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Posts Tagged ‘debit transfer’

SEPA…less than 100 days to go.

Written by Alexander Kutilov on . Posted in Exact Globe

As of February 1st 2014, existing domestic and international euro credit transfer and direct debit schemes will be replaced by SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD). Introducing SEPA is the largest payments initiative ever undertaken within Europe and will affect the 28 EU Member States, the three European Economic Area (EEA) countries and Switzerland and Monaco. The SEPA European legal framework requires banks as well as bank clients to use European payment standards.

On a practical level, SEPA means that you will be able to make fast and secure transfers between bank accounts anywhere in the euro area. As such, it will have a positive effect on both domestic and international payments, with consumers benefitting from new rules for transparent pricing and prompt transfer.

Effectiveness of the banking and cash flow management systems is expected to be much higher and relative maintenance costs of these systems will get much lower.

With less than 100 days left to go for euro area countries to migrate to the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) schemes, the changeover process is now entering a critical phase. In terms of the implementation of a solid SEPA-proof ERP solution, there are a number of key points to keep in mind if you are yet to begin. 

Reliable Sources of information: When preparing for a SEPA-proof IT environment and the uninterrupted continuation of financial processes, it is important to find reliable and relevant sources of information for all legal provisions, functional requirements and technical guidelines. The payment industry is one of continuing innovation, and it is important to ensure you are fully aware of the latest possibilities. Be sure to discuss the latest developments with both your software vendor and your bank before you embark on SEPA-proofing your IT. 

IBAN (International Bank Account Number): All domestic bank numbers will have to be changed to IBAN – a longer, harder to remember code. We recommend that the large volume of information you manage on banks, debtors and creditors is changed at once using one of the specially developed software tools available. Remember to also adopt IBAN information in the layouts of all relevant business documents. In short, it is important to remember that IBAN is not only integrated into electronic payment systems, but needs to be aligned throughout your business software.  

Electronic formats:  SEPA will go a long way to resolving the current problems surrounding the diversity of electronic payment formats available, as every bank will be required to follow the ISO20022 XML standard. However, don not take it as read that this will create perfect harmonization. The adoption of new technical standards is always open to a degree of interpretation. Some banks will view the guidelines differently than others, and may have small anomalies in the way they will handle the relevant formats. Many banks also continue to support various traditional electronic bank statement formats with SEPA extensions. Despite thick SEPA rulebooks on payment formats, these differences do exist and can potentially cause problems. As such, it is very important that your bank is fully informed of how your system operates, and confirms that it will accept the XML schemas your software will produce for electronic payment documentation.

SEPA is not a technical change: Many people believe that SEPA is simply a technical change – one affecting only the bank account number and the relevant electronically exchanged banking formats. This is not the case. SEPA brings a significant knock on effect across a range of related business processes. Companies, for example, face new choices regarding their payment and collection processes. Which banks should they choose to work with? How will they deal with reconciliation or the establishment of the SDD mandate administration? How does the business stay up to date with and benefit from the continual evolution of payment technology? What are the implications for planning and budgeting next year and beyond?

Exact offers practical services guiding you through the necessary changes in both: your software and business processes. Understanding your business processes, in combination with our solutions, can help ensure you consider the full scope of SEPA related issues and avoid unpleasant surprises next year.

Interested to learn more ? Please visit  Exact SEPA services website.  You may also want to learn how to update your Exact software with the latest version via a step-by-step guide.

Your feedback to this publication, including concerns and suggestions, will definitely be evaluated towards further enrichment of SEPA solutions in Exact Globe Next.

You are welcome to stay updated on further developments in the area of cash flow management and electronic banking solutions through our regular postings on the Exact Product Blog.

SEPA

SEPA migration end date is clear … what’s now?

Written by Alexander Kutilov on . Posted in Exact Globe

Now that the end date for the Single Euro Payments Area (SEPA) migration has been agreed upon within Europe, the industry has begun to realize the challenges that it will face the coming years. The good news is that a clear target date is set. In the euro area, this will be 1 February 2014, subject to certain limited exemptions mentioned in the SEPA Regulation. The bad news is that many are still in the preparation rather than execution phase. It is indisputable that the migration to the SEPA will be a challenging exercise. Market participants still need to evaluate its impact on their day-to-day operations. Migration to SEPA standards requires careful planning. The relevant actions and resources should be identified as soon as possible.

In this article I would like to share a general overview of SEPA compliance statuses as well as some short term plans of Exact Globe Next functionality for customers in countries of EU Member States.

SEPA was generally introduced in the product update 390, in 2008, and has been constantly improving since then.

We have chosen a flexible approach, with which we have implemented and support SEPA Credit Transfer for all EU countries based on general ISO20022 standard guidelines in 2009. Since 2010 we continued with extending SEPA functionality for frontrunners countries: the Netherlands, Belgium, Germany and Austria based on their national guidelines.

We are committed to plans for improving SEPA support in Exact Globe Next for all eurozone countries during 2012 and 2013.

IBAN and BIC. Customers are able to maintain IBAN and BIC in cash instruments and in debtor and creditor bank accounts in countries of EU Member States. Furthermore, to facilitate better and faster migration of bank accounts data into IBAN and BIC Exact Globe Next offers automations of generating these values for some countries or importing IBAN and BIC to debtors and creditors bank accounts for other countries.

IBAN and BIC are also included in most of layouts. For example the Exact customer in the USA is able to manage IBAN and BIC data of French debtor bank account and print this information in the sales invoice.

XML ISO20022 standards. Being based on ISO20022 standard, SEPA guidelines are allowed to be extended at the national level. Changes in national SEPA guidelines are prevail. At the same time banks within the same country are allowed to follow national or strictly EU guidelines or even extend such guidelines. Bank extensions to guidelines are prevail. Implementation of national SEPA migration plans are dependent on such diversity. Communications regarding relative technical and functional specifications as well as the speed of SEPA development in each country are different.

SEPA Credit Transfers (SCT). SCT functionality is available in Exact Globe Next for all customers and for all legislations as soon as the cash instrument and the creditor bank account are within EU and linked to euro. The frontrunners countries are having much better support of their SEPA standards.

SEPA Direct Debit (SDD). SDD was introduced in the product update 400 in 2010. This functionality is available for all customers of Exact Globe Next and for legislations as soon as the cash instrument is in the Netherlands, Belgium, Germany or Austria and linked to euro and the debtor master data is provided with IBAN and BIC and the information of relative SDD mandate exists. SDD mandate management is necessary part of the functionality. Being generally compliant to XML ISO20022 standard, the structure and content of SDD are implemented based on its national extensions.

Bank statements with SEPA information. SEPA includes a definition of Cash Management (CAMT), the XML based generic bank statements structure. The introduction of this standard, at the moment, gets lesser priority compare to IBAN and BIC, SCT and SDD. Expiration time lines for currently supported bank statements are not yet clearly defined. Therefore the majority of banks extend their bank statements specifications so that remittance information of SEPA transactions can be identified for reconciliations. Currently we keep implementing changes in existing bank statements in different countries, based on their specifications.

SEPA is a topic that can be addressed in different ways than just compliance. Starting now gives some, although limited, time to plan for changes taking possible benefits into scope. It is important to recognize that the impact of SEPA implementation goes beyond Europe. Compulsory usage of the ISO20022 standard certainly will be later considered for a global roll-out outside the eurozone.