SEPA & EDI Invoicing

SEPA Direct Debit Business to Business Scheme

SEPA on the keyboardThe imminent arrival of SEPA based direct debits into the Irish landscape has highlighted 2 distinct business risks for B2B suppliers. At present Irish B2B customers are afforded the same rights as B2C customers. This is due to the fact that no Irish banks have currently registered for the SEPA Direct Debit Business to Business Scheme leaving the SEPA Core Scheme as business’ only option. This means that a B2B customer currently paying by direct debit can now recall an authorised payment anytime up to 8 weeks after the payment date without having to give a reason for the recall. This has the potential to cause havoc with supplier cash flows and seriously jeopardise the viability of some suppliers.

EDI & Advance Notice

Another issue for suppliers being paid by direct debit and currently invoicing customers via EDI is that there is now a legal requirement to provide advanced notification to its customers prior to debiting.  The supplier must notify the customer on the amount, the UMR (Unique Mandate Reference) and the due date of the collection. The advance notice is 14 days unless an alternative timeline has been agreed between the creditor and the debtor. The advance notice can take the form of either a schedule of payments over an agreed period of time or an individual advice for each collection. This has implications for suppliers, their customers, IT providers and EDI service providers. There is potentially quite a lot of work and coordination effort to be done for very limited business benefit.

SEPA B2B Scheme Differences

Pressure should be put on Irish banks to register for the SEPA Direct Debit Business to Business Scheme to at least remove the first risk above. Some of the differences with the B2B scheme are listed below:

  • In the B2B Scheme the debtor is not entitled to obtain a refund of an authorised transaction.
  • The B2B Scheme requires debtor banks to ensure that the collection is authorised by checking the collection against mandate information; debtor banks and debtors are required to agree on the verification to be performed for each direct debit.
  • The B2B Scheme offers a significantly shorter timeline for presenting direct debits and reduces the return period.

Ken Halpin (50 Posts)

As Celtrino’s Managing Director, Ken leads the company’s product development and technical operations from the firms’ Dublin headquarters. Over the past 20 years Ken has demonstrated market leadership in developing and taking to market commercial supply chain services and software.