SEPA – The Age of Direct Debits

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Luckily, when Hoya, a Japanese technology company, created its in-house bank in 2006, it also made preparations for the Single Euro Payments Area (SEPA). In order for payments to be made in accordance with the SEPA initiative, the payment formats had to change accordingly. As required by the EU and governed under the ISO 20022 standard, the company now uses XML format for EU countries, and IDOCs for some Nordic countries. So when the EU suggested that companies make bank transfers based on this method from 2008 onward, it was no problem for Hoya.

“Little benefit” to the new direct debit process

And the same will apply to the direct debit process, which, as agreed in March 2012, will also have to be carried out in accordance with SEPA  from February 1, 2014. But not everything is crystal clear, as Jakob Pauwels, the SEPA officer of Hoya’s European SAP team, has discovered. Most of his questions relate to mandate management: How do I manage my master data in future? Will my processes still be valid? What is the solution for a company that has several branches, but just one account for payments? “For example, if an optician operates five branches, and each branch wants to trade independently, but debit from a joint account, this is not currently possible,” explains Pauwels – the customer number and the mandate must be identical. The Hoya employee currently sees “little benefit” to the direct debit process: “It means extra preparations on our part, and we will have to pay consultants in the individual countries because each country has its own legal regulations.”

The SEPA focus group of the German-Speaking SAP User Group (DSAG), in which Pauwels is also a member, has so far made 56 suggestions for improvement. At present, three out of every ten companies make payments in accordance with SEPA. The uncertainties surrounding the euro have meant that the scheme did not start in 2008 as was recommended, but had to be postponed – at least this is what’s being rumored. Now, there is no way of avoiding SEPA. And the processing of direct debit payments has become a pressing issue: Only two percent of companies now use SEPA for these payments.

Read more on the next page: Most SEPA queries will come in 2013

“2013 will be the year of SEPA,” says Georg Fischer, who saw surprisingly little demand in 2012, and now expects a “great flood” of queries. Fischer, who is responsible for user groups worldwide on matters of SEPA at SAP, and is also a member of the DSAG focus group, is always up-to-date with the latest “rule books” of the European Payment Council, and new requirements that have to be updated with Support Packages or SAP Notes. He finds it very beneficial to collaborate with customers on the subject: “New guidelines and directives always leave a certain amount of room for interpretation,” he says, and believes it is always helpful to reflect these developments in the focus group when it comes to modifications and roundings.

Plenty of familiarization required

The software giant is all too aware that there is always room for improvement. And time after time, the reason is the EU, whose unilateral decisions mean that processes have to change. Take direct debits for instance: Upon first use of a SEPA direct debit, the current situation means that the direct debit must appear on the debtor’s bank account five days before the due date. This deadline is a new development intended to offer greater security. Any further direct debits are then only subject to a two-day deadline. But many people, including SAP employee Fisher, are asking: “What if the second direct debit overtakes the first direct debit, or if a direct debit is declined, and the second direct debit suddenly becomes the first direct debit?” Not only this, but each customer is now required to present a written mandate that is “much more formal than the current direct debit mandate and includes additional information such as the creditor and mandate number,” says Fisher. Jakob Pauwels from Hoya also finds himself having to get used to these changes: As such, six weeks is no longer enough for a “regulated withdrawal” from an agreement, but could instead take up to 13 months. The plus side is that this leads to “more solid business dealings”, as Pauwels notes. And there is further confusion: There is still no “eMandate” that would allow future business partners to forgo the need for “real” signatures. A SEPA accompanying law allows a transition period through to 2016. Until then, the previous electronic processing method should still be possible according to the German E-Commerce and Distance Selling Trade Association (Bundesverband des Deutschen Versandhandels).

With so much indecisiveness, and the need to clarify so many issues, it’s a small wonder that demand for targeted training has not surged. There was already a significant number of “trial courses” in 2012, but not enough systematic workshops on site says Georg Fischer. In a very few cases, an enhancement package has had to suffice for IT systems. According to Fischer: “Numerous IT systems, including upstream and downstream systems may be affected, but SEPA is not simply an IT issue. The real challenge is adjusting the business processes.”

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