Focus on SEPA. Single Euro Payments Area, a catalyst for change Challenges and opportunities for you and us. SEPA takes the euro to the next level

Transcription

1 Single Euro Payments Area, a catalyst for change Challenges and opportunities for you and us SEPA takes the euro to the next level Fortis is ready for SEPA - are you? Focus on SEPA A magazine for European cross-border entrepreneurs I December 2007

2 Contents 1 Editorial Welcome to SEPA 2 What is SEPA about? Uniform payments in 31 countries 7 Fortis, a SEPA forerunner SEPA takes the euro to the next level The European Payments Council (EPC) has established pan-european standards for credit transfers, direct debits and card payments. Along with the Payment Services Directive (PSD), which will provide a unified legal framework, SEPA will fundamentally change the European payments landscape. Simon Colboc, COO Fortis Supply Chain and Cash Management, points out the opportunities this creates for companies and explains why Fortis is well placed to ensure its clients of the support they need throughout the migration process. 11 Our specialists opinion SEPA, a catalyst for change Challenges and opportunities for you and us For Fortis, SEPA represents a significant challenge to adapt its product offering and develop a better cost structure for clients. But what will be the other implications of SEPA for your company? They will primarily depend on what type of activity you carry on and the degree to which you operate on foreign markets. 18 Technical aspects The Fortis SEPA Payment Engine: Fast, cost-effective and reliable Fortis started to build its own cross-border payment platform, the SEPA Payment Engine, at the end of This platform enables payments to be processed quickly, cost-effectively and reliably in all European countries where Fortis is active. 24 SEPA in your country SEPA country challenges at a glance 30 Checklist How can you prepare for SEPA

3 Editorial I Welcome to SEPA The European Union will be taking a step towards an integrated market in January 2008, when the Single Euro Payments Area (SEPA) will become a reality. SEPA, a European Commission initiative supported by the European Central Bank and the European Payments Council, the banking industry s self-regulated body, will lead to a unified European payments market. All economic players will be able to make and receive euro payments across Europe as easily, securely and effectively as within national boundaries today. By creating a competitive internal market for payments, SEPA clearly offers opportunities for companies operating internationally. Moreover, SEPA will remove some of the obstacles standing in the way of businesses that are considering international expansion. Luc Caulier, CEO Fortis Supply Chain and Cash Management Will SEPA shake up the financial world? It is unlikely to come to that soon but in the long run, SEPA will definitely reshape the European payments system. Although companies will be affected in different ways, depending on their structure, the scope and nature of their business and their organisational model, it is clear that SEPA can be a trigger to optimise your company s entire payments system. Making the most of SEPA will require expert knowledge and thorough preparation. Fortis will be glad to assist your company with this and discuss the opportunities that SEPA will offer. What is SEPA exactly, what changes will it bring and most of all, how can your company benefit from the changes to come? You will find many answers to these questions in this magazine, and yet more by talking to your Fortis Relationship Manager. As a leading European bank in this field, Fortis can help your company take the necessary steps towards SEPA. Our stateof-the-art technical platforms will support innovative, creative solutions for your business. Moreover, you can take advantage of our local expertise in 126 Business Centres worldwide. Although SEPA will simplify various forms of payments, local payment instruments will still be in place after the changeover. Our combination of SEPA expertise and pan-european presence makes us the perfect choice as your preferred financial partner in the new payments area. We believe SEPA will open up many possibilities for European companies, and Fortis is uniquely positioned to help you make the most of these opportunities.

4 I Focus on SEPA I December 2007 Uniform payments in 31 countries January 2008 will see the introduction of SEPA, the Single Euro Payments Area. SEPA will gradually create an integrated European market for euro payments through credit transfers, direct debits and cards. Companies, public administrations and consumers will be able to make euro payments throughout Europe with the same degree of security, convenience and efficiency as domestic payments within national boundaries today. The Payment Services Directive (PSD) provides a common legal framework for SEPA The introduction of SEPA has been preceded by years of preparation and is the result of a strategic decision taken at the European summit in Lisbon in March 2000 (the Lisbon Agenda ), aiming to make the European Union the most competitive and knowledge-driven region in the world by 2010 to meet the challenges of economic globalisation. One prerequisite is the creation of a unified payments market in response to the current fragmented European landscape, dominated by diverse local payment instruments and different transaction processing standards and systems. The integration that SEPA will achieve also requires a common legal

5 What is SEPA about? I framework, which will be provided by the Payment Services Directive (PSD). All EU member states are required to transpose the PSD into national law by 1 November SEPA can therefore be regarded as a logical step in the construction of the European Union. Phased introduction in 31 SEPA countries SEPA will be introduced on a phased basis. National instruments and systems will gradually disappear, which will result in a smooth change-over to SEPA by Thirty-one countries are currently committed to SEPA: the 27 EU member states, the three other European Economic Area countries (Norway, Iceland and Liechtenstein) and Switzerland. SEPA involves three types of payment instruments: credit transfers, direct debits and cards. As one of the SEPA objectives is to enhance straight through processing of payments, paper based instruments like cheques or bills of exchange are outside the scope of the system. However, initiatives aimed at improving cash processing harmonisation and efficiency within SEPA are also being created. IBAN and BIC format IBAN (International Bank Account Number) The IBAN is provided by the bank servicing the account. It should not contain any spaces when it is stored electronically. When printed on paper, however, it is usually expressed in groups of four characters, the last group being of variable length. It consists of: the ISO code (two letters) of the country in which the bank account is held and a two-digit check number; the domestic Basic Bank Account Number (BBAN) (up to 30 alphanumeric characters). Total IBAN length may not exceed 34 characters. BIC (Bank Identifier Code) The BIC is the unique identifier for banks within the European Union. It consists of 8 or 11 characters, which include: a bank code (four characters); a country code (two characters); a location code (two characters); if applicable, a branch code (three characters). Both codes should already be mentioned on your bank account statements.

6 I Focus on SEPA I December 2007 Steps towards the harmonisation of the European payments market Introduction of the euro as an electronic currency. Introduction of the international TARGET real-time gross settlement system for largevalue transfer clearing. EU Regulation 2560/2001 establishes the principle of equal charges for domestic and cross-border euro payments within the EU. The Regulation comes into force in July 2002 for bank card payments and withdrawals from cash machines. From 1 July, cross-border bank transfers up to EUR 12,500 within the EU must cost the same as domestic transfers, in accordance with EC Regulation 2560/ EU Lisbon Agenda. Introduction of euro banknotes and coins. In time, SEPA credit transfers will replace the wide variety of existing local schemes, both for domestic and crossborder euro payments throughout Europe. With effect from 28 January 2008, SEPA credit transfers will be made available in each SEPA country. More specifically, those banks whose payment volumes represent the critical mass of payments should be capable of both sending and receiving SEPA credit transfers from 28 January 2008, while the remaining, smaller banks are only expected to receive SEPA credit transfers from January 2008 but should be able to send them by the end of SEPA credit transfers In order to be SEPA compliant, credit transfers must include an IBAN (International Bank Account Number) and a BIC (Bank Identifier Code), two standards that were developed to facilitate payments across national borders. Since 1 January 2007, it has been mandatory to specify the IBAN and BIC within the European Union for cross-border credit transfers in euros, regardless of the amount involved. This provision will also apply to SEPA compliant domestic transfers (bearing in mind that local instruments may co-exist alongside SEPA products for some time). The full amount will be transferred and the costs will be deducted separately. In time, SEPA credit transfers will replace the wide variety of existing local schemes, both for domestic and cross-border euro payments throughout Europe. It is expected that companies will derive numerous benefits from this new

7 What is SEPA about? I On 1 January, EU Regulation 2560/2001 raises the amount for fee harmonisation of euro payments to EUR 50,000. IBAN and BIC become mandatory for cross-border euro credit transfers on 1 January. SEPA credit transfers go live on 28 January. Payment Services Directive (PSD) to be transposed into national law by 1 November in each EU member state. SEPA direct debits to be launched on a Europe-wide basis. SEPA payments (credit transfers, direct debits, card payments) are expected to replace all national payments across the eurozone EPC defines common technical requirements (rule books) for SEPA credit transfers and direct debits and for cards (SEPA cards framework). Start of market-driven replacement of local (legacy) payment instruments and processing infrastructures. SEPA Direct Debit scheme instrument, which will enable payments to be processed faster and much more transparently. Pricing and fee structures will be clearer, with payments made gross and fees charged separately rather than as deductions from the amount transferred. Payment initiation, possible corrections and reconciliation in a straight through processing mode will be enhanced by the use of uniform SEPA standards. SEPA direct debits National direct debit schemes vary greatly from country to country. Moreover, not all national banking communities regarded direct debits as a fully fledged payment instrument. However, direct debits have been steadily increasing in volume and

