IBAN bank account numbers in Belgium

Europe is a magnificent continent, with languages and cultures diverse and colorful, rich history and beautiful women. I hope we can all agree on that. Business-wise, there’s one major issue:

We just can’t seem to do things in a uniform, organized manner.

Through ages, for many different aspects, systems have been shaped and formed, re-evaluated, reshaped and reformed. Each country decided how things worked best for them, each nation defining their own ways of handling things, which is all fine and dandy… Until you start doing business across your border. Pure horror. “But THEY do things differently, why can’t they adapt to US?!”

However, to rid ourselves of that mindset, European big shots pooled their resources and came up with several ideas, to gradually create a uniform, European standard. SEPA, among many other things, was created out of the thick veil of Intra communitarian transaction – intra communitarian being: transaction within the EU.

SEPA stands for “Single Euro Payments Area” – simply put: creating a single, simple format for bank transactions within the EU region. Important nuance: the acronym says EURO for E, and NOT European. After all, not all European nations have the Euro as their currency (ie.: United Kingdom, Switzerland,…).

Banks and SEPA

Every country has a different bank account number format, so in order to have simple European transactions, we need a uniform format. Intro: IBAN (=International Bank Account Number). To keep things from tl;dr: IBAN provides a syntax for bank accounts numbers and comes with the SWIFT  (=Society for Worldwide Interbank Financial Telecommunication) bank identifier, also coined as “BIC” (=Bank identifier code). I think I’m about done with explaining abbreviations now, don’t worry.

As of now, bank already accept SEPA transactions and have already commissioned their systems into using these SEPA formats, so in the long run, we rid ourselves of our old, national formats and use the European standard. However, the impact of such an implementation, especially when it comes to financial institutions, is simply gigantic. Therefore, there’s a transition period of several years in place, where banks are allowing the use of the old format, slowly progressing into the new SEPA oriented formats.

Our Belgian banks, especially, haven’t been sitting on their asses and have jumped the proverbial bandwagon from the get-go.

Customers and SEPA

I can’t say I’ve heard many customers about SEPA and IBAN, but there’s a kicker: SEPA allows you, as a vendor, to be much more protected when it comes to direct debits. I’m afraid I’m no expert on this, but case in point: it will be a lot harder for a customer to reclaim his payment and the timeframes are a lot shorter. This piques an interest here and there.

What concerns most, however, is that some accounting software and ERP’s do not offer satisfactory functionality to switch between old formats and IBAN/BIC.

“Where do I find the IBAN number?”

“How do I calculate the IBAN number?”

“Can the old formats be inputted and will the software automatically convert it to an IBAN numbers?”

“Can I convert my entire customer, vendor and bank account tables, to the IBAN format?”

Google offers plenty of tools to convert a single account number, or a batch of account numbers. I’ll address these in a later topic.

A general rule of thumb:
Update the system as soon as possible. Transfer your customer to the IBAN format as soon as possible. Provide them with a list of benefits of the IBAN formats. Point out that they need to be ahead of the game. There are generally no downsides, except for the transition, which might take some effort.

Apparently, Belgium is doing pretty well, in handling SEPA, as opposed to a larger player on the field, like France, which still actively use hand-written, old-fashion “cheques”, which are currently subjected to pretty hefty handling fees.