Our treasury consulting team recently invited six vendors: Cegid, Diapason, FIS, Kyriba, Neofi, and Sage to a workshop focused on the migration to ISO 20022. At this event, they sat down with our experts, Iris Rousselière and Jéromine Adler and discussed their thoughts on this transition as well as how companies can benefit from it.

– Why should companies that want to improve their treasury processes pay close attention to ISO 20022?

Iris Rousselière, Treasury Consultant, Redbridge: System management and meeting reporting requirements are part of a treasurer’s day-to-day work. The migration to the new ISO 20022 standard for payments will have an impact on both of these duties, which is why it’s important for companies to plan around this topic in advance.

Mastering the ISO 20022 standard will result in more accurate reporting, and I believe that adopting it sends a strong message to a company’s shareholders, suppliers, and customers about how efficiently they manage their business and how serious they are when it comes to reporting requirements.

Jéromine Adler, Treasury Consultant, Redbridge: Treasury reporting is a managerial necessity. Any initiative that results in improved reporting enables treasurers, management teams, and the whole company to better navigate the uncertain environment we currently find ourselves in.

From a treasurer’s perspective, adopting the new ISO 20022 standard represents an opportunity to stand out and increase their visibility within the company. It’s an opportunity to take the lead and show that the treasury department is playing an active role in the company’s digital transformation.

– Who is affected by ISO 20022 and when will the migration start?

Guy Moons, FIS: The migration to ISO 20022 primarily applies to banks. It’s referred to as a migration project, but in reality, it’s more about consolidation, convergence, simplification, and centralization. The migration has already begun rolling out worldwide and should be completed by November 2025.

Guillaume Metman, Kyriba: The ISO 20022 migration will start off with banks and interbank systems. There is no clear timetable for when corporates will see the benefits of this new standard. However, once banks have upgraded their systems and more of them start to process payment orders natively in the new formats, it will be possible to receive more information from when payments are first initiated all the way to the final account statements.

Traditional payment message formats are in the process of being phased out. As a result, the range of services that banks will be able to provide will change.

– What changes will corporates see in concrete terms?

Guy Moons, FIS: The first change is that each payment will be able to carry much more information. ISO 20022 payment messages will include references that can be retained throughout the entire process and will facilitate the reconciliation of incoming payments with outgoing invoices. The data they contain will be more structured and the way payments are processed within banks will improve.

Straight-through processing rates should improve as long as everyone involved in the payment process plays their part. This will make the overall payment system more efficient and enable more solutions to be offered.

Guillaume Metman, Kyriba: Perhaps the most concrete element for companies is the new requirement on addresses. Regulations require that we send increasingly precise addresses in our payment systems. Old formats are not able to carry this information, which means they’re doomed in the medium term.

– What should treasury departments do to take advantage of ISO 20022?

Patrick Bert, Neofi: The first thing they should do is ask their banks if they already offer new formats that will replace MT101 and MT940 messages currently used for issuing payments and retrieving statements. They need to ask if they can retrieve statements in CAMT 053 format and for payment orders, when their banks intend to switch to PAIN 001 full XML.

Abdenasser Chahi, Sage: Once the elements relating to message formats have been discussed with banks, companies will need to ensure that all of their internal applications are able to use the new format. They will probably need to convert from a fixed format to an XML format and vice versa so that the work done within the treasury management system can be applied to their accounting outputs.

Patrick Bert, Neofi: It’s a two-stage project. The first stage is a discussion with the banks about the new format’s availability. The second stage consists of setting software to make sure the new formats are correctly integrated or converted if necessary.

– Will ISO 20022 benefit other departments outside of treasury?

Eric Gayno, Cegid: While it is currently still possible to reconcile a cash transfer with limited information, the added value of ISO 20022 will be more apparent with accounting reconciliation chains and returns in the ERP. There, it will be possible to carry out automatic lettering more systematically, as this is already the case in Belgium!

With the migration to ISO 20022, it’s also important to look towards electronic invoicing, as this is the next major regulation companies are set to face in Europe. This regulation will result in a better link between invoices and payments.

Companies will finally be able to optimize their reconciliation chain and if they wish, improve the accuracy of their cash flow forecasts, perhaps by adopting invoice-by-invoice forecasts rather than working on the level of payments. This is one of the gains we expect from these new technologies.

Alexandre Sortais, MCC / Diapason: Let’s remember that the ISO migration only concerns payment formats. Financial transactions and confirmations of financial transactions still use MT messages that are transmitted by the FIN messaging system. All confirmations of market transactions, such as MT300 and MT500, will not be included in the migration.

In 2022-2023, companies will likely do what they did back in 2012 when many switched to SEPA. They will take advantage of this new transition to rationalize their payment chain and switch to full XML. This should not be a particular problem, perhaps with the exception of the issues with addresses. However, there will be changes that need to be made to the repository so that this information is correctly conveyed to the bank.

Eric Gayno, Cegid: Although this is a regulatory project for banks, companies should see it as an opportunity to rationalize their systems and improve productivity. The challenge is to simplify banking formats and switch everything into XML. This will end the need for local formats and result in only one format being used within the organization.

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