If you carry out services for companies located on the continent, it is likely that your payment processes are a little more complicated than if you only work domestically within the UK.
The differing currencies – pounds sterling in the UK, and euros in the Eurozone – create problems from day one, and you’ll need to know whether to charge a fixed rate in euros, or a variable fee depending on the exchange rate.
But either way, figures from Experian show that payments coming out of the Eurozone are often subject to data discrepancies, which could lead to them arriving in the wrong place, or going AWOL altogether.
The data comes ahead of the deadline for SEPA-compliant payment standards, as Eurozone businesses must comply with the demands of the Single Euro Payments Area by February 2014, just 12 months away.
For businesses elsewhere wishing to transfer funds in euros, the deadline is not so pressing, and is due in October 2016.
But before that time arrives, the changes within the Eurozone itself could impact on payments coming out of Euro countries, and into the UK.
According to Experian, 45% of International Bank Account Numbers, or IBANs, currently stored by SEPA-compliant businesses lack the Bank Identifier Code (BIC) that would allow transactions to be routed successfully.
This could easily compensate for the improved data completeness usually associated with IBANs, which suffer an error rate of just 4.6%, compared with a 12.7% error rate in domestic account numbers held by large Eurozone businesses.
Meanwhile, Experian says cross-border transactions are also subject to errors, with 12% of all euro transfers into and out of the Eurozone containing data errors.
An even greater 35% of all euro transactions lack full and accurate routing data about their intended destination.
Managing Your Risk
Dealing with cross-border (and even cross-currency) debts can be difficult, but from March 2013 the new Late Payments Directive takes hold across the EU – not just in the Eurozone, but also in the UK.
This sets out clear rules about when you can add interest to the amount you are owed, and how much you can add.
Even if it is unclear whether you can charge interest, there are already routes to recourse if a client in an EU member state does not pay you.
A European Payment Order allows you to reclaim funds that they admit to owing, while the European Small Claims Procedure is the equivalent process if they refute the claim.
The latter is for claims of up to €2,000, beyond which you should seek legal advice on how to proceed.