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Nexia Ebner Stolz

Economic Sectors

Switchover to SEPA creates an urgent need for action

As of Fe­bru­ary 1, 2014, or ta­king into ac­count the re­cently de­ci­ded pro­lon­ga­tion un­til Au­gust 1, 2014, all non­cash pay­ment tran­sac­tions must be chan­ged to the SEPA pro­ce­dure from the cur­rent Ger­man pro­ce­du­res.

Com­pa­nies should the­re­fore be­gin or com­plete their pre­pa­ra­ti­ons for the chan­ge­over right away. This re­qui­res that they in­di­cate their own ac­count iden­ti­fier IBAN (in­ter­na­tio­nal bank ac­count num­ber) and in­ter­na­tio­nal bank code BIC (bank iden­ti­fier code) on out­go­ing in­voices and ob­tain the same in­for­ma­tion from busi­ness part­ners in or­der to con­form their in­ter­nal hand­ling of pay­ments  to the new pro­ce­dure.

Cau­tion! Any de­lay in swit­ching to the SEPA pro­ce­dure can create con­side­ra­ble com­mer­cial risk. For ex­am­ple, if the ven­dor mas­ter data have not been chan­ged to meet SEPA spe­ci­fi­ca­ti­ons by Fe­bru­ary 1, 2014 or re­spec­tivly Au­gust 1, 2014 and trans­fer or­ders are not im­ple­men­ted by the banks as a re­sult, the dis­count for cash pay­ment may be lost. Mis­ta­kes while chan­ging over to the SEPA de­bit pro­ce­dure could lead to even grea­ter pro­blems if re­ceivab­les are col­lec­ted from cli­ents to any si­gni­fi­cant ex­tent by way of di­rect de­bit.  De­lays in swit­ching over would cause di­rect de­bits to fail, thus re­sul­ting in a si­gni­fi­cant cash short­fall for your com­pany.

Most com­pa­nies have pro­bably al­re­ady ta­ken mea­su­res to switch to SEPA. Howe­ver, they should at least be che­cked over one more time be­fore the dead­line of Fe­bru­ary 1, 2014 to make sure that they have com­plied with all the re­qui­red pro­vi­si­ons and mo­di­fi­ca­ti­ons.

Do you al­re­ady have things un­der con­trol for the switch to SEPA? Use our check­list to make sure.

Tip: In or­der to en­sure that you make the switch be­fore the dead­line, you should create a ti­me­line showing when each step of the pro­cess needs to be com­ple­ted. It is im­port­ant to de­cide whe­ther to switch over on a cer­tain date or whe­ther to test the SEPA pro­ce­dure’s func­tio­na­lity in a par­al­lel ope­ra­tion. It would also be ad­visa­ble to train em­ployees in the pro­ce­dure early on in or­der to pre­vent mis­ta­kes when they start using it.

  1. Chan­ging per­so­nal ac­count in­for­ma­tion
    Banks can as­sist you with chan­ging per­so­nal ac­count in­for­ma­tion into the kind of in­for­ma­tion re­qui­red for the SEPA pro­ce­dure. The re­sult should then be pre­sen­ted to the cli­ent to check it over. Then the cli­ent mas­ter data need to be ad­jus­ted, kee­ping in mind that no um­lauts may be used in the SEPA pro­ce­dure.
  2. No­ti­fy­ing busi­ness part­ners of IB­ANs and BICs
    IB­ANs and BICs should be sent to all busi­ness part­ners, eit­her by mail or by email. At a mi­ni­mum,  they should be in­di­ca­ted on your web­site. 
  3. Chan­ging sam­ple con­tracts and forms
    The sam­ple con­tracts, forms, in­voice tem­pla­tes, and let­ter­head used by a com­pany need to be chan­ged into the new form. 
  4. Au­dit of IT sys­tems
    IT sys­tems need to be che­cked to make sure that they can pro­cess the new XML for­mat used for SEPA wire trans­fers and de­bits. Soft­ware also needs to be che­cked to make sure it con­forms to the new stan­dards.

    Note: Be­cause the new for­mat ge­ne­ra­tes much more data, the per­for­mance of IT sys­tems should also be tes­ted for ade­quacy. It is of course also im­port­ant to check the IT sys­tems in ad­vance to make sure that they are fully func­tio­nal. 
  5. SEPA de­bits
    In or­der to keep using the de­bit pro­ce­dure, it will in­iti­ally be ne­cessary to ap­ply to the Bun­des­bank for a cre­di­tor iden­ti­fi­ca­tion num­ber. A dis­tinc­tion must also be made bet­ween ba­sic di­rect de­bits and com­pany-to-com­pany di­rect de­bits, the lat­ter not being al­lo­wed in tran­sac­tions with end users. For ex­am­ple, these pro­ce­du­res are dis­tin­gu­is­hed by their re­spec­tive pre-no­ti­fi­ca­tion pe­riods and re­turn con­di­ti­ons.
    Note: Exis­ting di­rect de­bit aut­ho­riza­ti­ons can be tur­ned into SEPA di­rect de­bit man­da­tes if there is a va­lid di­rect de­bit aut­ho­riza­tion left over from the past and if the cu­st­omer is in­for­med that it will con­ti­nue to be used. For new cu­st­omers, a writ­ten and si­gned SEPA di­rect de­bit man­date is re­qui­red.
    Mo­re­over, a sys­tem should be set up in which the cre­di­tor re­cei­ves prior notice in a ti­mely fa­shion be­fore the de­bit is cre­di­ted. This could be done on the in­voice, which could also in­di­cate whe­ther the de­bits will be re­cur­ring.

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