The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union (EU) to simplify electronic bank transfers. Within SEPA, all euro payments are treated as domestic payments.

A SEPA reference number is an alphanumeric string, up to 25 characters long. The letters RF always appear at the beginning of a SEPA reference. The two characters following RF are check digits and the remaining characters make up the actual reference.

Every electronic transaction within SEPA is assigned a SEPA reference. For customer payments, SEPA payment references are generated within the system and saved as a unique identifier for each transaction. According to SEPA standards, SEPA references are to be stored in four-character blocks. Therefore, numbers generated by the system are created and stored with blanks.

For supplier invoices received, the supplier generates the SEPA payment reference and the AR clerk enters the reference in the system. The SEPA reference is then validated by the system. For supplier transactions, the number is stored as you enter it. However, the system is able to process and validate the reference numbers whether they include blanks or not.

The Payment Reference fields on customer and supplier screens also enable you to use SEPA to allocate payments. SEPA references are also printed on financial reports such as Customer Invoice Print (27.1.1.4) and Supplier Remittance Print (28.9.9.8). In these reports, the SEPA references are always displayed with blanks. The SEPA payment reference is also used for matching in Process Incoming Bank Files and is integrated in the XML message of the outgoing supplier payment file. The SEPA reference in the XML message must be without blanks for processing purposes. Therefore, if the original reference contained blanks, these are removed for XML transmission.

When a customer or supplier bank account is set up to use the SEPA payment format, then any transaction must include a valid SEPA reference number. When SEPA messages are switched on at entity level, any deviation from SEPA format returns a warning message.