BI Survey Danske Bank
Danske Bank on SEPA The deadline for SEPA-readiness is fast approaching, and many Irish businesses still aren’t prepared. Danske Bank’s Barry Manning outlines how they can help. an element of testing required before going live in February. IPSO provide an online testing tool but most businesses should conduct testing with their bank,” said Barry. “If some customers don’t make it on time there’s an expectation Barry Manning, Head of Corporate Cash Management Sales, Danske Bank. that banks will offer he standardisation of Euro a conversion service, but that’s not payments through the use of a what SEPA was designed for. It’s not single automated channel will sustainable and there may still be benefit both debtors and creditors. disruption to payments if you are But, warned Barry Manning, Head of not ready.” Corporate Cash Management Sales at In terms of what else businesses Danske Bank, “a lack of preparation can and should do right now, Barry for SEPA can place businesses at risk noted that businesses need to know of delays in making and receiving their own BIC and IBAN and to share payments to and from suppliers, staff this with their staff (particularly staff and customers once the February 1st in accounts payable and receivable), 2014 deadline passes.” According to customers and suppliers. They should the ECB, only 15.3 per cent of Credit also be aware that the full payment Transfer Originators are SEPA ready. advice of up to 140 characters must More worryingly, only 6.7 per cent be forwarded in full, from the of Irish Direct Debit Originators are payer to the payee with no changes SEPA ready. Barry urged businesses although this should make the who haven’t addressed the issue to do reconciliation process easier. Finally, so immediately, because “February 1st they need to know the timeframe for 2014 is not a target, it’s a deadline.” making a payment – Euro transfers within SEPA take place within one u business day of being generated. Need for testing A key change under SEPA is that u New Business Service existing bank account numbers will be The inclusion of an eight week noreplaced by BIC and IBAN. However questions-asked refund right under the companies need to be alerted to the mandatory Core SEPA Direct Debit need for testing. “There is definitely
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scheme was met with some concern by Irish businesses collecting from other businesses. The alternative SEPA Business to Business (B2B) scheme does not provide this eight week debtor refund right. Whilst Danske Bank can offer the SEPA B2B Scheme to eligible customers today, most domestic banks in Ireland do not offer SEPA B2B at present. As the SEPA B2B Scheme requires that both the creditor’s and debtor’s bank be scheme participants, this greatly restricts businesses transacting within Ireland from availing of the SEPA B2B Scheme. A new SEPA Business Service has been developed by IPSO as an interim alternative to the SEPA B2B scheme. This service will facilitate an agreement between creditors and their debtors to waive the Core Scheme’s eight week debtor refund right. Danske Bank will participate in the interim SEPA Business Service, available in Ireland from 1st December 2013. The service will run until the 1st February 2016, by which time it is anticipated that SEPA B2B Scheme will be widely available in the Irish Market. Barry concluded, “The most visible benefit of SEPA will be standardisation. There should be no difference in the information required, terms and conditions, and settlement time frame when paying or receiving funds under SEPA in any of the 33 countries. With SEPA, a payment to a supplier in Ireland will be the same as to a supplier in Germany. For larger corporates operating across multiple European geographies there will be an opportunity to rationalise the number of accounts and with less accounts comes easier management of cash and liquidity. SEPA also promotes the concept of centralisation so initiatives such as payment factories and Shared Service Centres are easier to accomplish”. g For more information visit: www.danskebank.ie/SEPA