Last week, PwC released an update to the “SEPA Readiness Thermometer” that it originally developed in January 2013. The first report suggested that 55 percent of companies were at risk of missing the February 1, 2014, deadline for clearing euro-denominated credit transfers and direct debits through Single Euro Payments Area (SEPA)-compliant systems. This time around, PwC surveyed 150 organizations about the state of their readiness for SEPA and found that although some companies are making progress, many are still lagging.
The survey found that 26 percent of respondents do not have in place a project plan for SEPA readiness; that number has not decreased since January. “This number is significant,” states the PwC report, “given the incomplete understanding of what SEPA readiness entails. We observe a widespread inconsistency in scope definition—in particular, for companies that have not planned their readiness activities.”
The PwC report expresses concern about respondents’ levels of preparedness: “Experience has taught us that SEPA projects take, on average, 6 to 12 months. However, heavy direct debit users, decentralized organizations, and corporations using in-house developed IT systems may need up to 24 months.”
PwC recommends that companies at risk of SEPA noncompliance on February 1, 2014, should develop a “Plan B.” This may entail reducing the number of cash management banks the organization works with. It may involve using cloud-based conversion software that sits between the company and the bank, translating legacy payment formats into SEPA-compliant formats. Or an organization with concerns about the SEPA deadline may reconsider the payment options it makes available to European customers, using online payment formats as alternatives to credit transfers or direct debits.