8 6 I Focus on SEPA I December 2007 Most SEPA countries are expected to phase out magnetic stripe cards by the end of 2010 in favour of the EMV chip standard. popularity around the globe. The change to SEPA direct debits will undoubtedly be the most critical consequence of SEPA s introduction, as it will make the process much more competitive while offering many potential benefits for corporate clients with international operations. SEPA direct debits will be based on a four-party model comprising the debtor, the creditor, the debtor s bank and the creditor s bank (see also scheme page 5). The debtor (the buyer) will issue a mandate to the creditor (the supplier), authorising the latter to instruct the debtor s bank to debit his account for the payments under a particular contract (purchase of goods or services). The mandate covers one-off or recurrent euro payments from the debtor s account. The debtor will be entitled to obtain a refund within eight weeks from the debit (due) date. One of the main differences with a number of existing local schemes in Europe is that the SEPA direct debit mandate will be concluded between the debtor and the creditor, instead of between the debtor and his bank. The creditor will be responsible for the dematerialisation, the archiving and for managing the mandates. Card payments Based on a decision by the European Payments Council, banks in the SEPA countries should stop issuing magnetic stripe cards by January Most SEPA countries are expected to phase out magnetic stripe cards by the end of 2010 in favour of the EMV (Europay/MasterCard and Visa) chip standard. Originally developed by Europay/MasterCard and Visa, EMV is now recognised as the common standard within Europe. Within SEPA, the use of EMV and the Personal Identification Number (PIN) security standard will be mandatory. In addition to achieving full interoperability, one major objective is to combat card fraud. Most point-of-sale terminals are expected to be EMV compliant by January 2008, and all should be capable of accepting EMV cards by the end of It will pay to invest in SEPA On the one hand, adapting to SEPA means that companies will have to address a number of crucial questions, including changes in their Enterprise Resource Planning (ERP) and treasury packages. This may be the right time to include other process changes too. On the other hand, corporate clients are expected to derive substantial cost savings from SEPA from their payment providers, by their suppliers adopting SEPA at an early stage, by centralising and optimising bank accounts and banking relationships as well as through liquidity management and process efficiencies. The latter may also include centralising operations in shared service centres or outsourcing accounts payable and/or receivable (see article on page 30). As a bank with an established international network and experienced in-house cash management specialists, Fortis is extremely well positioned to help your business switch to SEPA. Our experts will be pleased to explain the significant benefits of investing in SEPA. Your Fortis Relationship Manager or Fortis Cash Management specialist will provide you with all the information you require and/or answer any questions you may have concerning SEPA. As a Fortis client, you will continue to receive clear information about the services we offer.

9 Fortis, a SEPA forerunner I Simon Colboc, COO Fortis Supply Chain and Cash Management: SEPA takes the euro to the next level Companies are becoming increasingly aware of the importance of the financial supply chain. There is a growing understanding that efficiency in this area helps a company maximise its working capital. This is made possible by providing the company with more robust payment information. This is the revolutionary aspect of SEPA, says Simon Colboc, Chief Operating Officer (COO) of Fortis Supply Chain and Cash Management. SEPA takes the euro to the next level. It establishes pan-european standards for specific products, such as credit transfers, direct debits, and debit and credit cards. Together with the European Payment Service Directive (PSD), which calls for speed and transparency, it will fundamentally change the way payments are handled in Europe.

10 I Focus on SEPA I December 2007 Simon Colboc believes that SEPA will have three major benefits for Fortis clients: First, SEPA will make it easier for companies, including SMEs, to buy and sell across borders. Today, a business operating across ten European countries would usually have to deal with ten different payment systems, reducing the effects of the integrated market. Secondly, companies that make mass collections from private individuals also stand to gain efficiencies through SEPA. Telecom companies and utilities, for instance, will be able to receive payment by international direct debit. The third, and perhaps the most important benefit, is that behind each payment there is a wealth of information. When a company migrates to SEPA, it opens itself up to the opportunity of having more detailed information on its cash positions throughout Europe, making it easier to reconcile invoices to the associated payments. The result will be improved financial management and simplified administration. Comprehensive local support Fortis is pioneering SEPA payments. This is a very important decision we have taken in the interests of our clients, emphasises Simon Colboc. We have the technology in place and we are ready to make SEPA payments. As we announced at the Sibos trade fair in Boston in early October 2007, our systems have been tested and validated. International payments are already being centralised. Fortis level of preparation, combined with its European network and keen understanding of local markets, means that the bank is well placed to ensure that its clients have the support they need throughout the migration process. Local support is very important both for domestic companies and for companies

11 Fortis, a SEPA forerunner I The introduction of SEPA is the ideal time for a company to evaluate its payments strategy. Simon Colboc that have many European branches. With our network of Business Centres in 18 European countries, Fortis has the personnel and resources necessary to offer companies global and local assistance. According to Colboc Fortis SEPA strategy is entirely geared to supporting its clients and dovetails perfectly with the bank s business strategy to support mid-cap companies throughout Europe. In practice, clients with important international operations have both a global Relationship Manager for their head office and a local Relationship Manager for each country in which they operate. Liaising between the Relationship Managers ensures that the group approach and the local actions are perfectly integrated. The more homogenous the system, the lower the cost The creation of the SEPA payments platform in Europe will inevitably lead to more competition between banks. Simon Colboc expects that there will be a certain level of resistance from some banks. In some countries, payments are a very profitable banking service. Obviously, some banks in these countries will be reluctant to give up this benefit by aggressively opting for SEPA. However, the more homogenous and transparent a country s payment system is, the lower the cost. The Benelux Fortis domestic market is leading the way with SEPA payments: the Netherlands and Belgium offer the lowest payment costs, and Luxembourg is probably the furthest advanced technically. SEPA will further strengthen the homogeneity of the payment system on a European scale. Fortis is firmly committed to this approach. SEPA means opportunities Companies that choose to develop a SEPA strategy now will be best placed to make the most of the opportunities that

12 10 I Focus on SEPA I December 2007 SEPA will make it possible for ERP systems to be better integrated and to communicate better with the bank. Simon Colboc SEPA may bring. There are a number of questions that companies can ask themselves as they prepare for SEPA. For instance, do they want to export more and more efficiently to Europe? Or are they thinking about expanding their foreign client base through a direct debit payment system? Do they want to improve their knowledge of their financial supply chain, or reduce reconciliation costs? Will the introduction of SEPA facilitate the broader framework of e-invoicing? To make the most of the opportunities that SEPA opens up, companies are advised to engage their SEPA-compliant banks as early as possible. SEPA is an important, but not sufficient, element of a company s business strategy, adds Colboc. For instance, SEPA will make direct debit e-invoicing possible, but this is only one aspect of the equation. A bank must provide additional instruments for day-to-day banking, account management and payments to help integration with a company s financial systems and reduce costs. Like the banks, companies have the option of setting up a cross-functional steering committee to focus on making maximum use of the SEPA platform. SEPA is an important development that will affect a company s treasury operations. The cash manager will have much to contribute in this regard, while the optimisation of payment reconciliation will involve the accounting department and the credit manager. Colboc firmly believes that the change-over to SEPA is the ideal time for a company to evaluate its payments strategy, or for its senior management to embark on a strategic debate about European expansion. It may also be the right time for a company to streamline its financial supply chain. An alternative to outsourcing? SEPA offers opportunities that may be alternatives to outright outsourcing, Colboc believes. For instance, companies that may be thinking about outsourcing the reconciliation of client and supplier invoices for the whole group to specialists in India may find that they can achieve similar savings in wage costs and working capital by organising the process in a different way, without outsourcing. This way, they retain control while reaping the cost benefits they seek. By centralising the payment activities of the whole group in a payment factory to enable the maximum use of the SEPA platform, companies will have a better overview of their payments and achieve substantial working capital savings. SEPA will make it possible for ERP packages, that manage companies resources, to be better integrated and communicate more effectively with the bank. As a result, manufacturers of ERP systems will also need to be compliant if companies are to derive maximum benefits from SEPA. SEPA creates new opportunities for many economic players and may have a profound impact on how you run your business. In a way, we are writing history. We at Fortis have been building solid SEPA expertise and have developed a strong strategic roadmap for payments business transformation. We are well-positioned to help you evaluate your various options and are keen to give your company our full support, both globally and locally, concludes Colboc.

