Failure to Prepare for SEPA May Cause Severe Cashflow Problems
One in three companies is still at risk of not being ready for the upcoming SEPA deadline, according to a new PwC report.
The findings, published in a survey of 150 companies about their state of readiness for the SEPA (Single Euro Payment Area) deadline of 1 February 2014, also indicate that companies underestimate the effort required to comply, and few of them have a back-up plan should they fail to be ready in time.
Major findings of the survey ‘SEPA Readiness Thermometer August 2013 update – Prepare a Plan B’, which is an update to PwC’s January survey, reveal good and bad news.
The good news is that more companies are actively working on SEPA readiness since we surveyed them in January this year, and the understanding of the task at hand has improved significantly.
The bad news is that 34% of companies are still at risk of not being ready in time, because either they still have not planned their readiness project at all, they have planned completion in Q4 2013, or January 2014, and/or they have an incomplete understanding of the scope at hand.
Nearly half (46%) of the respondents admit to not having thought about a back-up plan. Hardly any respondents have implemented or tested a back-up plan.
“If every third company were unable to instruct its bank to settle its obligations, this would be alarming news to all,” explains Bas Rebel, senior director treasury advisory at PwC in the Netherlands. “This goes beyond reputational damage to the individual company; it may create a backlog in repairs at banks and liquidity problems for beneficiaries.”
With less than 120 working days left until 1 February, there is no time to lose, and few companies can afford delays and mistakes. “The 34% of companies at high risk of not meeting the deadline should now seriously consider a back-up plan,” says Bas.
“But they should understand that a back-up plan cannot be implemented overnight. It needs preparationand does not necessarilyprovide a shortcut for all aspects of ‘plan A’.”