Part 1: Epicor Software on preparing for SEPA
By Robert Sinfield (pictured, right), Product Marketing Manager for Epicor Software
The Single Euro Payments Area (SEPA) is the largest payments initiative ever undertaken within Europe. European Union (EU) law effectively mandates migration to SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) in the euro area by February 1, 2014, with a six-month transition period recently announced starting on that date.
With SEPA fast approaching, is your business ready? Equally important, is your enterprise resource planning (ERP) system ready? This article explores the importance of SEPA and the changes necessary within your ERP system to achieve compliance in advance of the February 2014 deadline (EU-member states with a non-Euro currency will need to have adopted SEPA by October 31, 2016).
What is SEPA?
Electronic banking has been around for many years, however each country, and often each bank has required data to be formatted according to a proprietary standard. In a drive to reduce the cost of electronic payments and to simplify cross-border transactions the EU has created a set of standards and common payment instruments to be used with a common payment area (known as SEPA).
SEPA is expanding across Europe and many countries are requiring all supplier payments to be executed using regional SEPA standard. Within the EU, companies making and receiving payments in Euros will find an increasing need to use the SEPA standard.
As of August 2013, SEPA impacts 33 different countries including the so-called “EU-28” and Iceland, Liechtenstein, Monaco, Norway and Switzerland. Each country within the area will be able to adopt the standard or extend it with additional requirements; however, due to the way XML works this will not break interoperability. As such, it’s important to make sure your ERP system supports the standard SEPA messages for instructing a bank to make a payment on behalf of a customer.
Why is SEPA important?
Trade is built around an exchange of goods or services for either goods or services of equal value, or some form of monetary compensation. Management of the transfer of funds for goods and services in multiple countries has resulted in increased complexity for banks, financial authorities, and payment brokers, as well as increased costs for payers and payees.
The introduction of a single, overriding payment standard for the management of electronic movements of money is designed to simplify systems, increase transparency, and hopefully reduce costs for the various parties involved.
I thought SEPA was the same everywhere?
SEPA is a set of standards and guidelines for managing electronic transfers in Euros. These standards allow for some interpretation and flexibility with member countries able to extend and modify the SEPA layouts to match local fiscal governance requirements.
The adoption of SEPA in Europe has been different across the region up until now; with countries like Finland opting to adopt SEPA earlier than other countries. This combined with the flexible nature of the SEPA standards framework has resulted in different levels of control in different countries. Countries like Germany and Estonia have opted for a single SEPA standard to be used by all banks within these countries requiring all banks to accept the same SEPA file format. Countries like the Netherlands and Finland have taken a different approach allowing banks to extend the SEPA file layouts according to the individual banks requirements. Remember this is Europe after all and even though most use the same currency, there are still some differences between the different countries!
This means that you might use multiple banks in the same country and be required to prepare slightly different SEPA output files depending on the local interpretation of SEPA. It also means that you might use the same bank in multiple countries and there may be a need to prepare multiple formats of the same payment files depending on whether these are going to be sent to the Swedish branch, the Finish branch, or the German branch.
Check back tomorrow for part two, on what we need to be doing to get SEPA ready
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”