13 Our specialists opinion I 11 SEPA, a catalyst for change Jo Germeys, Head of Product Development, Fortis Supply Chain & Cash Management Challenges and opportunities for you and us Michael Turner, Head of Cash Management Banks & Europe, Fortis Specialised Financial Services For Fortis, SEPA represents a significant challenge to adapt our product offering and develop a better cost structure for our clients. But what impact will SEPA have on your company? Of course, this will depend on the size of your company and the principal types of transactions you currently carry out. One thing is certain, however: SEPA will be a catalyst for change and could act as an incentive for every company to optimise its accounting system and review its cash management. Bernard Levie, General Manager Fortis Commercial Banking Teresa Petim, Head of Operational Department, Fortis Portugal How do you rate the importance of SEPA? Jo Germeys: SEPA will change the basis for payments throughout Europe, in both corporate and commercial banking. It is a huge project that will bring about a revolution in the payments landscape. Michael Turner: SEPA is a catalyst for change, for example in the area of end-toend business processes. The current solutions in this field are not yet perfect, but things are moving in the right direction. This is an ideal opportunity for our clients to review their working capital practices, and perhaps also the liquidity structure of their business. Bernard Levie: SEPA will not really bring about a revolution, but drives us, as a bank, to adapt our product offering and to develop a better cost structure in the interests of our clients. Teresa Petim: SEPA will not pose any major problems for our clients in Portugal. In any event, they are very much in favour of the change. Fortis will undoubtedly provide excellent central support to enable

14 12 I Focus on SEPA I December 2007 SEPA to be implemented efficiently in Portugal, as in other countries. What are the benefits of SEPA for companies? What can they expect? Michael Turner: Firstly, we should make a distinction between multinational companies and SMEs, and between companies with a large volume of cross-border payments and those whose payments are predominantly domestic. The very large multinationals generally already have a shared service centre or at least a centralised approach. So, as they already operate on a European scale, it would appear that there is not much additional benefit to gain from SEPA. However, on closer inspection, they will actually benefit from a standardised payment format in 31 European countries. A company operating in multiple locations, with a high volume of exports to other European countries, or with branches in other European countries, will see the benefits of SEPA from the outset. Similarly, this will also be the case for a company that is internationally active, without its own operating branches abroad, but with a bank account in each country for the domestic collection of receivables from its customers. In theory, such a company will only need one bank account for the whole SEPA zone. Jo Germeys: In some cases, however, it s not necessarily for country regulation reasons that the account will be kept, but that might make more sense and be more profitable for a company, e.g. for tax reasons. There are also countries, such as France, Italy, Spain and Portugal, where companies use cheques extensively to make payments. SEPA will have a direct impact on these payments. In Europe, 70 billion payments are effected in the eurozone each year and this figure is expected to increase by a further 30 billion by As a result of the increased efficiency of European payments, shorter processing times and more rapid clearing, banks will lose a significant part of their revenue from payment transactions in many countries. The drop in revenue is estimated at anywhere between 13 and 27 billion euros and will, therefore, result in the consolidation of the payments market. Certain banks will outsource payments to companies specialising in this area. Fortis will insource rather than outsource, because we consider payments as core business.

15 Our specialists opinion I 13 The speed of the evolution will depend upon two important factors that relate directly to each company s business case. First, how rapidly can the company change certain ingrained practices and second, what is the company s competitive position in the various markets. Bernard Levie We believe that we will be able to effect many more national payments for our clients in the various countries where we are active. In any event, the payments market will become much more competitive. Our clients will see that the money appears more quickly in their accounts, which will give them more certainty and create value for them and this, in turn, will have a very significant impact on their cash position. Bernard Levie: In the short term, I expect few major changes. The speed of the evolution will depend on two important factors that relate directly to each company s business case. First, how rapidly the company can change certain ingrained practices and second, how much the company can benefit by adopting SEPA, which would depend on the number of payments they make. Most payments in Europe are domestic payments. Only 1% of the 70 billion payments in the eurozone are cross-border payments between the member states or involve countries outside the eurozone. A very large number of these payments are relatively low-value Internet payments. High-value payments are generally interbank payments and fall outside the SEPA framework. Payments are a profitable business for many banks in many countries in Europe, but not all, as in Belgium, for instance. For the banks in these countries, the incentive to make major changes and to implement SEPA rapidly will not be as great. They will probably not market SEPA very pro-actively. Much will depend on the pro-activity of other banks that do adopt SEPA quickly. Jo Germeys: SEPA will offer immediate advantages for multilocal companies that issue multiple invoices, such as telecommunication and utility companies. These companies will be able to collect large numbers of payments by direct debit on an automated basis and will be the first to switch to SEPA once the SEPA direct debit system is in place. The impact will be less for industrial companies that make relatively few payments involving fairly large amounts. SEPA is an opportunity for a bank like Fortis, as we have good systems and can offer a good service for international clients. Michael Turner: To reap major benefits from SEPA, a certain critical mass is needed. This critical mass will indeed be achieved particularly rapidly by the early adoption of SEPA by governments and by,

16 14 I Focus on SEPA I December 2007 Fortis will insource SEPA transactions rather than outsource; we believe that we will be able to execute many more transactions for our clients in the various countries in which we are active. Michael Turner for example, telecommunication and utility companies. Will direct debit be the future for business-to-business payments? Michael Turner: Yes, but the cultural differences between European countries will have to be taken into account. In any event, this change-over will take time. Direct debit will also be highly appropriate for e-invoicing. E-invoicing coupled with direct debit will speed up the payment of invoices. Jo Germeys: The development of direct debit will certainly be a good thing, particularly because business-to-business direct debits will be on a no-recourse, norefund basis. Business direct debits will certainly be the future. The banks want to automate their payments as much as possible and will have to explain to their clients what positive effects SEPA will have on their businesses working capital. SEPA will offer quantifiable economic benefits, as cash will circulate much quicker. Teresa Petim: Direct debit will be a very attractive way of paying invoices for companies. Companies very often pay their national and European suppliers by cheque. The principal reason for this is that, while the cheque is not cashed by the beneficiary, the issuer is earning interest on his account. A cheque can be used as a legal document if it cannot be cashed because of insufficient funds in the account. One of the actions proposed by the government to reduce the volume of cheques is to stop treating cheques without provision as a criminal offence. This will, of course, increase the use of direct debits, especially with the possibility of using them within SEPA. Today the creditor can take legal action on the basis of non-payment of the cheque in Portugal and France, for instance. In the UK, however, a creditor may take legal action immediately based on the underlying contract. Bernard Levie: The direct debit system is a very attractive market in Denmark, for example, where a large number of business-to-business payments are made in that way. SEPA will mean that credit transfers can include a great deal of useful information. How important is this?

17 Our specialists opinion I 15 Jo Germeys: As there will be space for 140 characters, a SEPA credit transfer will indeed contain a great deal of payment information. It will contain much more information than is currently possible in most European countries. Since SEPA payments use the XML format, there will be sufficient space to include a structured message, as already used in a number of European countries. What changes are expected in the financial supply chain? Jo Germeys: SEPA will act as a catalyst for streamlining end-to-end processes more effectively. For certain larger corporate clients, thanks to the end-to-end approach that is an essential element of the new SEPA XML standard, SEPA will significantly facilitate the automated reconciliation of payments. This is often difficult to do at the moment due to the plethora of different payment systems. Automated reconciliation is very important for companies that deal with a very high volume of payments. We have to realise, however, that the end-to-end approach is only a first step. Further automation should be triggered by other initiatives, which are beyond the scope of SEPA. ERP-system manufacturers, such as SAP, will make SEPA available very quickly to ensure that the financial supply chain can be streamlined. Companies that work with Coda software a lot will also be able to switch quickly. Coda has already launched a new SEPA-compliant version on the market. In any event, companies that are making substantial investment in software modification or replacement will need to take account of SEPA. Bernard Levie: Most developers of accounting programs are local players. Large and very large corporate clients use ERP systems, but have to comply with different standards in each country. SEPA has yet to come up with an answer on the reporting issue. Does SEPA represent a commercial and competitive advantage for companies? Michael Turner: SEPA will cut clients financial and administrative costs and improve their credit management. Fortis has drawn up a very useful checklist of points for companies to consider when switching to SEPA, as SEPA is not just about making payments in a different way. There are also, as mentioned, IT issues to consider.

