Prepare Your SAP Financials System for the Single Euro Payments Area

  • by Juergen Weiss, SEPA-Now Consulting
  • July 15, 2008
Become familiar with the regulations of the Single Euro Payments Area (SEPA) and its consequences for companies doing business in Europe. Get an overview of the SEPA functions delivered within the SAP Financials system and understand for which SAP releases they are available. Learn how you can activate and configure the SEPA functions in the SAP Financials system.
Key Concept

Single Euro Payments Area (SEPA) is one of the largest projects in the history of pan-European monetary transactions. It is another major step toward a common financial market following the introduction of the Euro in 1999. SEPA, which became effective in January 2008, affects all companies that do business with European partners and send or collect payments in Euros. SEPA not only erases the boundaries between payment service systems in the European Union, but also forces corporations to comply with new payment standards, change master data, and reconsider their business processes in financial accounting, cash, and treasury management.

Single Euro Payments Area (SEPA) is the result of actions taken by the banking industry in 2002, when the industry created the European Payments Council (EPC) to define the standards, frameworks, and rules for Euro payments. SEPA enables citizens, companies, and other stakeholders to make and receive payments in Euros within Europe, whether between or within national boundaries, under the same basic conditions, rights, and obligations, regardless of their location. The political driver behind SEPA is the European Commission along with the European Central Bank.

SEPA applies to all national and cross-border Euro payments within and between the 27 member states of the European Union (EU), the three European Economic Area countries, and Switzerland. All of these countries gradually have to harmonize their payment systems and procedures. This means establishing European standards for processing payments, reducing barriers to market entry, increasing efficiency, and lowering transfer costs. Setting such standards leads to payment format and master data changes — not only for companies in Europe, but also in the US and other countries that send or receive payments from SEPA member states.

SEPA introduces two new payment instruments provided by banks for their customers: SEPA credit transfers and SEPA direct debits. These new payment instruments are identical across SEPA and provide significant payment efficiencies for the daily business of corporations. For example, exporters no longer require expensive, difficult-to-manage, incoming payment accounts at foreign correspondence banks. Companies can set up payment factories and shared service centers for financial operations, enabling them to centralize their financial accounting, cash, and treasury management functions. SEPA affects card payments as well. Holders of EC cards and credit cards can use them within SEPA to make payments at their usual national rates.

Juergen Weiss

Juergen Weiss works in the functional area of SAP Financial Supply Chain Management. As part of SAP’s product management team, he was globally responsible for the Financial Supply Chain Management applications, including Electronic Bill Presentment and Payment, Dispute Management, Collections Management, Credit Management, Treasury and Risk Management, Bank Relationship Management, and In-House Cash as well as Accounts Payable and Receivable.

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