The Single Euro Payment Area (SEPA) will affect companies making and receiving euro payments in Eurozone countries from 2008, including those headquartered outside the Eurozone.
But to reap the full benefits, companies must understand and prepare for operational changes, says ABN AMRO.
The aim of SEPA is to eliminate national differences in payment instruments and processing infrastructures in Europe and ensure uniform quality, timeliness and costs for cross border transactions in euros within SEPA. To achieve this, new payment instruments will be introduced: The SEPA Credit Transfer (SCT), the SEPA Direct Debit (SDD) and the cards framework, for transactions in euros across the Eurozone.
"SEPA will go a long way to fulfilling the expectation of a 'one country market' in Europe, reducing complexity, improving efficiency and lowering transaction costs," said Ann Cairns, Chief Executive Officer, Transaction Banking at ABN AMRO, speaking at the EuroFinance International Treasury Management conference in Miami on 5 April.
The opportunity is extensive. By 2008, SEPA is likely to comprise up to 18 countries as new EU entrants, such as Estonia, Lithuania, Slovenia, Cyprus, Latvia and Malta, join the 12 existing Eurozone members.
What should corporate treasurers be doing now to prepare their companies for SEPA?
ABN AMRO's SEPA checklist for corporates offers a roadmap:
- Identify a champion in the organisation to quantify the impact of SEPA and guide strategy implementation
- Start a programme to include International Bank Account Numbers (IBANs) and Bank Identifier Codes (BICs) on all invoices
- Obtain the IBAN and BIC from all counterparties in the Eurozone
- Discuss the impact of SEPA with trading partners and identify early adopters to work with during the transition
- Review financial trading terms with counterparties - especially when trading in multiple markets
- Talk to technology providers about the SEPA scheme and systems changes needed
- Talk to banking partners and identify banks that can support the organisation through the transition
- Identify banks that can also provide broader European coverage, which will be important as more countries join the euro.
ABN AMRO has co-published with Euromoney the 2006 Guide to Single Euro Payments Area, offering information and insights into aspects of SEPA relevant to companies.
"Many companies are currently unaware of SEPA and how it will change their relationships with customers and suppliers. ABN AMRO is committed to SEPA and to raising awareness of these important changes through discussions with clients and wider audiences," said Ms Cairns.