18 16 I Focus on SEPA I December 2007 Jo Germeys: We want to show our clients that we are ready to help them to prepare for the change-over to SEPA. Each migration will be different and will depend on local market circumstances and pricing. Companies will have to take the decision themselves, but they can do so in consultation with their bank. Fortis will be happy to support them in their deliberations. Teresa Petim: A single account with a number of sub-accounts may also be a solution and may be preferable to a single account on its own. A single account will enable cash management to be improved and also to be carried out on a crossborder basis, as well as making it possible to streamline the financial supply chain. Moreover, it will offer advantages in terms of payment reconciliation and the optimisation of cash management. Are companies sufficiently clear about the precise size of the SEPA market? Jo Germeys: A clear distinction must be made between SEPA, which covers the euro area and is an interbank initiative under the auspices of the European Payments Council (EPC), and the European Payment Services Directive (PSD). The SEPA zone is not limited to the eurozone, but includes the 27 member states of the European Union, together with the three countries of the European Economic Area (EEA), Norway, Iceland, Liechtenstein and Switzerland. This area is not exactly the same as the area covered by the PSD, which takes in all 27 EU member states and the EEA countries, except Switzerland. The PSD applies to all the EU currencies, and not only the euro. It specifies how payments must be processed, defines what a financial institution and payments provider are, and regulates value dates. Michael Turner: The PSD in itself will never have a legal impact on payments in Switzerland, as they will not adopt this in their national legislation (although they will follow the principles set out), just as SEPA will not affect a domestic transfer in sterling in the UK, or direct debits in Danish kroner in Denmark. UK clients of Fortis making a UK domestic sterling payment will have to ensure compliance with the PSD. Denmark and the UK are part of the SEPA zone, but not the eurozone.

19 Our specialists opinion I 17 For certain larger corporate clients, thanks to the end-to-end approach that is an essential element of the new SEPA XML standard, SEPA will significantly facilitate the automated reconciliation of payments. Jo Germeys What do companies need to know to be able to benefit from SEPA? Teresa Petim: In Portugal companies need to be aware of the benefits offered by SEPA, such as the handling of one single account, which will make eurodenominated payments at lower fees easier and optimise reconciliation systems. The use of paperless electronic payments is also a value-added service offered by Fortis. Direct debit will no doubt be one of the best solutions SEPA can offer: the possibility of paying invoices within the euro area on the basis of a single pre-authorisation (mandate) and defined common rules and procedures will no doubt be most easily accepted by customers. Jo Germeys: It will be very important for companies to be up to date with developments in the SEPA zone and they will need to contact their bank regularly about these developments. Fortis will guide its clients every step of the way by pro-actively providing information and supporting the migration towards SEPA instruments. Michael Turner: For companies, the main priority is to take action now to evaluate how SEPA will change their organisation, and to identify whether new business processes will be needed and/or whether new opportunities will arise. They will need to discuss with their bank whether their company is SEPA-compliant. If not, they will have to find ways to become SEPA-compliant. The time a company will need to adapt and be ready to switch to SEPA will vary from one organisation to another, but one thing is certain: every company will be affected by SEPA in one way or another. The process is irreversible. SEPA will have a positive effect on cash position and raise awareness of the other potential benefits of SEPA. Bernard Levie: SEPA is an opportunity for companies to review their payment procedures. The greater the impact of payments on financial supply chain costs, the greater the incentive will be to use SEPA. SEPA is an excellent opportunity for international companies to reorganise their payment flows in Europe. As a result of benchmarking, companies will also have the opportunity to standardise their processes and increase payment discipline. Fortis offers a competitive advantage in this respect due to the presence of 126 Business Centres in 19 countries.

20 18 I Focus on SEPA I December 2007 The Fortis SEPA Payment Engine Fast, cost-effective and reliable Fortis started to build its own cross-border payment platform, the SEPA Payment Engine, at the end of This platform enables payments to be processed quickly, cost-effectively and reliably in all European countries where Fortis is active. From 28 January 2008, Fortis clients throughout Europe will be able to reap the benefits of this unique payment system.

21 Technical aspects I 19

22 20 I Focus on SEPA I December 2007 Fortis Payment Services operates as a shared service centre, where payments are pooled from all of the countries in which Fortis is active. It provides services to the Fortis business lines, as well as to other financial institutions. The Fortis shared service centre processes around one billion payments annually. In the last few years, Fortis has invested in payments back-office capabilities by deploying state-of-the-art payment engines for international payments and, more recently, for SEPA payments. Electronic volumes are growing steadily, leading to increased productivity and cost efficiency. Our objective is to achieve full electronic computer-to-computer processing (straight-through processing/ STP) with a minimum of reconciliation tasks, explains Jean-François Denis, Global Head of Electronic Payments. The strategic decisions were taken early enough to enable a new SEPA-compliant payment platform to be deployed in two years time. This has also resulted in Fortis being the first European bank to sign the SEPA Credit Transfer Scheme Adherence Agreement as well as one of the first banks to complete its SEPA-compliance testing programme with SWIFT. At the same time, Fortis has solved the challenge of SEPA reachability. Fortis will clear payments through the SEPA platform, but if the receiving bank does not yet speak the SEPA language, we will continue to send the payments in question through the existing clearing systems. Our clients will not even notice, emphasises Jean-François Denis. Whether or not a credit transfer is cleared via SEPA clearers is irrelevant to clients; their only concern is that the transfer takes place smoothly and rapidly. Supporting the SEPA schemes and more The SEPA payment platform supports different schemes for both credit transfers and direct debits. New schemes have been developed for credit transfers and direct debits that describe the technical and functional protocol for exchanging credit transfers and direct debits between two banks using formats and procedures. All of these procedures and formats make STP possible, points out Jean-François Denis. The formats are based on the ISO XML standard developed by SWIFT. The choice of format is not only important for interbank payments, but also for bankto-client payments. The format is mandatory in the interbank environment, but is optional for payments between a bank and its client.

23 Technical aspects I 21 Clients can count on receiving full information and technical support from Fortis. Jean-François Denis The model for SEPA direct debits is slightly more complicated because the bank has to take account of potential refunds of payments, for example. However, technical innovation is opening the way for many new value-added services, such as the separate management of direct debit mandates, one-off collections, an overview of outstanding collections, etc. The standards that will make it possible to exchange information widely are already available. The Fortis SEPA direct debit scheme will become operational in 2009 and Fortis clients will then have the option of pan- European collections from a single account. As a result of standardisation and the fact that more and more value-added services are being offered, SEPA direct debit are expected to replace local direct debit systems, which in many cases have been around for a long time. Fortis is determined to lead the way in this field. The pan-european statutory framework for direct debits between businesses and consumers requires, in parallel, a legal basis that will be provided by the European Payment Services Directive (PSD). This Directive must now be transposed into the national legislation of each member state by 1 November 2009 at the latest. However, this framework is not necessary for business-to-business direct debits. IBAN-isation The length and format of account numbers differs from country to country. Some companies are already using IBAN (International Bank Account Number), while others are still using a local format (BBAN) for their account numbers. To meet the SEPA requirements, Fortis therefore asks its clients to specify the IBAN of the counter party. At some point in time, our corporate clients will have to IBAN-ise their data files, says Jean-François Denis. Fortis will be providing migration support to its clients. Each company will choose its own particular migration plan. They will than have to decide whether or not to pay their creditors using SEPA payments, but also when to start quoting their IBAN on their invoices. If a company continues to mention the former domestic references, however, its payments will not be SEPAcompliant. According to Jean-François Denis, the public and private sector will play an important role in the change-over. The more rapid the migration, the shorter the length of time that both companies and banks will have to manage two systems simultaneously: adding a new system alongside an old one will generate extra costs that Will there be a pan-european structured message? Not every country in Europe uses the system of structured remittance information for payments yet. Belgium and Finland already do, as Jean-François Denis explains: Our clients in Belgium, for instance, will continue to be able to use structured messages. They will simply be included in the XML format so that we can provide continuity of service in a transparent way. The European Payments Council (EPC) has set up working groups to develop a pan-european form of structured remittance information and a decision on this will be made at a later stage.

