European businesses risk losing billions of Euros due to the failure of tackling simple payment errors (view press release). The revelation comes from a new report released by information services company, Experian, which warns that the move to a single SEPA payment system will expose out of date account data and other errors that were previously overcome through a patchwork of locally implemented fixes. The move to single SEPA – which becomes mandatory in February 2012 for Eurozone countries - is designed to simplify and streamline processing operations for domestic and international payments.
Experian found that 12% of electronic payments made to and from businesses in Euros currently contain data errors that could critically block the timely and cost-effective transfer of funds when new legislation for SEPA payments first comes into effect. Conversely, only 65% of Euro transactions are underpinned by fully accurate destination account data.
It also found that 45% of new SEPA–compliant International Bank Account Numbers stored by large European businesses do not have the valid corresponding Bank Identifier Codes required to enable successful completion of transactions.
In addition, these errors could lead to payment failures when made through SEPA, costing businesses an estimated EUR50 for each failed transaction, leaving a total bill of more than EUR20 billion a year. An average error rate of around one in eight equates to a potential cost of EUR600, 000 for an organisation transacting with 100,000 bank accounts.
"The SEPA initiative is a key component to strengthening the financial foundations of the Eurozone with improved and more efficient end-to-end straight-through processing of payments, said Jonathan Williams, director of payment strategy at Experian. “While SEPA will undoubtedly benefit organisations trading in Euros, errors in bank account details held by European businesses risk causing significant teething problems as locally implemented fixes - which have largely worked so far - are made redundant by the new common payments system.”
Wilkes also says that European businesses must analyse their account data and fix any errors and convert this information to the correct standard as a means of a making sure suppliers, partners and staff continue to be paid on time.