Companies in Ireland slow to prepare
Special Report The changes come into force in February and yet some firms have not addressed them
Many Irish businesses could be in for a rude shock. The introduction of the Single European Payments Area (SEPA), new banking legislation standard, is drawing ever closer. Chances are, though, that if you are an Irish company, you have only the faintest knowledge of what the new initiative is and how it will affect your business.
In recent months, a number of business lobby groups, such as Ibec and Isme, have voiced concern over firms’ readiness for SEPA, which comes into effect in February.The aim of the new payments regime is to simplify, and cut the cost of, cross-border electronic payments by creating common standards and rules across 33 countries, including Ireland.
It is hoped this will make payments made across Europe as efficient as national payments usually are.
Because the new payments regime has important consequences for how electronic fund transfers are processed and direct debit payments are made, it affects all businesses. So far, however, Irish firms have been slow to ready themselves for it.
Between now and February’s start-date, all businesses need to invest in reconfiguring their payroll, direct debit and accounting systems to deal with the changes to be introduced under the new legislation.
However, according to a survey by Ibec in April, as many as 42 per cent of firms had yet to begin preparations, with small firms found to be particularly unaware of the new rules and their likely impact.
The information services group Experian, which is advising a number of Irish companies on how to prepare for SEPA, is critical of how some firms view the legislation.
“Too many businesses have seemingly taken a ‘the diet starts tomorrow’ mentality towards becoming Sepa-compliant, yet time really is running out to get the process underway,” said Jonathan Williams, director of payment strategy at Experian.
“The arrival of SEPA legislation has been on the horizon for 10 years now, yet many businesses across the eurozone are still not prepared, Irish companies included. With time running out, the need for action is now,” he said.
Ibec, which has been running seminars across the country to promote better understanding of the new payments area, said that awareness of the legislation has increased since it carried out its survey earlier this year, but added that there is still much to be done.
“It is very important that companies understand that February 1st is a deadline and not a soft introduction of SEPA. We’ve been building towards it for a number of years now and all businesses need to be compliant by February 1st whether they like it or not,” said Fergal O’Brien, Ibec’s head of policy and chief economist.
When the new legislation comes in, current national payment schemes will be closed and all electronic payments must be processed using new schemes.
Among the other main changes are the use of International Bank Account Numbers (IBANs) and Bank Identifier Codes (BICs) for cross-border payments instead of current national sort codes and eight-digit bank account numbers, and the introduction of the ISO 20022 XML format for bulk payment files.