24 22 I Focus on SEPA I December 2007 Fortis will ensure a smooth connection between the payment platform and the various traditional electronic banking channels. Jan Rottiers companies would want to minimise. Each country has developed its own roadmap for migration to SEPA and will choose its own way of involving companies in the migration (see the article on country specifics on page 24). Belgium is setting the pace and plans to have completed the migration by the end of Luxembourg completed the switch to SEPA credit transfers in September 2002 through the introduction of the BIC and IBAN for local payments. The Netherlands expects to complete the process by It is important for our clients to know that they can count on us for information and technical support, comments Jean- François Denis. Local access to SEPA Payment Engine It is a priority for Fortis to ensure that its new payment platform, the SEPA Payment Engine will from the start support existing electronic banking systems, including proprietary and national systems. Many European countries have a national standard for electronic banking. Wherever appropriate, Fortis uses its own channel to host its own offering: Isabel in Belgium, MultiCash in Germany, Austria, Hungary, the Czech Republic and Switserland, and Credemtel Connection in Italy. In Luxembourg, New MultiLine, the latest version of the national platform will soon become operational. In France, Fortis offers both its own platform, FortisNet Enterprise Plus and the Etebac3 and Etebac5 compliant solutions. Jan Rottiers, Director of Product Development, Fortis Supply Chain and Cash Management, explains: Fortis has its own international electronic banking channel, Fortis Connect, which is based on the advanced technology of the Belgian electronic banking channel, Isabel. Fortis was one of the founding fathers of this technology and is also a co-owner. In the Netherlands, Fortis uses its own channel, Money Manager for Windows, but in countries such as Spain, Portugal, and the UK, which do not have established domestic standards, we use Fortis Connect. In the near future, this will also be the case in Denmark, Sweden and Romania. This means that Fortis clients throughout Europe will be able to take advantage of the benefits of SEPA without having to change their e-banking system. From the

25 Technical aspects I 23 send via the electronic banking channel. Various new standards have been developed for the SEPA payment platform, based on the XML standards. Consequently, the electronic banking channels will have to be modified to make it possible to upload and download payment files in this XML format. Businesses that enter their payments directly into the electronic banking channel will be able to use new screens for SEPA payments in the existing applications. The major advantage of these changes is that they will enable our clients to standardise more processes and make it possible to maximise STP of payments, which in turn will have a positive impact on the speed of processing, costs and operational efficiency, Rottiers believes. Additional changes are planned for the information and reconciliation elements of credit transfers. Most of the local standards in the various countries have already been changed, so that the payment message and reference can be sent in full to the beneficiary, making STP possible. More STP means less reconciliation of payments received, and since the information field of each payment is 140 characters long, all payment references are guaranteed to be communicated in full. outset, Fortis Connect and Isabel will be equipped with new functions. In those countries with a local standard, new functions will be added as and when the local standard evolves. Fortis will ensure not only a smooth connection between the payment platform and the various traditional electronic banking channels, but also the connection through SwiftNet for SWIFT SCORE and MACUG users, stresses Jan Rottiers. Local support through 126 Business Centres Fortis will support its clients to change over to its European payment platform in every way possible. Individual companies will need to make a number of technical changes for credit transfers and direct debits, explains Jan Rottiers. The first changes will affect businesses that use their own accounting software to create payment files, which they then A large railway network SEPA is just the beginning, predicts Jean-François Denis, who sees it as a large railway network. As a first step, we are building tracks using the same gauge throughout Europe, so that large numbers of trains will be able to run on them. The credit transfer train is already using the network, but this will be followed shortly by the direct debit train and the pan-european structured message train. This will certainly be followed by numerous other high value service trains.

26 îì Ú±µ««º ÍÛÐß Ü»»³¾» îððé ÍÛÐß ½±«² ½»²¹» ¹ ²½» Û Ê ² Ô»½µ» ËÕ Î±»³» Ð «Ò»» ²¼ Í ½ λ«½» Ù» ³ ² Ù«Î ³»² Þ» ¹ «³ Í ²¼ ²» ͽ ½µ Ô³¾±«¹ Ü ª ¼ Û ½ ¾»» Í ² ß² ± ²» Ó± Ú ²½» Í ª Ó ½½ ª»

27 ÍÛÐß ²»³ Ô ²¼ îë Ø»»² Ò± ¼»¹»² Í»¼»² Ì ó±²» ½±«²» ³ ¹» ± ÍÛÐßô» ½ ± ² ½»ô ¼»»²¼ ²¹ ±² ± ³» ½² ½ ½» ±» ÍÛÐß ³±¼» ò Ú± ²» ² ±² ²» ± µ ±º ½ ³ ² ¹»³»²»½ ª» ¾»»² ± µ ²¹ ±²» ÍÛÐß ² ±¼«½ ±² º± ³±² ô µ ²¹ ² ± ½½±«²» ² ±² ³ ¹ ±² ² ±º» ½ ÍÛÐß ½±«² ò ̱¹»»» ±½ Ý Ó ² ¹»³»²»» ô» µ» ±±µ» «±² ² ±³» ½±«²» ²ª± ª»¼ô º±½«²¹ ±²» ½»²¹» ª» ± ¾» º ½»¼ ²¼ ±² ±» ² ±¼«½ ±² ±º» ÍÛÐß»³ ºº»½»» ½±«²» ò Ö Î ¾ Ý»½ λ «¾ ½

