Understanding Bank Payment Types in Business Central

Every company makes payments to employees, vendors, and others. The Payment Journal is the page where Business Central (BC) processes those payments. But how those payments are made falls into a couple of different buckets. This post will discuss the different bank payment types available in BC.

Bank Payment Type Options

When processing payments through the Payment Journal, you have the option of processing those payments in one of three ways. The Bank Payment Type option allows you to choose one of those three options. The options are described below:

1. Computer Check: When using this option, you are telling BC to print checks from the system. BC provides several options for printing checks from landscape format to portrait format where the check can be printed in one of three different placements.
   • Note: You may need to modify the standard format depending on the placement of fields on your company’s check stock.
2. Manual Check: This option is used to post payments made outside the system for which you just need to post the payment. For example, use this option if you write checks outside the system and just need to post them in BC. Or, maybe you processed a wire transfer with your bank and also just need to post the payment in BC. This option is best for that application.
3. Electronic Payment/Electronic Payment-IAT: Use this option when you need BC to prepare a text file that you can upload to your bank in order to initiate payments. This is the option to use if you need to process ACH payments out of BC. The IAT option is a newer option that can be used if processing international payments. This option allows you to generate remittance advice to send to your vendor and also prepares the text file for upload to your bank.

Requirements for Electronic Payments

Since the setup for processing electronic payments is a different from the other options, let’s discuss the setup requirements for processing these payments.

• Data Exchange Definitions: The actual makeup of the text file is developed using the Data Exchange Definitions page. BC comes with a default EFT definition for the US. Most banks should be able to read this format. If not, you will need to get the file specifications from your bank and create your own format.
• Bank Export/Import Setup: This page ties the data definition noted above with a code and direction. For electronic payments, the direction should be “Export-EFT” which will auto populate the necessary processing codeunits. This is also where you assign the data definition previously created.
• Bank Account Card: On the bank account card for the bank that the payments will be generated from, there are three fields which require entries:
  • Bank Account No. for the account where the payments will be withdrawn from.
  • Transit No. (aka Routing No.) for your bank
  • Payment Export Format – This is where you assign the bank export/import setup code previously created.
    

• Company Information: The only entry on this page that is required for electronic payments is the Federal ID No. (or EIN) for your organization. If left blank, you will get an error message when attempting to process the ACH payments.
  

• Vendor Bank Account: Since you are making electronic payments to vendors, you will need the routing number and account number for your vendor. This information is stored in the Vendor Bank Account file. Navigate to the vendor list/card and click on Related / Vendor Bank Accounts. You can enter multiple vendor bank accounts if necessary. The minimum information needed to make payments is as follows:
  • Code: Each vendor bank account must have a different code.
  • Bank Account No.: This is for the vendor’s bank account number.
  • Transit No. (Routing No.): This is for the vendor’s routing number.
  • Use for Electronic Payments: Check this box “ON” to allow this bank account to be used for electronic payments.
    

Note: On the vendor card itself is a field called “Preferred Bank Account Code”. Enter the vendor’s preferred bank account code to default on the payment journal when payments are generated for this vendor.

• Payment Journal Batch Setting: The last requirement is to set certain fields on the payment journal batch where the payments will be made from. For the batch, ensure that the following fields are populated:
  • Bal. Account Type: Set to “Bank Account:
  • Bal. Account No.: Set to the bank account code for the account where the payments will be made from.
  • Allow Payment Export: Set the checkbox to “ON”. This indicates that the batch allows exporting ACH payments.
    

Summary

With this setup complete, you are now ready to process payments from the payment journal using the preferred method(s) for your organization. Separate videos and white papers will describe how to process electronics payments and also how to customize your export format. Test these options out to find the best method for your organization.

The post Understanding Bank Payment Types in Business Central appeared first on Dynamics Communities.