Treasury Practice

Problem Solved: Cees-Jan Dijkstra, Holmes Place

Published: Jan 2014

When the 1st February 2014 deadline for migration to the Single Euro Payments Area (SEPA) was announced in early 2012, Berlin-based health and fitness chain Holmes Place Lifestyle Clubs knew that it would need to act quickly.

Portrait of Cees Jan-Dijkstra

Cees-Jan Dijkstra

CFO

Holmes Place Lifestyle Clubs found that getting in shape for the Single Euro Payments Area (SEPA) posed a number of challenges. But with the expert advice provided by its banking partner, Commerzbank, the company was able to overcome these hurdles and successfully migrate its direct debits well in advance of the 1st February 2014 deadline. Now the business is no longer worried about compliance and is ready to leverage the benefits of a harmonised euro payments area.

Problem…

The company’s treasury teams were aware of the numerous benefits switching to SEPA would bring, such as centralising collections and, possibly, reducing bank fees in the future. However, with direct debits collected from 300,000 members in over 75 locations, much of the company’s post-deadline business hinged on how successfully the team managed the transition.

In September 2012, the company began its migration to SEPA. Immediately it was confronted with a number of challenges. Firstly, the company had decided to synchronise its switch to SEPA with the implementation of a new customer relationship management (CRM) system. But in order to migrate to SEPA, every existing database file had to be converted and validated, a task which involved obtaining International Bank Account Numbers (IBANs) and Bank Identifier Codes (BICs) from every customer.

A further problem arose when the company looked at the implications of the SEPA regulation’s pre-notification requirements. Under the new regulation, it is mandatory for pre-notifications for direct debits to be sent five additional days in advance. Switching to the new schedule, however, could potentially cause serious disruption concerning the company’s cash flow management, which depends on the direct debits received from their members in the first two days of the month.

“We needed a practical solution to this,” says Cees-Jan Dijkstra, CFO of Holmes Place Lifestyle Clubs, further explaining that sending out reminder letters each month would not likely be appreciated by their customers, not to mention the considerable costs that the company would incur through such an exercise.

…Solved

Fortunately for Holmes Place Lifestyle Clubs, specialist help was on hand. From the beginning, the firm was able to rely on the help and advice of two SEPA experts provided by its banking partner Commerzbank.

“At the outset we held several meetings with the specialists to discuss how the SEPA guidelines were to be interpreted and how we could find a feasible solution for both sides,” says Dijkstra. As the project proceeded, the company found Commerzbank’s SEPA experts were there to assist at every juncture. “Later on we set up a hotline to the professionals so that any problems that arose could be solved in a timely manner.”

In particular, Commerzbank helped convert customer master data into IBAN and BIC for a total of nine countries. This data was then validated, with Commerzbank helping the company by checking business partner master data against the bank’s account. Additionally, the bank also provided some assistance with its conversion service for SEPA Direct Debits (SDDs) and by informing direct debit initiators.

Like many corporates, Holmes Place Lifestyle Clubs found one of the biggest challenges relating to migration was interpreting the vast amounts of pages comprising the regulation. For this reason, the advice provided by Commerzbank proved critical, particularly in the case of pre-notifications for SDDs. When the company realised that migrating to SEPA would mean a longer pre-notification period, Commerzbank recommended that they set up a system of three workflows that trigger pre-notifications and SDD files. Through this solution SDDs now arrive in the bank account at the beginning of each month – exactly when they are needed.

Now the Holmes Place Lifestyle Clubs is SEPA-ready and, while many of its peers are scrambling to meet the deadline, the company can now look to how it will leverage the benefits of SEPA in the future. Top of the company’s agenda will be to reduce the number of collection banks by utilising SDD for cross-border transactions. “This will create added transparency and more streamlined payment methods for our members,” says Dijkstra. “It will also hopefully reduce our bank fees too, even if not by a large amount.”

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