28 îê Ú±µ««º ÍÛÐß Ü»»³¾» îððé Þ» ¹ «³ Ø«¹» Ì ²ª» ³»² ² Þ» ¹ «³» ³ ± ¾ ²µ ª»» ¼ ¼±²» ± ± ª» ÍÛÐßó½±³ ² ¾ îè Ö ²«îððèò Ì ²¹» ¾ ¼ ºº»»² º ±«½»²» ½±²½» ²»¼ò Ó ² ½±³ ²»»»³ ± ¾» ²¹ ±»» ± ²¹ ² ±«ò ͳ ²¼ ³»¼ «³ó»¼ ¾«²»» ª» ²± ¹ ª»² ± ±» ± ²¹» ¼ª ² ¹» ±º ÍÛÐß ±» º«ò Ô ¹» ½±³ ²» ô ±²» ±» ²¼ô ¼±»»³ ± ¾» ¾«¹» ²¹» ¼ ò Ѳ» ±¾ ½» ± ¼ ¼ ±² ¾» ¾ ²µ «¹» Ì ²ª» ³»²» ¼ò Ò± ¾ ²µ» ²¹ ± ³ µ» ²ª» ³»² æ ±³» ±º» ³» ¾ ²µ» ²µ ²¹ «¾ ¹¹» ±²» ± ½»» ÍÛÐß ³»² ò Ì» ó ½±«² ²«³¾» º ±³ ÞÞßÒ ± ÞßÒ ²¼ ½±»½» Þ Ýò ͱ³» ½±³ ²»»» ÍÛÐß ±ºº»» ± ± «² ± µ» ½ ±» ±±µ» Û«±» ² Ý Ó ² ¹»³»² «½ ò ß½½± ¼ ²¹ ± Ù«Î ³»²ô»» º»½ ³» ± ± ³» ½ ½½±«² ²¼ ¼ ««¼ «½ ò Ù«Î ³»² øþ» ¹ «³ æ»» º»½ ³» ± ± ³» ½ ² ±º Û«±» ² ¾ ²µ ½½±«² ²¼ ¼ ««¼ «½ ò Ò»» ²¼ Ô±±µ ¾»º±» ± ²» Ò»» ²¼ α»³» Ð «½ ±» ³±² ± ²¹» ² ±¼«½ ±² ±º ÍÛÐß º± Ú± ò Ø» ½±³» ±» ½±²½ «±² ó º ±³» ± ² ±º ª» ±º ¾±» ¾ ²µ ²¼» ¹±ª» ²ó ³»² 󻪻 ²¹ ¹± ²¹ µ» ½ ±½µ ± µò Ñ«½»² ô ±²» ±» ²¼ô»»²¼ ²¹ ± µ» ±±µó¾»º±»ó ±«ó» ó ± ½ ò ͱ³» ³»»»ª»² ª» ±» ² ± ½± ±» ½»² ÍÛÐß ¾±«ô ± ± «²» ±ºº» ²¼ ± ± ²¹ ½±«²» ò α»³» Ð ² æ ݱ³»¼ ±» Û«±» ² ½±«²» ô» ³»²»³»»» ¼» ½» ó ó ²»» ²¼ ±» ²»»»¼» º»»» ½ ² ±² ±» ±«ò Ì»»» ½± ²ª± ª»¼ ² ½ ²¹ ± ÍÛÐßå ¹»²»» ±²¹»» ³ò Î ±² ²¹ ø±ª» ½½±«² «½ α»³» Ð «øò»» ²¼ æ Ì»»» ½± ²ª± ª»¼ ² ½ ²¹ ± ÍÛÐßå ¹»²»» µ ²¹ô» ¾»»ª ¼»² ²» ±²¹»» ³ò Ú ²½» Þ ² ¼» Ú ²½»» ²¹» ½» ² Ú ²½»» ² ±¼«½ ±² ±º ÍÛÐß ½±«¼» ±² ¾ ± ¼ «± ²» ¾ ²µ ²¹»½ ± ô» º ±³» Ú»²½ ݱ ±» Ì» ß ±½ ±²ò ß»» ²¹ ½±³³»»» ¼»¼ ±ª» ¾» ½»² ¾ ²µ» «² îððêò Ì» ² ³±²» ² º»» «²¹» ÍÛÐß»³ ª» ²± ¾»»² «½½» º«½±³ó»»¼ò ß² ± ²» Ó±» ² æ Ì» º±«²¼ ±² ¾»»² ¼æ ²±» ²»»¼ ± ¾«¼ ±² ò Ì» ³ ² ½»²¹»» ² ±ó ¼«½ ±² ±º ÍÛÐß º±»ª» ¼ ô» ½ ²¹» ¼»½ ¼»¾»³ ½²»³ ±»¼ ±² ¹» ½»ò Ì» » ² ± ±² ±º ³»² ¼»½ ª» ² ± Ú»²½»¹ ±²ò Ì» ³ ½ ±º» ² ±¼«½ ±² ±º ÍÛÐß ¾» ½» º» ² Ú ²½»æ» ²¼ ¼»³ º±»»½ ±² ½ ¾ ²µ ²¹ ¾»¼ ±²» Ú»²½ ÛÌÛÞßÝ ± ±½± ¾»» ½»¼ ¾ ²»»³ ¾»¼ ±²» Ù» ³ ²»»½ ±² ½ ¾ ²µ ²¹ ²¼ ¼ ÛÞ ÝÍò Ì µ» ¾ ±º ¹» ²¹ ¼ ±ô Ú»²½ ½±³ ²»» ª» ½»¼ ±»»»²»³ò ß² ± ²» Ó± øú ²½» æ Ì» ³ ² ½»²¹»» ² ±¼«½ ±² ±º ÍÛÐß º±»ª» ¼ ô» ½ ²¹» ¼»½ ¼»¾»³ ½²»³ ±»¼ ±² ¹» ½»ò

29 ÍÛÐß ²»³ Ô ²¼ îé Ô³¾±«¹ Þ ¹» º± ¼ Þ Ý»³»½ ² ½ ²¼ ¼ º± ½ ± ó¾± ¼» ³»² ò Í ²¼ ²» ͽ ½µ» ² æ Ô³¾±«¹ ¼±»¼ ÞßÒ ² ±² ²¼ ¼ ² Í»»³¾» îððî ²¼ ¹ ¼¼ ±«±» ²¼ ¼ ò Ô»» Ô³¾±«¹ ¾ ²µ ²¹ ± ¼ ±±µ ¾ ¹» º± ¼»²ô ² ѽ ±¾» îððêô ¼±³» ½ ó ³»² ½»¼ º ±³ Ô ÐÍóÒ» øô³¾±«¹ ²» ¾ ²µ Ð ³»² Í»³ ±² ²» ¾ ±» ÍÛÐßó½±³ ² ÍÌÛÐî º± ³ò Ì ½ ²¹»ó±ª» ±³»¼ ¾ ½± ½±² ¼» ±² ²¼» ±ª»² ½µ»½± ¼ ±º» ÍÌÛÐî º± ³ò ² ½ ½» ³ ô ³» ²» Ô³¾±«¹ ¾ ²µ ²± ²óÛ«±» ² «±³»¼ ½» ²¹ ± øðûóßýø º± ²¼ ²¹» ¼±³» ½ ² ± ½½±«² ô º± ² ²½»ô ³ ² Ý»½ ½±³ ²» ³ µ» ±»½» ª» ³»² ²»«± ò Ì» ² ±¼«½ ±² ±º ÍÛÐß ª»» ³ ½ ±²» Ý»½ λ «¾ ½ ½±«² ò Ö Î ¾ ¼¼ æ ó ½ º± ½±³ ²» ¼± ²¹ ¾«²»»»«± ±²»ò Ì»» ó ±² ²± ¾» ½»» ò Ö Î ¾ øý»½ λ «¾ ½ æ ݱ³ ²» ¼± ²¹ ¾«²» º ½ ²» ² ±² ² ½ ±² ²± ¾» ½»» ò ± µ ²¹ ±² ½»² ó±»²»¼ ± «±² ±» ½»»» ²¹ ² ±²»³ ò Ì» ¹» ±¾ ½» ±» ² ±¼«½ ±² ±º ÍÛÐß ª» ¾»»² ½»»¼ô ±»ª» ò Í ²¼ ²» ͽ ½µ ¼±» ²±»»½ ª» ³«½ ± ½ ²¹» º» îè Ö ²«îððèæ ³»³»²ó ±² ±º» ª ±«ÍÛÐß ² «³»²» ¼ ² ¼ª ²½»¼ ¹»ô ½ ³» ²» ¼»½ ³ ½ ±² ½±³ ²» ²¼ ¾ ²µ ¾» ³»¼ò Í ²¼ ²» ͽ ½µ øô³¾±«¹ æ ³»³»² ±² ±º» ª ±«ÍÛÐß ² «³»²» ¼ ² ¼ª ²½»¼ ¹»ô ½ ³» ²» ¼»½ ³ ½ ±² ½±³ ²» ²¼ ¾ ²µ ¾» ³»¼ò Ý»½ λ «¾ ½ ݱ³³» ½ ¾ ²µ ³«¾»»»¼ Ù» ³ ² Ý «±»½»¼ Ù» ³ ² ¾ ²µ ª» ¾»»² ± ¹ ² ²¹ ± µ ± º±» ½»² º± ±³» ½±² ¼» ¾» ³» ±»»»»³ º±» ¼ª»² ±º ÍÛÐßò Ì»» ¼ ô» ³ µ» ¾»¼ ±² ±²¹ ±½ ² «³»² ô º± ³ ²¼ ½» ²¹ô» ² Í ½ λ«½» ò Ûª»² º± ²» ² ±² ³»² ô ½»² ½ ²»² ± º ª±«¾» ½±²¼ ±² ¾ «²¹ Û«±» ² Í ²¼ ¼ Ì ² º» ò Ý» ô ÍÛÐß ²±» ½»»» ² «³»² ³³»¼» ò Ø» º»» ±¹ ½ º±» ½ ²¹»ó±ª» ± µ» ½» ¹ ¼«ò Ì ± ³» ² ³»³»² ±² ²» ¾«²»»½ ± ± ±ó ½»»¼» ¾» ò Ó ² ½±³ ²» » ÛÎл³ º± ³»² ô ²½ «¼ ²¹ ²» ½ ±² «½ Ì» «Ó ² ¹»³»² Í»³ øìóí ò Ѳ» ±» ²¼ô º» ½±³ ²» ª» ± º ª»² ¼ ± ³»³»² ²» ÍÛÐßó½±³ ² «½ó ò Í ½ λ«½»»»½» ¾«²»»½ ± ±» ÍÛÐß ½ «±² ² ò ²» ±²¹»» ³ô ±»ª» ô» Û«±ó» ² ³»² ³ µ» «²¼» ¹± ¼ ½ ² º± ³ ±²ò ±º» Ý»½ λ «¾ ½» «² îðïîô ½½± ¼ ²¹ ± Ö Î ¾ ò ß» «ô»» ± ± µ º± ÍÛÐß ³ ² ½±²½» ²» ½±³³» ½ ¾ ²µ ò Ø» º»»» ³± ³ ± ² µ ¾» ± ± ÍÛÐß ±» Ý»½ ³ µ» æ Ì» ½±³³» ½ ¾ ²µ ª»» ±¾ ±º «± ²¹ ÍÛÐß ³»² ² «³»² ²¼ ½ º± º ¾ ±º» ±²ò Ѳ» ²¹ ²»»¼ ± ¾» µ»² Í ½ λ«½» øù» ³ ² æ Ú» ½±³ ²» ª» ± º ª»² ¼ ± ³»³»² ²» ÍÛÐßó½±³ ² «½ ò

