SEPA mandate: all you need to know to manage your SEPA Direct Debit transactions

To set up a direct debit, every company must hold and offer a document that is essential for identifying the company.

This document is the SEPA mandate, linked to a direct debit transaction.

In this article, we take a closer look at its characteristics and its various components.

Would you like to start using SEPA Direct Debits and expand the payment services you offer?

Without further delay, let’s start with a brief reminder of the background to SEPA mandates.

What is the SEPA mandate?

The SEPA mandate is the unique identification document that authorises a direct debit.

The SEPA mandate contains essential data that identifies the parties involved, namely:

• the Unique Mandate Reference (RUM): this is a number used to identify each mandate. As a company, if you wish to offer subscriptions or one-off direct debits, this reference will serve to identify each direct debit transaction;
  
• the SEPA Creditor Identifier (SCI): this replaces the Numéro National d’Émetteur (NNE) and serves as a reference for the creditor in a direct debit transaction. In practical terms, to obtain an SCI you take the old NNE and add a country code, a control key and the company’s business sector code;
  
• the creditor’s contact details.

Note that in France, as in other SEPA countries, there are two types of direct debit requiring different types of mandate:

• a mandate with a single direct debit authorisation if the direct debit is a one-off;
• a mandate until cancelled if the direct debit is recurring.

SEPA mandate: what are the payer’s obligations?

The payer of the direct debit transaction must provide information on the debtor, namely:

1. Information relating to the debtor’s account number using the IBAN (International Bank Account Number)

The SEPA mandate requires the use of the IBAN to uniquely identify the bank accounts of beneficiaries and debtors.

This reduces data entry errors and facilitates payment processing, particularly when a direct debit is issued or received.

The IBAN is made up of 34 alphanumeric characters that identify the country, the bank and holder’s account number.

1. Information relating to the debtor’s bank using the BIC (Bank Identifier Code)

The BIC is a unique identification code for banks.

It is used in conjunction with the IBAN to route payments efficiently to the right beneficiary.

The BIC guarantees that the payment reaches the right bank.

To make a direct debit transaction, the payer signs the mandate and sends it to the creditor (the party receiving the funds). The signed mandate must be accompanied by the information needed to perform the direct debit: the IBAN and BIC.

Why is the SEPA mandate important for your company?

Now that we have explored the features of the SEPA mandate, let’s look at why it is essential for your company.

1. Efficient payment

The SEPA mandate standardises euro payments by simplifying the process.

Payments are processed quickly, usually within one working day, optimising the company’s cash flow management.

Faster payment also means reduced borrowing costs.

2. Reduced costs

SEPA payments are often less expensive than traditional international payments, as they avoid exchange fees.

This can result in significant savings for your company, particularly if you frequently carry out cross-border transactions.

Currency conversion costs and processing fees are considerably reduced.

3. Standardisation

The SEPA mandate uses shared payment standards, reducing the risk of error and simplifying payment management for your company.

You can expect greater accuracy when processing payments, thus reducing the risk of disputes or incorrect payments.

4. Ease of use

Companies can make SEPA payments from any member country of the SEPA area, making cross-border transactions easier.

This opens up commercial opportunities throughout the SEPA area, strengthening your company’s international presence.

5. Direct debits

The SEPA mandate allows direct debits to be used for recurring payments such as subscriptions and recurring bills.

This simplifies payment collection for your company and guarantees stable cash flow.

Payment by direct debit can also be authorised by customers, simplifying the payment process for them too.

How do you set up the SEPA mandate?

To use the SEPA mandate effectively, your company needs to follow a few essential steps:

To make SEPA Direct Debits, you must obtain a signed mandate from your customer authorising the payments.

You must retain this mandate to ensure regulatory compliance.

Make sure you collect your customers’ full bank details, in particular their IBAN and BIC.

This ensures that payments are correctly routed.

1. Use SEPA payment management software

With a tool like that offered by SlimPay, you can automate the process of collecting and processing SEPA payments.

This type of software makes it easier to manage recurring payments and ensures compliance.

Make sure your company complies with the SEPA regulations in force in your country.

This may include specific requirements regarding the retention of mandates and reporting.

Conclusion

The SEPA mandate is an essential initiative to simplify euro payments within the SEPA area.

Understanding its features and use can have a significant impact on the efficiency of your company’s financial management. Standardisation, reduced costs and ease of use make it an invaluable tool for optimising financial transactions within the SEPA area and boosting your competitiveness on the European market.

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