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Positive Impact on the Business Model The use of direct debits is a fundamental part of UTA's business model, and a uniform B2B direct debit scheme across the entire SEPA area will open up brand new opportunities for the company.

Positive Impact on the Business Model

by Thomas Wolpert, Senior Credit Manager, UNION TANK Eckstein GmbH & Co. KG (UTA), and Jürgen Krieger, Sales Specialist Cash Management, Commerzbank AG

UNION TANK Eckstein GmbH & Co. KG (UTA) has operated as an all-round service provider for commercial goods and passenger transport for 50 years. UTA not only allows drivers to refuel at more than 32,000 independent diesel stations in 38 European countries and settle tolls in 20 European counties, but it also enables them to take advantage of breakdown, towing and repair services – and all of this is done without cash, using the UTA Service Card system. The use of direct debits is a fundamental part of UTA’s business model, which is why the company has been keeping a very close eye on the Single Euro Payments Area, particularly with regard to the SEPA B2B Direct Debit, right from the start.

The process that UTA used in the past was extremely complex and time-consuming, as direct debit collections abroad always had to be handled via the respective national schemes and their independent formats and processes – not to mention the fact that a separate bank account was required in each country. In view of that, the uniform B2B direct debit scheme across the entire SEPA area opens up brand new opportunities for UTA.

The SEPA rules provide for two different forms of direct debit: the SEPA Core Direct Debit, whose basic characteristics are similar to those of the German direct debit authorisation scheme, and the SEPA B2B Direct Debit, which is used solely for the collection of payments due from companies. The treasurers responsible for this area at UTA started off by finding out about the general requirements for utilising the new direct debit process, paying particular attention to the mandate and client communication process. All of the experience and results were documented in detail and saved in what is termed a SEPA process structure. SEPA Direct Debits must also be submitted to the bank with a given lead time and all submissions made through electronic channels. Finally, there must also be a signed mandate on hand from the payer. There are no formal requirements for this mandate, but its content has been expressly defined. It can be revoked by the payer at any time and automatically expires 36 months after it is last used.

Implementing SEPA

Once it had compiled this information, UTA began its SEPA implementation project at the start of 2010, and its most important partner in introducing the new direct debits was Commerzbank. Together, the company and the bank performed an analysis to determine the scope and effects of the SEPA changeover. Commerzbank processed the first test transactions back in December 2010, and these were followed by numerous test runs for the clients with the most transactions in 2011 and 2012.

This provided UTA with the practical experience it needed to optimise processes within the company, and its own specialists converted the IT systems. The mandate reference number offers a good example of the type of unexpected problems that can occur. UTA had developed a system that utilised a full stop (.) It became clear, however, that many banks forgot to register this full stop, resulting in numerous problems with SEPA direct debit collections. As a result, there was no choice but to develop a new classification system – without a full stop. It is a rather mundane example, but it shows just how important it is to allow extra time when implementing conversion processes.

Over the course of the preparations it became clear that clients with a high volume of transactions were usually already well informed about SEPA, whereas smaller companies had little or no knowledge of the relevant rules and regulations. These companies usually lack the time and manpower to devote greater attention to SEPA, which is why UTA focused on making the conversion as simple as possible for its clients. Each was given a SEPA package containing three pre-completed SEPA mandate forms and an information sheet. Integrating clients into the conversion process in this way has paid off, as UTA is already working with a uniform SEPA process in twelve countries. The mass conversion process is now in full swing at UTA.

By the start of 2014 it will be possible to run the new SEPA direct debit process alongside the old national direct debit processes at UTA. The advantages of the SEPA B2B Direct Debit process for UTA are already apparent: employees no longer need to deal with different national procedures for direct debts, and it is no longer necessary to maintain a local bank account in every single country. This reduces costs, saves time and generates greater transparency, as for instance with the now-uniform direct debit return process.

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