30 îè Ú±µ««º ÍÛÐß Ü»»³¾» îððé ˲»¼ Õ ²¹¼±³ Í»¼»² É ²¼»» ß ±«¹» ²» ³»²»³ ¾» ±» º±»«± ² ½ó ±² ô»» ¹» ¼» ±º ²»» ² ÍÛÐß ²» ËÕò Û Ê ² Ô»½µ»» ²»ª»² ±«¹» ËÕ ½²½ ½±² ² ± ¾» ±«²¼» ²¹ô ³ ² ËÕ ¾«²»»»»½ ± ¾» ºó ª» ²¼ ª ¼«²¼ ½±³ ²» ³ µ ²¹ ³»² ²»«± ò Ì» «²½ ±º» ²»»³ ½ ½ º± º ½ ²¹»ô»ª»² ²» ËÕò ݱ³ ²»»» ÍÛÐß»»» ±» ½² ¾«²» ³±¼» ± ² ± ± «² ±» «½ó ± ² ± ËÕ ³ µ ²¹ »³ ² ½±³» ª» ²» º ½» ±º ÍÛÐßò Ì»»» ± ±» ¼»ª» ± ³»² ²» ËÕ» ²± ¼»½ ²µ»¼ ± ÍÛÐß ¾» ¹» º± ËÕ ¾ ²µ ± µ» ¼ª ² ¹» ±º ± ± «²» ÍÛÐß ¾ ²¹ò Ѳ»» ³»» Ú» Ð ³»²»³ô ½ ¾»½±³» ±» ±² ² Ó îððèò Ý» ô» ² ±¼«½ ±² ±º Þ Ý ²¼ ÞßÒ» ²¼ ¼ º±»«± ² ½ ±²» ¼ ¾ ¹» º± ¼ º± ËÕ ½±³ ²» ò Û Ê ² Ô»½µ» ¼¼ æ Þ» º ± ¹±ô ½«º± ³»¼ «³ó»¼ ¾«ó ²»» ò Ú± ± ½ ª» ²» ²¹ ½»² ± ¹ ² ¾»» «²¼» ²¼ ²¹ ±º ÍÛÐß ²¼ ½±² ² ± ¼± ±ò Ø»»² Ò± ¼»¹»² ±¾» ª» ô ±«¹ Í»¼»² ²± ±º»»«± ±²»ô ¹» Í»¼ ¾ ²µ»»»»¼ º±» ¼ª»² ±º ÍÛÐßæ ²µ º» ± ͽ ²¼ ² ª ² ¾ ²µ ½ ²» ²¼ ½±³ ±²» ¾ ¹ Û«±» ² ¾ ²µ ²»»½ ò Ô±±µ ²¹» ¼ ±» ² ±¼«½ ±² ±º ÍÛÐßô» ¼¼ æ ÍÛÐß ½»¼ ² º» ¾» ª ¾» º ±³ îè Ö ²«îððèò ß ±«¹ Í»¼»² ¼ ¼»½ ¼»¾ ³»² ² «ó ³»² º±» íð» ô»ª» ¼»»½»¼ ±³»» «½ ²½»»¹ ¼ ²¹ ÍÛÐß ¼»½ ¼»¾ ò ͱô ³»»½ ²¹ ¼»³ ²¼ ± ¾»» ª» ³»¼ò Ì ²¹» µ» ± «²» Í»¼»² ± ²»»«± ±²»ò Ѳ½»»² ô» «±² ½ ² ½ ²¹» ª» «½µ ò ß» ³±³»² Í»¼ ½±³ ²»» ¼± ²¹ ó ²¼ó»» ± ½ ò Ó ½±²½ «±² ÍÛÐß ª»» ª» ³»¼ ³ ½»» ²» ±» ³ò Ø»»² Ò± ¼»¹»² øí»¼»² æ ß» ³±³»² Í»¼ ½±³ ²»» ¼± ²¹ ó ²¼ó»» ± ½ ò Ó ½±²½ «±² ÍÛÐß ª»» ª» ³»¼ ³ ½»» ²» ±» ³ò Û Ê ² Ô»½µ» øëõ æ Ú± ± ½ ª» ²» ²¹ ½»² ± ¹ ² ¾»» «²¼» ²¼ ²¹ ±º ÍÛÐß ²¼ ½±² ² ± ¼± ±ò

31 ÍÛÐß ²»³ Ô ²¼ îç Û²± ³±«²»» Í ² ¾ ²µ ²¼ ²º «½ ½±³³»¼»³» ª» ± ³ µ ²¹ ÍÛÐß ½»¼ ² º» ª ¾» ± ½»² ¾» îè Ö ²«îððè ¼» ¼ ²»ò Í ª Ó ½½ ª» æ ݱ³ ²»»»²± ³±«²»ó»»¼ ²» ±»½ ¾»½ ±º» ±¾ª ±«¼ª ² ¹» ÍÛÐß ± ±ºº» ò ر»ª» ô» ½µ²±»¼¹ ²¹» ³³»¼» ½»²»» ±»½ ²»»¼ ± ¾» ±³ ²½± ±»¼ ² ± ß¼¼ ±² Ñ ±² Í» ª ½» ò ² Í ª Ó ½½ ª» ª» ô ³±³»² ò ¼»»²¼ ±²»» ±«±±µ º ±³» ¾ ²µ ±» ½»² ± ² ±º ª» ò ß º» ¾ ²µ» ½±²½» ²»¼ô» ²ª» ³»²» ¼ «²»¼ ±«± ¾» ¹» ² ² ½»¼ò ² ½ ±² ±² ½½±«² º± íû ±º» ± ² ½ ±² ²» ¾ ²¹ ²¹ ÍÛÐß ² «³»² ² ²»» ²¹ ¼±³» ½ ±ó ¼«½ ô»»½ º ¼»½ ¼»¾» ½±²½» ²»¼ò Í ²»»³ ± ¾»» ¼ º±» ² ±¼«½ ±² ±º ÍÛÐßô ¾» ó ª» ½ ± ó¾± ¼» ² º» º»» ±«¼ ª «¼» ÍÛÐßô» ² Ü ª ¼ Û ½ ¾»»ò Ì» ²» ³»²»³»»º±»» ½» ª»¼» ô ½ ³» ²» ¾«²»»½ ±» ±²» ª» ± ± ¾» ¼»»¼ Ø» º»»» ³ ½ ±º ÍÛÐß ±²» Í ² ³ µ» ²»ª»»» ¾»»²± ³±«æ Ó±²» ² º»» ª»»»² ª»»»ô ¾«ÍÛÐß» ½»» ½ ¹» ò Ü ª ¼ Û ½ ¾»» øí ² æ Ì» Í ² ¾«²»»½ ± ±½» ²¹ ½ ¹» ò Í ª Ó ½½ ª» ݱ³ ²»»»²± ³±«²»»»¼ ²» ±»½ ¾»½ ±º» ±¾ª ±«¼ª ² ¹» ÍÛÐß ± ±ºº» ò ܱ ±«ª» ² ±² ¾± ² ±¼«½ ±² ±º ÍÛÐß ² ±«½±«² á DZ«Ú± λ ±² Ó ² ¹» ¾» ± ¼ª» ±«ò

