Switching to ISO 20022 - What You Need to Know for a Smooth Transition


by Katarzyna Kaniecka

Read the original Swedish article at azets.se

Swedish banks are adopting new file formats, which means the traditional BGC files used for salary payments in Swedish companies will gradually become outdated. Here’s some key information to consider for a smooth switch to the new format.

The reason Swedish banks are moving to the standardized ISO 20022 format for payment files is based on a directive from the European Parliament. This directive, dated November 25, 2015, relates to payment services across Europe and sets requirements for all EU and EEA countries to adapt to the new common standard.

The goal of this change is to standardize payments both within Sweden and internationally. Many banks already offer salary payments in the new format, even as they continue to support the old BGC file. However, support for BGC will gradually be phased out. It's crucial to plan this transition well in advance. Banks like Handelsbanken and Danske Bank are among the first to stop using BGC, and others will follow, though they haven't yet announced their timelines.

Plan Wisely

Keep an eye on updates from your bank and pay attention to the information they provide. Salary payments are crucial for all Swedish companies, as employees generally expect to get paid, usually on the 25th of each month. Employers are responsible for ensuring that this process is not disrupted during the transition. The switch could affect various parties—employees, payroll system managers, payroll administrators, IT departments, and management.

Questions to Answer

  • What is the current process for creating the payment file at your company?
  • How is the payment file sent to the bank and what does the approval process look like?
  • What sub-processes could be impacted when the file format changes?
  • What software is used and will it support the new format?
  • Is it only the payroll system that will be affected, or will other software used for sending and signing bank files be impacted?
  • How are authorizations managed specifically for signing the salary payment file?
  • What documentation should be created or updated during the transition?
  • How will the new format affect cut-off times and deadlines for your bank?
  • What steps are in place to ensure the file is signed well before the salary payment date?

In addition to the major differences between the old BGC format and the new XML format, you should be aware that there are also variations depending on which bank you use. For instance, there could be differences in what data the files should contain and in the cut-off times for submitting files for payment on the 25th. There may also be variations in the employee banking details that need to be collected in the payroll system.

Got questions about all this? Feel free to reach out to us at Azets. We're experts in payroll administration, advisory, and accounting and offer advice to companies in need of assistance.

FAQ - Frequently Asked Questions

What is ISO 20022?

ISO 20022 is a file format for payment files from banks. The goal of introducing this new format is to standardize payments both nationally and internationally.
post author

About Katarzyna Kaniecka

Katarzyna works as a Business Process Improvement Manager at Azets.