With any business change (particularly one that has been mandated by someone else) it is often difficult, whilst in the throes of implementing that change, to really see the future benefits of it. However, if you are a business that uses ePayments and has migrated already to SEPA (as 95% already have in Ireland) you have gone through the implementation phase so now you have the opportunity to recognise the benefits SEPA will bring to your business.
So what are these benefits?
Through the introduction of a common framework for banking identifiers you will now provide a BIC (Business Identifier Code) and IBAN (International Bank Account Number) to your customers to allow them to pay you regardless of what participating country they are in with the Single Euro Payments Area. This makes it easier for you to get paid with less administrative overhead and explanation of the Irish Banking identifier system to a customer in another market that just wants your goods / service! Similarly, it also means that you don’t have to spend time attempting to understand the bank account identifier systems of banks outside your local market and filling out excessive amounts of forms to make a simple transfer.
Much of the work of the European Union over the years has been around bringing down borders. This has been done by removing cross border costs to businesses in terms of removing cross border duties within the EU and introducing a common currency amongst many others.. In respect of SEPA the savings are potentially significant. For a business, SEPA is mandating that payments are treated the same way, in terms of cost for transfers, between all participating countries in SEPA. What this really means for a business is that the cost of international transfers is reduced significantly and no additional charges are applied just because it is outside of the Irish jurisdiction. Put simply a payment from Dublin to Dusseldorf will cost the same as a payment from Dublin to Dingle.
Similarly, it is important to understand that opportunities now exist in the area of the business banking providers. There is now the opportunity for you as a business to re-evaluate the bank you use. Is the bank that you are with today the one that best suits your needs? Is there an opportunity to consolidate all your business banking activities across the SEPA zone to a single provider at a lower cost? Similarly, if the introduction of SEPA has made it more cost effective to move exclusively online in your payments and banking activities is it potentially an opportune time to identify banks from other jurisdictions that can provide the services that you require at a cost effective price?
Cashflow is the lifeblood of all businesses. With 34% of Irish businesses expecting Cashflow to be their biggest concern in 2014* and businesses increasingly looking for opportunities to expand and grow, there is a clear opportunity for businesses to embrace electronic payments as a means of speeding up cash in-flows to their businesses, improving their financial health and better positioning themselves to make sound investment decisions based on a better knowledge of their current position.
SEPA is a hugely beneficial tool for the improvement of Cashflow via electronic payments. It will not only ensure more prompt receipt of electronic payments from within the SEPA area but will also provide a more time and cost effective means of accepting payments other than traditional cash / cheques or indeed ePayments prior to SEPA.
There is a very clear recovery underway in the Irish economy, businesses are cautiously optimistic for the future and are looking to expand to both new markets and new offerings.. SEPA can act as a key enabler of this ambition.
For businesses that are already SEPA compliant, they will begin to feel these benefits almost immediately.
For businesses that are making and receiving e-payments but are not yet SEPA compliant the time to act is now! The extended deadline of March 31st will soon pass and your banks will no longer be obliged to accept ePayment instructions in the previous formats and more importantly you will be missing out on all the potential advantages outlined above.
Lastly, for businesses not yet in the ePayments space, massive benefits are possible for your business today, so it is time to act to enable your future success!
*Sage Omnibus Survey January 2014