SEPA or the Single Euro Payments Area is a European payments initiative to create one single integrated standardised payments market in Europe. It will mean that individuals and organisations can make payments using the same format throughout the SEPA area of 32 countries in a quicker, easier and more cost effective way than currently.
When will it come into effect?
SEPA has been in operations since 2008 but from 1st February 2014, the current system will be shut down and all payments within the SEPA territory will be under the new format using IBANs and BICs so they can be processed through the banks here in Ireland and throughout the SEPA territory.
What are IBANs and BICs?
Instead of having the current Bank Account Number and Sort Code we will have IBAN and BICs. IBAN stands for International Bank Account Number and is simply a new format of existing account numbers that can be recognised internationally. It’s similar to putting the country code before dialling a phone number overseas. The BIC is the Bank Identifier Code, or sometimes referred to as a SWIFT address.
So what do businesses need to do to prepare for this changeover?
The Team at Paycheck Plus are advising our clients to appoint someone within their organisation to be responsible for keeping abreast of the changes and how and when they will impact on business operations. It is also important for the senior management team and directors to consider how the changes will impact on strategic options going forward.
All bank details for suppliers, customers and employees will need to be changed over to IBAN and BIC format. It is important for business owners to speak with their account manager in their own bank to find out what assistance your bank can give in the transition.
Depending on the type of bank service you use, you may need to change the file format from its current format to the new ISO 20022 XML format. Your bank will advise on the conversion.
Businesses should also consult with their software providers to evaluate the impact of SEPA on the payment processing.
Will this have a big impact on SME’s?
SEPA will impact on everyone who has a bank account. However, careful and timely management of the changeover will minimise payment issues when the current payment format ceases on 1st February 2014. It is imperative that all businesses understand how the change will impact on their payment processes and are positioned properly to implement the changeover. We advise our clients to ensure that they have their credit facilities in place and up to date and to make themselves aware of the format of payment files. We have noticed that the payment date in the files may have to be adjusted for some banks to ensure that their employees receive their payroll on the date agreed.
As a Payroll Provider, what changes are you making to facilitate your client’s payroll payments?
Paycheck Plus has been in discussion with the Banks and software providers for the past 18 months and has put procedures in place to manage the changeover. To minimise any potential difficulties, Paycheck Plus is involved in the pilot scheme with some of the major banks and software suppliers. Our objective is to ensure that our clients are prepared to pay their employees without disruption. We will be commencing the transition from July of this year. We will provide a smooth transition for our clients and will be keeping them informed of any changes required on their end. As we are liaising with all the major banks, we anticipate that clients using our payroll outsource services and their employees will benefit from the expertise of our Payroll Team who will handle the changeover on their behalf.