Regulation & Standards

SEPA phase II

Published: Jan 2014

Editor’s note: These responses were submitted prior to the European Commission’s extension of the SEPA deadline.

Portrait of Gerwin Braam
Gerwin Braam, Senior Bank Manager and SEPA Project Manager, AkzoNobel:

For the most part, the Single Euro Payments Area (SEPA) phase II at our company will be a continuation of the progress already made in the build-up to the deadline. At AkzoNobel we have applied a lot of effort to ensure we are ahead of the game and SEPA-compliant before the deadline.

One of our key goals in SEPA phase I was to connect all AkzoNobel entities to our centralised payment factory, allowing AkzoNobel to make SEPA payments on behalf of our legal entities. This was built to be SEPA-compliant and is technically ready to process XML payment files. A large majority of our legal entities are already connected to the payment factory, allowing them to process the SEPA Credit Transfer (SCT). SEPA phase II will therefore see us continue to connect the remaining entities to the payment factory – this will be completed in 2014 and will enable our payment process to be streamlined, with one credit transfer type leaving the company and only one bank file to process.

During phase I, we put a lot of energy into the SEPA Direct Debit (SDD) mandate. Today, we have centralised the process creating a collection factory which allows treasury to collect SDD transactions from customers’ accounts on behalf of our legal entities – a system unique to AkzoNobel. The system is technically live and the large majority of our entities, who have had to configure their own local ERP accounts payable (AP) systems, have already migrated. A key part of phase II will therefore be to continue connecting our entities to the collection factory, allowing us to harmonise and streamline the collection process. This involves replacing the legacy structure, where all entities have their own local electronic banking (e-banking) system, to a single system where collection files are sent to a central treasury system and then collected on behalf of our entities. In the long run this will allow us to gain increased visibility over the process and reduce our banking costs, as we will only have one bank contract. In addition, this should also see an increase in the number of direct debits that we have with our customers.

Across all our EU entities, the HR departments have already implemented SEPA-compliant salary payments. This is not something which will be extended to non-euro HR departments during phase II because these countries have their own currency that is not regarded as a SEPA currency payment and therefore do not have to comply with the SEPA standards.

Portrait of Almudena Lombardia Escudero
Almudena Lombardia Escudero, Treasury Administrator, Shared Service Centre (SSC), Gas Natural Fenosa:

The introduction of the Single European Payment Area (SEPA) has simplified the management of Gas Natural Fenosa’s associates across Europe from its Shared Service Centre (SSC). The standardisation of files for the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) mean that we are truly able to talk about synergy in operations.

We have been able to accomplish SCT before February 2014 with the implementation of SEPA formats for most of the countries we operate in, other than Spain. Thanks to the opportunities afforded to us by our global banks we are now using XML SEPA formats sent to our entities via the internet. In this case, mass payments to suppliers are included by most of our associates, with Italy adapting to XML files in February 2014.

We are also waiting until February 2014 to migrate the file structure in Spain, where they will be migrated to the 34-14 format because of the Editran version installed. We will then update the Editran version in phase II before changing to XML format.

The migration to SDD is more complex because of the diversity of commercial interfaces and systems that support gas and electricity invoicing. Gas Natural Fenosa has recently implemented a merger process which has not yet been completed at systems level in the commercial department, and the new invoicing systems are currently in the implementation stage, meaning that both processes will overlap in time.

Only the SDD for Portugal and Spain are currently managed from the European SSC via non-SEPA formats. Migration to SEPA will be carried out covering the minimum necessities to guarantee operation viability. We are already working to unify physical custody of the mandates and XML files, for all of our associates, along the transition period until February 2016.

We are therefore expecting to finalise and complete the centralisation process in Spain, for operations by our European SEPA associates, once February 2014 arrives, for both SCT and SDD.

The single European payment factory will be consolidated, leaving specific residual operations for the local structure in each country, such as small cash payments, payment of charges and particular local taxes.

We will achieve major synergy in our European banking map thanks to the designation of global banks. This will permit simplifying the number of entities we work with in each country, so that there will be a global bank, and in some cases a local bank for specific operations, mainly SDD.

The processes which are currently different in each country, because of the varied equipment used, will be made uniform and unified in the SSC via centralisation. This will confer greater control and knowledge about our operations and the position of our associates beyond our frontiers.

Portrait of Gary Williams
Gary Williams, General Treasury Manager, Mitsubishi Corporation International (Europe) Plc:

At Mitsubishi Corporation International (Europe) Plc we have applied much effort to meet the SEPA deadline, as the project overall will give us greater efficiency. This process began around four years ago, when we became aware of the SEPA Credit Transfer (SCT), which we have since adopted and is used for around 53% of our euro payments. In addition, SEPA reduces the amount we pay in bank charges, which is quite significant as we make more than 4,000 payments per year that are eligible for SEPA.

With regards to SEPA phase II following the deadline, it would be ideal if we could conduct all our euro collection activity from one account, as currently we hold several accounts across Europe to collect remittances from our customers. However, we are aware that dependent upon the customer’s bank, cross border payments as opposed to in-country payments may attract a higher bank change. Despite this, we are planning to conduct some analysis on our bank account usage and ongoing requirements. We need to build up a clear picture and fully understand our customer’s position before we make any changes.

Another element of SEPA phase II we will be looking at is in regards to the cut-off times for making payments. The SEPA cut-off time for which payments have to be released prevents us from making certain same-day type payments and therefore we opt for the safer high value type payment option. Consequently any extension of this cut-off time in phase two would help us migrate more of our business to SEPA.

Although we have already adopted the SCT, we do not see SEPA Direct Debt (SDD) as constituting a large part of our phase two plans. A few of our vendors want to use SDDs and while we can accommodate, it is not something that we can apply to the collections side of our business. The primary reason for this is that our commodity trading business is based on the issuance of an invoice to collect payments.

SEPA certainly has been a much hyped and discussed subject for some time. The sheer volume of information surrounding the topic has often made it challenging to navigate through and ascertain clear facts. However, in terms of improving business efficiency I believe that it has certainly been worth all the effort.

The next question:

“How will treasurers be affected if all money funds are required to switch to VNAV?”

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