If you are not mid-way through Sepa compliance you are too late and need outsourcing back-up

The deadline for businesses in Europe to be able to make and take payments that are compliant with Sepa, the Single European Payments Area, is six months away. But projects to migrate systems to Sepa compliance takes at least a year, so if businesses have not started they have to accept they won’t make it and need a plan B.

Even if you are based in a European country not in the Euro zone, such as UK, will have to be able to accept and make payments using the standard. The idea of Sepa is to make cross boarder payments the same as in-country payments.

Sepa will force businesses to use International Bank Account Numbers (Ibans) and the ISO2022 XML format.

The worrying thing is only 2% of direct debit payments that have to be compliant by February are currently compliant and only 45% of credit transfers are compliant despite the fact that the system for those payments went live in five years ago.

So businesses have had a six year period to get ready for this. That is the problem. If you set a six year deadline what do you expect? The business changes and the people change in that time.

Another problem is how confusing it is. Most UK companies have been living in denial presuming that they will not have to comply, which is very wrong if they want to trade with the Eurozone. The February 2014 deadline applies to them also.

Jonathan Williams, director of payment strategy at Experian, told me a project to migrate systems to Sepa compliance is a one year to eighteen month project. So if business haven’t started they are not going to make it. They will miss-out on the benefits of standardized payments and the opportunity to centralize payments in their company.

Williams said he was recently at an event in Ireland and 40% of businesses said they had not even started their Sepa migration and 40% hadn’t even started. The migration process include ensuring systems such as ERP software is compatible or has been upgrade, make sure the data format can be stored and ensure staff are trained on new processes.

So the long and short of it is you need a back-up plan. Banks will probably support businesses that are not compliant for a while and do it on their behalf, but that won’t last forever. Businesses can use third parties to translate payments into Sepa, but this will cost money.

Williams advised businesses to start now but have a plan in place for a bank or third party to make the payments Sepa compliant while the project is being carried out.

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