Junior Minister, Tom Hayes, is advising SMEs to start their Single Euro Payments Area (SEPA) preparations now, to ensure they are SEPA compliant before February 1st 2014.
Explaining the background to SEPA, Minister Hayes explained: “SEPA is an initiative within a 32-country European zone which will mean a common way of processing electronic credit transfers, payments and direct debits. It will change the way euro electronic payments are processed across Europe. It will mean that businesses can make and receive payments seamlessly, collect a direct debit on any euro account or make a credit transfer to any euro account within SEPA.”
“From February 1st 2014 all national direct debits and credit transfers must be SEPA compliant. This will include everything from staff payroll, to paying creditors or receiving a euro electronic payment from customers within SEPA. Existing national credit transfers (CT) and Direct Debits (DD) will be replaced by pan-European SEPA equivalents (SDD and SCT) and national sort codes and account numbers will be replaced by an International Bank Account Number (IBAN) and a Bank Identifier Code (BIC) for all euro electronic payments.”
“SEPA will make banking systems compatible so that once you make a payment, or anybody in the 33-country area makes a payment, it’s guaranteed to arrive in the beneficiary’s account the next day. Currently this could take up to 6 days.” Concluding, Minister Hayes said; “This will bring significant advantages for businesses as a key benefit will be faster settlement and simplified processes that will help to improve their cash-flow and potentially help to reduce their costs. The last thing that a business will want to face after the SEPA deadline is having difficulty paying their suppliers, or receiving payments from their customers.”