for businesses and, if you're a company boss, you need to get up to speed.
Firms will need to ensure that their payroll, direct debit and accounting systems are SEPA-ready before the February deadline so that they are able to make euro electronic payments after that date.
"There are system changes that need to be made on the business side to make sure that they can send the (payment) file in the right format to the bank and making sure that the bank can accept that format," Mr Manning said.
So if you're a company and you've yet to make the transfer, what do you do first?
"Talk to your bank. All the banks have a separate website (on SEPA). Get a good, broad understanding of what SEPA is and assess what the implications are for your business," Mr Manning said.
Bosses also have to think about migrating existing clients to the new system, and get up to speed on the software to ensure their payroll and accounts are formatted correctly.
And don't forget to talk to your own staff and explain the differences to them.
They need to be reminded that when dealing with transactions, it's all about BIC and IBAN, and no longer sort code and account numbers.
Further details can be found at www.readyforsepa.ie, an information website operated by the Central Bank.