Cash & Liquidity Management
Published  8 MIN READ
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SEPA 2.0: Realising the Potential

SEPA 2.0 Main Image

by Bas Rebel, Emiel Kuiken and Didier Vandenhaute, PwC Corporate Treasury Solutions

The last weeks before the SEPA deadline of 1 February 2014 have proved, for many a project manager, to be hectic. Now that that the European Commission has proposed an additional transition period of six months till 1 August 2014, companies might take a step back and reassess their approach to implementing SEPA. Quite a few organisations had underestimated the effort of migrating to SEPA, and the time pressure might have forced them to go for a ‘quick and dirty’ approach. In many companies, compliance and business continuity have been given priority over seizing the SEPA opportunity. With the official deadline now behind us, it is time to realise the full potential of SEPA, often branded SEPA 2.0.

It is easy to lose sight of the benefit potential of SEPA ‘once fully embraced’. A study by PwC (‘Economic analysis of SEPA – Benefits and opportunities ready to be unlocked by stakeholders’) assesses the potential benefits per stakeholder if SEPA was fully implemented throughout Europe as of 1 February 2014. Our study concludes that the corporate sector has much to benefit from SEPA. However the benefits do not result from compliance only, but from streamlining cash management across the SEPA zone. The study shows that SEPA represents for the corporate sector a savings potential of up to euro 13.2 bn annually and may unlock up to euro 180 bn of idle cash and credit lines. Other benefits may be harder to unlock as they depend on other EU initiatives and on agreement at industry and market levels. So SEPA should not be assessed in isolation but as a catalyst and change agent.

SEPA as catalyst for benefit

SEPA enables organisations to streamline and centralise their payment processes and improve the effectiveness of their cash management structures across the Eurozone. It makes organisations independent from in-country bank accounts for their payment processes. The standardised and integrated clearing mechanism and harmonisation of payment products across Europe makes the location of payor and beneficiary accounts fully transparent. Furthermore, the file formatting now standardised on XML ISO 20022 (‘XML’) and in the SEPA Rulebook caters for tags (fields) that identify the party ordering the transaction (ultimate payor/beneficiary) and the owner of the bank account (payor/beneficiary). These tags facilitate the concept of Payments and Collections on Behalf of (POBO/COBO). Consequently SEPA allows for: