There is a significant change about to happen in the area of euro-denominated electronic payments affecting businesses that make payroll or creditor payments, or collect direct debits electronically.
An EU regulation set 1 February 2014 as the date by which all users of electronic payments in the Single Euro Payments Area (SEPA) - a 33 country area comprising the EU 28 along with Iceland, Norway, Switzerland, Monaco and Liechtenstein) - must migrate from ‘domestic only’ payment systems to a pan-European equivalent.
This means big changes for our banks, many software providers and approximately 50,000 businesses that make payroll or creditor payments, or collect direct debits electronically.
What is changing?
Ireland’s national payment system for credit transfers (payroll, creditor payments) and direct debits will close for business on the 31 January 2014 and be replaced by two pan-European schemes:
This will mean that payment file formats will need to change from the current domestic ‘Standard 18’ to the new SEPA ‘ISO 20022 XML’ formats.
In addition our NSCs (National sorting codes) and bank account numbers will be replaced by BICs (Bank identifier codes) and IBANs (International bank account numbers).
These technical changes will help standardise payment messaging across SEPA and lead to more efficient payment processing.
Where can you find IBAN and BIC?
IBAN and BIC details are generally included on bank statements.
What is the benefit of SEPA?
A benefit of SEPA is that next-day value is guaranteed for funds transferred between accounts in SEPA.
Are you obliged to conform to SEPA standards?
Yes, EU regulation 260/2012 means that all businesses must conform to the new SEPA standards before the end-date of 1 February 2014.
What should you be doing now to prepare for the change over?
You need to contact your bank and software provider.
Your software provider will advise you when their software updates will be completed.
Your bank will be able to advise you on any actions that you need to take to make sure that you are fully SEPA-compliant in good time for the 1 February 2014 deadline.
What will happen if I do nothing?
If you haven’t conformed to the new SCT and SDD technical standards by the 31 January 2014, your bank will not be able to process your transactions.
This is cause disruption for your business.
Early planning and migration to the new schemes is highly recommended, as it may not be possible for all latecomers to be accommodated in a timely fashion.
Deirdre McDermott is Audit Director in OSK. Contact OSK for all your payroll services, bookkeeping and accounting queries
A video message from Tadgh O'Sullivan, Director.
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