GUEST BLOG: SEPA and e-Day – key deadlines for Irish SMEs

By Kevin Murphy, managing director of Colthurst Card & Payment Solutions

For Irish businesses, there are two key milestones over the coming months, both of which hugely impact their payment processes and systems, namely SEPA deadline and national e-Day.

For SEPA this date is August 1st. According to the European Central Bank (ECB), the majority of businesses have completed the migration to SEPA. In February 2014, SEPA direct debit transactions were at 80.3% and already 649.82 million transactions have been processed in the new SEPA format. Furthermore, AIB are claiming that in excess of 90% of Irish Payment files are now processed under SEPA. So clearly the majority have moved ahead and are implementing the changes required, which is a good thing. However, for those who are not, and with just three months to go, this is a crucial time. There will definitely be no further extensions to this date!

At this point, businesses should certainly have aligned and upgraded their internal systems and began the process of communicating BIC and IBAN business account details with customers and suppliers alike. I’ve blogged before about the main actions required by businesses to get SEPA-ready.

Under SEPA, banks are subject to stricter data checks in processing existing payment files so compliance is more crucial than ever. While companies are auditing their systems in preparation, it’s also timely to examine pci dss compliance.

Meantime, in accordance with the National Payments Plan (NPP), government departments, local authorities and other state agencies will stop sending and receiving cheques from businesses from September 19th this year. This date has been branded e-Day, and actually launched in September last year to allow businesses and public sector bodies the year to prepare for the transition to e-payments.

It’s all part of the NPP plan to reduce costs and improve cash-flow in the Irish economy and encouraging SMEs to move away from cheque usage. Currently SMEs contribute to more than 60% of all cheques in circulation in Ireland.

Although cheque usage has halved in Ireland since 2005 it remains a key payment method for many Irish businesses, amounting to a total of 33 million cheques every year. It is ingrained for many as a fuss-free method of paying suppliers or contractors.

According to the NPP, savings of up to €1bn per annum can be made if Ireland were to match best practice in Europe by migrating away from cheques and cash in favour of electronic payments. The challenge for businesses is to ensure that they have the right financial management tools and processes in place to manage transition efficiently.

In order to prepare for e-Day, businesses should discuss and agree new e-payment solutions and carry out the steps required so there is minimal disruption to regular trading eg online transfers will need to be set up to ensure payments are made in a timely manner.

Certainly the business benefits to both SEPA and e-payments are numerous, however there will be short-term pain in this preparation and transition phase.

There is considerable planning and effort required, especially for Irish SMEs, to ensure they have all the processes in place to smoothly manage the transition to SEPA and e-payments beyond e-Day.

For more information on how these will affect your business and how best to prepare and align your payment processes, get in touch with us at Colthurst Card & Payment Solutions.