32 30 I Fokus auf SEPA I Dezember 2007 How can you prepare for SEPA Today, most corporate treasurers and financial managers are well aware of what SEPA stands for and what it aims to achieve. Many of them have started looking at how SEPA may affect their processes and how they will be able to take advantage of SEPA. Nevertheless, the transition to SEPA requires meticulous preparation and adjustments. SEPA poses a number of challenges and Fortis is happy to help you get on board. Adopting a wait-and-see attitude carries a considerable risk We thoroughly understand what SEPA means to our clients. Throughout our European-wide banking network, we will have the capability to support both new SEPA instruments and existing local formats. To that end, we have developed state-of-the-art, centralised payments processing platforms with highly competitive straight-through processing. Working in close consultation with you and taking into account the specific nature of your business, your Fortis Relationship Manager will help you ensure a seamless transition to SEPA. Furthermore, we will keep you updated on new SEPA-related developments, so that you can take the necessary steps. How soon should you start preparing for SEPA? While some companies may take comfort in the fact that a relatively long transition period has been built into the SEPA implementation phase, the sooner you begin to assess which processes will be affected by SEPA and how your business can be improved, the sooner you can decide whether it is in your best interest to be an early adopter. No big-bang approach From January 2008, SEPA credit transfers will initially run alongside existing national instruments. Migration of critical mass is expected to be reached by end of 2010, when all purely national schemes will cease to exist. The transition period could make it tempting to adopt a wait-andsee attitude. However, this strategy carries a considerable risk. You can read more about the potential risks and their impact on your business in the article entitled SEPA takes the euro to the next level on page 7 of this magazine. First-mover advantage There are several reasons why many companies are considering changing to SEPA sooner rather than later. First of all, your customers might decide to shift their payments to the SEPA system early. If your systems are not yet SEPA-compatible, this might affect your reconciliation process. Secondly, to handle the switch to SEPA efficiently, you will need to prepare your administrative staff. Training needs should be considered at an early stage. Thirdly, you might want to analyse how SEPA will affect not only

33 Checklist I 31 Checklist Fortis is excellently placed to help you prepare for the changes associated with SEPA. We are ready for the introduction of SEPA and can assist you to get ready within your own timeframe. We will help you determine which areas of your business will be affected, the opportunities that might arise from SEPA and how best to approach the adjustment processes. To guide you through the necessary adjustments, Fortis has put together a set of checklists that steer you through the process step by step. The checklists cover the following aspects: General aspects: who will manage the project, action plan and switch date for your company, financial budget, strategic opportunities Credit management Cash management: - incoming flows (receipts) - outgoing flows (payments) Account structure IT Human resources Staff Your Fortis Relationship Manager will be happy to discuss these checklists with you so that you can work out a SEPA action plan that best suits your company s needs.

34 32 I Fokus auf SEPA I Dezember 2007 SEPA provides you with a unique opportunity to review the way you do business. your financial chain and your cash and credit management, your IT capabilities and your human resources operations, but possibly also your supply chain. SEPA is a strategic issue On a strategic level, an action plan, financial budgeting and strategic analysis of how SEPA will change the way you do business will certainly contribute to a smooth transition. The strategic plan might also include an analysis of how SEPA can give you access to new markets and provide new opportunities for your business. It would be advisable to set a target date for your company s active switch to SEPA. This plan should also cover possible changes to your financial supply chain, accounts payable and accounts receivable reconciliation and other financial processes. A key area for review involves your working capital management. SEPA s new payment cycles could impact on your liquidity and reduce your need for short-term credit. You could also start looking at opportunities for centralising the group s credit management and/or payment and collections processing. Another aspect to consider is rationalising the group s credit management by means of electronic billing (e-invoicing) linked into your payment systems. Your day-to-day transactions will also need to be monitored. You will have to assess how and when domestic instruments will migrate to SEPA instruments to reap all the benefits of a unified payments system. You might also want to examine how many bank accounts you will need under SEPA you may no longer need a variety of local banking services and whether your cash pool structure could be adjusted. To sum up, this is the right time to check all aspects of your transactions: legal, fiscal, use of local payment instruments, local customs, etc. and the practical task list is just as crucial Fortis is keen to play a supporting role in your transition to SEPA. SEPA will have a significant impact on your documentation and contracts. For one thing, your credit management processes will benefit from an inventory of documents and procedures affected by SEPA. One major change involves the use of BIC (Bank Identifier Code) and IBAN (Interna-

35 Checklist I 33 Editorial Focus on SEPA is published by Fortis Merchant Banking January 2008 will see the introduction of SEPA, the Single Euro Payments Area. SEPA will gradually create an integrated European market for euro payments through credit transfers, direct debits and cards. Companies, public administrations and consumers will be able to make euro payments throughout Europe with the same degree of security, convenience and efficiency as domestic payments within national boundaries today. In this Focus on SEPA, we focus on all you need to know about SEPA and our specialists give you an impression on how Fortis is pioneering SEPA payments. tional Bank Account Number) for all crossborder euro payments since January As such, all contracts, subscription forms, etc. containing account numbers have to be updated and your invoices will have to show your bank account number (IBAN) and identifier (BIC). The same is true for client approval forms for direct debits (to be implemented throughout the eurozone from November 2009). You should be at the stage of completing your IBAN and BIC databases for all your business partners; it is also necessary to collect your staff s IBAN and BIC data well before first salary payments are made in SEPA. Your employees should be trained to handle the new payment processes. Information technology will play a crucial role in the transition. It may be necessary to make an inventory of all software and files that rely on BIC and IBAN data. Where customised financial software is used, the provider should be contacted to implement any necessary changes. Will your software be able to support dual SEPA and non-sepa formats during the transition period? You should assess how your interface between any enterprise resources programme (ERP) and electronic banking software will be affected. A software adjustment plan and trial runs of your updated systems will be most useful to make your systems SEPA-proof. SEPA: a catalyst for change Whether you are of the opinion that your company should be an early adopter of SEPA, or that you should wait and see, one thing is certain: SEPA provides you with a unique opportunity to review the way you do business. As part of your preparations for SEPA, consider the way you manage your working capital, how you run your back-office operations and how you interact with your supply chain and business partners. Whether you can make the most of this opportunity and maximise the benefits that operating in a unified payments area can bring will depend on how much time, effort and attention you are willing to invest in SEPA. Editorial team Kris Barrezeele, Marlies Brouwer, Sarah Buyl, Simon Colboc, Leen Crollet, Jean-François Denis, Jo Germeys, Jacques Godet, Pia Gonzalez-Nazareno, Petra Heemskerk, Catherine Ossemerct, Freddy Quidousse, Serge Rogat, Sabine Rosseel, Grethe Schepers, Jos Sterk, Luk Weyens, Ellen Vandenbempt. Photo credits Dreamstime, Fortis, Getty Images, Isabelle Persyn, Photos.com, Frank Toussaint. Responsible editor Luc Zuallaert Warandeberg 3, 1000 Brussels Concept, editing and lay-out Decom nv Stationsstraat Mechelen Belgium This edition was compiled carefully by Fortis editorial team to the best of their knowledge. Although the utmost care was taken to ensure that it is accurate, Fortis does not accept any responsibility for errors or omissions. Any question about our services and products mentioned, can be put forward to your Relationship Manager or one of the Business Centres of Fortis Bank. Please visit and for more information.

36 ½ ²¹» î Ù» ²¹ ±»ò Ì» Í ²¹» Û«± Ð ³»² ß» ½»» ²» ± ± «²» ²¼ ½±«¼ ª» ¹» ³ ½ ±² ±«½ ²¼» «³ ² ¹»³»² ò Ó µ ²¹» ³± ±º»» ± ± «²»» ± ±«¹ µ²±»¼¹» ²¼ ½»º ±²ò ß» ¼ ²¹ ¾ ²µô Ú±» ½»»² ½»¼ ±» ±«½±³ ² µ»» ²»½»» ò Ñó±ºó»ó»½ ² ½ º± ³ «± ²²±ª ª» ± «±² ô ¹»»¼ ± ±«¾«²» ²»»¼ ò Ó±»±ª» ô ±«½ ² µ» ¼ª ² ¹» ±º ±»»²½» ±º ±½ ³ µ» ²¼ ³»²»³ ô ±«¹ ±«Û«±» ² ²» ± µ ±º ³±» ² ïîë Þ«²» Ý»²» ò ɱ µ ²¹ ±«¾«²» ô ±«Î» ±² Ó ² ¹»» ±² » ³» ² ±² ± ÍÛÐßò ò³» ½ ² ¾ ²µ ²¹òº± ò½±³ñíûðß