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I am deputy editor at The Banker, a Financial Times publication. I joined the magazine in August 2015 as transaction banking and technology editor, which remain the beats I cover. Previously I was features editor at Profit & Loss, an FX and derivatives publication and events company. Before that I was editorial director of Treasury Today following a period as editor of gtnews.com. I also worked on Banking Technology, Computer Weekly, and IBM Computer Today. I have a BSc from the University of Victoria, Canada.

Friday, 15 November 2013

Do you have a plan B for SEPA?

August 2013

The golden rule in any project design is to always have a Plan B. It’s becoming clear, however, that there is no fall-back plan for the Single Euro Payments Area (SEPA), despite all indications that many corporates will not be ready in time.

One in three companies is still at risk of not being ready for the upcoming Single Euro Payments Area (SEPA) deadline of 1st February 2014, according to a PwC report, ‘SEPA Readiness Thermometer August 2013 update – Prepare a Plan B’. A survey of 150 companies about their state of readiness indicate that companies have underestimated the effort required to comply, and few of them have a back-up plan should they fail to be ready in time.

According to PwC, 26% of respondents admit they have no readiness activities planned. This percentage has not decreased since its January survey.

“If every third company were unable to instruct its bank to settle its obligations, this would be alarming news to all,” explains Bas Rebel, Senior Director Treasury advisory at PwC in the Netherlands. “This goes beyond reputational damage to the individual company; it may create a backlog in repairs at banks and liquidity problems for beneficiaries.”

Interestingly, despite the European Payments Council’s (EPC) edict that “there is only plan A, so act now”, effectively dismissing the possibility of postponing the deadline, a mere 20% of respondents believe that the regulators will strongly enforce the deadline and disallow legacy formats to be processed by the banks. A few respondents (6.5%) still expect and actual postponement of the official deadline.

But corporates shouldn’t rely on this possibility becoming a reality.


Prepare your back-up plan

SEPA projects take on average six to 12 months. With less than 110 working days left until 1st February, the pressure is on for corporates to reach compliance in time for the deadline.
In the eventuality that they are not ready, less than half (46%) of the respondents admit to not having thought about a back-up plan, with 16% relying on assistance from their bank. Hardly any respondents have implemented or tested a back-up plan.

“The 34% of companies at high risk of not meeting the deadline should now seriously consider a back-up plan,” says Rebel. “But they should understand that a back-up plan cannot be implemented overnight. It needs preparation and does not necessarily provide a shortcut for all aspects of ‘plan A’.”

In the report, PwC makes a number of recommendations for those corporates preparing their plan B. The back-up plan should provide a clear scenario that can be followed should they be unable to make payments after the go-live date, such as:
  • Temporarily switch back to the legacy payment schemes.
  • Prepare for using a conversion service to produce SEPA-compliant payment batches.
  • Prepare a communication plan to inform your stakeholders about delays.
  • Have a credit facility on standby to cover short-term liquidity dips, in case your clients are unable to make payments.
  • Prepare alternative payment products, such as bill payments, online money transfer schemes or other payer initiated payment schemes, in order to be able to get paid.
To read the full report, please click here.

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