Financial software vendor Advanced Business Solutions is urging UK companies not to ignore new EU legislation that will cause significant changes to the way banks process payments in euro currency denominations.
The Standard European Payment Area (SEPA), which will become part of European law on 1 August, will affect all financial transactions in the EU and means businesses will be required to make a number of key changes to their finance systems before the go live date.
SEPA is a new standard for the processing of bank transactions, and affects all credit transfers and direct debits in euros.
While the UK is not a Eurozone member country, any business making a cross border transaction will still be affected by the change.
Ahead of the migration to SEPA, UK businesses will need to use new bank data formats, termed BIC and IBAN, to identify their bank and their account, rather than the national sort codes and account number currently in use.
They will also need to ensure payroll and accounting software is SEPA compliant, and that providers have programmed in the changes required to make or receive euro payments.
Simon Fowler, managing director, Advanced Business Solutions, said: “UK companies really need to make sure they are ready for the revised deadline date and this means speaking not just to their bank, but to their software provider as well... We are now advising all our customers to start collating bank account information and to input that data sooner rather than later.
“One problem we have already noticed is that the ‘standard’ layout is not being interpreted in exactly the same way by all banks. Although the main structure of the files may not change we have found that the validation rules supplied by the banks differ. While this is not a major problem, this could hold up key payments if businesses leave their planning to the last minute and such issues remain unaddressed.”
The ultimate aim of SEPA is to improve the efficiency of cross-border payments and turn fragmented national markets for euro payments in to a single domestic model. SEPA will enable customers to make cashless euro payments to anyone located anywhere in the EU using a single bank account and a single set of payment instruments.