SEPA – far-reaching changes in payment transactions as of February 1, 2014

Transfers and direct debits can only be executed until January 31, 2014 using the procedure that is standard today. Banks may only accept SEPA instruments as of February 1, 2014. Non-compliance threatens problems with all bank transactions, up to and including insolvency.

EU Regulation No. 260 of March 31, 2012, requires mandatory migration to the SEPA (Single Euro Payments Area) payment schemes. If it is not completed in time, no payment transactions can be executed as of February 2014. In the worst case, affected companies face the risk of insolvency – in both the technical and the economic sense. According to current surveys, many companies in Germany have not yet taken the necessary steps to ensure timely SEPA compliance of their payment processes.

Need for action in the construction and real estate sector

Our impression is that many companies in the construction and real estate industry still have a great deal of work to do. SEPA alignment was often classified as a purely interbank issue and as a mere replacement of account number and bank code by IBAN (International Bank Account Number) and BIC (Bank Identifier Code).

All businesses with large numbers of non-cash transactions, such as collecting rent and lease payments, should make sure they have all the necessary data from debtors and creditors to continue to receive and make these payments in a timely manner.

In the future, two different procedures will be available for direct debits for business transactions: the SEPA Core Direct Credit and the SEPA Business to Business Direct Debit. Both are associated with special advantages and requirements. Timely decisions and preparations are therefore necessary.

Swift action is also indicated if a creditor identification number is not yet available for your company today. This is currently the case for an estimated 60% of all companies in Germany. So it’s high time to apply for the creditor ID at the Bundesbank.

Changes to payment processes and IT systems

The generally alarming situation has prompted the Institute of Public Auditors to point out that SEPA directly affects the work of auditors. Management is ultimately responsible for ensuring that changes to payment processes and IT systems that are necessary for the continuation of the Company’s operations are implemented. Each auditor will have to assess in the course of its audit whether possible omissions are so serious that the SEPA timetable can no longer be met. Emerging problems may give rise to a reporting requirement under sec. 321 para. 2 HGB or even have an impact on the auditor’s report.