For several years, Treasury & Risk has covered the impending Single Euro Payments Area (SEPA). We’ve explained the technical details of how systems need to change to accommodate SEPA credit transfers and SEPA direct debits. We’ve discussed ways in which some companies are leveraging their compliance efforts to improve payment processes across Europe and beyond. We covered fears last fall that businesses would be unprepared to comply by the February 1, 2014 deadline. And then, of course, we covered the extension of the deadline to August of this year.
Now that we’re six weeks past the original SEPA compliance deadline, we thought it would be a good time to take the pulse on how large corporates are faring. To what degree are European credit transfers and direct debits SEPA-compliant today? And to what degree have organizations taken the extra step of improving accounts receivable (A/R) or accounts payable (A/P) processes as they’ve revamped their technology infrastructure to meet SEPA requirements? To find out, we sat down with Ad van der Poel, the Bank of America Merrill Lynch product executive for payments and receivables global transaction services for Europe, the Middle East, and Africa (EMEA).
T&R: Are there still any obstacles to centralization and standardization once a company is using SEPA-compliant systems and processes in different countries?
AP: Yes. The biggest issue is that SEPA has variations in different regions. The devil is in the detail, and as we’ve all come to realize, it’s not really a single payment area where everything is the same. In the next two to three years, the industry will be fine-tuning SEPA and hopefully will get rid of most of the variations.
T&R: And you think companies will start to reap the benefits of standardization in the near future?
AP: Absolutely. We are starting to have discussions with our clients around all the things that have been put forward as the benefits of SEPA. Companies are looking into automation and standardization, not only of file formats, but of processes as well. As a result of that, they have the opportunity to centralize their processes and their receivables organization. And they can also rationalize their bank accounts and their number of banks. When we start talking about these types of initiatives, we’re really getting into the benefits of SEPA.