This week, I have been at the EuroFinance SEPA Conference in Frankfurt.
In less than eleven months SEPA ends and the sense of urgency is becoming acute among the corporates who are still a few steps away from compliance.
It became obvious to the conference delegates that the discussions in the early days of SEPA (since the SCT start date in 2008) have since completely shifted from theory and passionate intellectual debates to “hands-on” business and technology prescriptions, to trial and error feedback from corporations with varying degrees of success in their approach.
It is thanks to those early SEPA pioneers that we now have a good sense of an “ultimate SEPA migration guide” and this resulted in a very captivating conference. Below is a summary of the four keys areas discussed at the event:
Where are most Corporates in terms of compliance, 11 months ahead of the deadline?
Previous EuroFinance survey results show that more than half of the corporate respondents in the SEPA zone still had no plan in action at the end of 2012. Two European organisations, Telenet (Internet Services Provider, Belgium) and Specsavers (Consumer sector, UK) shared how their early preparation and readiness ahead of the deadline provide them with peace of mind.
Lessons learned of early migration onto SCT and SDD (incl. mandates)
The key theme of the day was sharing the full list of business and technical roadblocks SEPA-compliant corporates have been through. According to international corporations like EADS (Germany), the four main lessons learned were:
- Full cooperation between the Bank and the corporate
- Early preparations, thorough analysis of the SEPA requirements and Bank specific integration points
- Testing, testing and more testing of all business flows and exceptions with the Bank
- Full commitment to the migration; SEPA will not be postponed or optional
XML ISO 20022 and file formats conversion
XML ISO20022 is the absolute SEPA requirement for file formats, from 1st February 2014 onwards (a year later in some countries). According to Alcatel-Lucent (Technology sector, France), Corporate Treasurers and IT Directors don’t wake up one morning thinking “I should probably implement XML for payments and treasury management today”.
On one hand, some corporates decide to completely transform their IT and supply chain systems to support native ISO XML themselves, while on the other hand some corporates decide to use a partner like GXS to convert and enrich their Bank flows into SEPA-compliant ISO XML 20022. One bank confirmed that they will reject anything else that reaches their corporate channels from 1st February 2014.
ERP and Treasury Management System integration: changes of accounts data and identifiers
The migration towards SEPA is not only about new payment rules and file formats. Corporates are facing a significant task to cleanse and update their ERP and TMS reference data with their clients’ SEPA bank identifiers.
While some suppliers offer real-time bank identifiers, validation and enrichment services on behalf of corporates, the overall prescription of pioneers and specialists is to refresh all the ERP and TMS reference data once and for all. British American Tobacco (Consumer sector, UK) provided examples of the results when such moves are planned carefully before going live with SEPA; reduced error rates on outgoing payments and suppliers paid on time.
Centralised treasury opportunities beyond SEPA
In most of the war stories shared at the event, the SEPA migration was a compelling event to push through additional step changes within the Treasury and IT organisations. ALSTOM (Germany) and other corporates added more streamlined payment operations and centralised treasury management at this time.
To conclude, the part you have all been reading my blog to learn the result of – my personal, newly introduced “Guinea Pig Award”, in 2013 this goes to the Banks, those who have managed to reach this point within less than a decade with self-regulation (through the European Payments Council).
The legal responsibility of compliance is applied to both Financial Institutions and Corporates; however the Banks are clearly leading the whole industry forward. Let’s check again in ten months to see if the gap in non-compliant organisations is completely closed.