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How to set up and use electronic funds transfer (EFT) to pay vendors with D365 Business Central
Paper checks – they’re cheap because they grow on trees right? The cost of paying vendors by paper check is estimated at between $3.00 and $10.00 per payment, while receiving payment by check still costly at $1.57 to $5.00. Conversely, the cost of ACH is estimated at only $.26 to $.60 per transaction. If that’s not immediately enough of a reason to switch, paying by paper check is also more prone to errors, can stress vendor relationships due to late payments, and affects clear visibility to cash flow.
Easy decision but how does it work? Good news! Making the change to ACH is simpler than ever in Business Central. Why, you ask?
Let’s walk through how…
2. Vendor Documents Layout – Navigate to select reports to send as remittance advice and who to email it to. Make certain to define the report that will be sent from unposted as well as posted payment entries.
3. Vendor Card – Select a Payment Method that indicates to you this vendor is to be paid by EFT (ACH), select the bank account setup for ACH as the Preferred Bank Account Code.
4. Journal Batch – Create a batch making certain to set the bank for balancing account information.
5. Data Exchange Definitions – Confirm US EFT CCD exists as an option in your company.
a. If US EFT CCD definition does not exist, it can be exported from another company such as Cronus demo company, then imported.
6. Bank Export/Import Setup – Confirm US EFT CCD record exists in your database and that the Data Exchange Definition Code US EFT CCD is selected.
7. Bank Account – add the information to the operating account you will use to transact ACH. Select US EFT CCD as the Payment Export Format.
After all the setup is complete, your AP department is ready to start testing. NOTE: I strongly recommend you test major procedural changes such as these, even if only setup & configuration related, in a sandbox (test) environment prior to implementing in production.
2. Once the payment journal (batch) has been created, send email remittance advices automatically from the payment journal. Go to Bank, Export. (PDF example shown.)
3. In this example, we are waiting until the end of payment processing to include all electronic payments for the day into one export file, therefore we will post the payment journal.
a. You can also select to Generate EFT file prior to posting Payment Journal Lines. In my experience this approach can cause issues if upon trying to post the payment journal you have errors that require changes after the EFT file has been generated. In testing, determine the best approach for your organization.
4. Run the Generate EFT File Action. This can be done from the payment journal (now empty), or found using Tell Me.
5. Select posted electronic payment lines to include in the ACH file. Only lines not previously sent in an EFT file are available for selection. Generate the EFT file.
6. When testing, check the export file created to the bank’s documentation. (I have found that some banks are happy to send you a sample export file, however, this is not provided as a matter of course. This makes it easier to verify your results are in the proper format and with correct values.) If changes are required, modifications can be made to the Data Exchange Definition.
7. If needed, a remittance advice can be printed or re-sent at any time from the payment Vendor Ledger Entry.
I hope this answers your questions and provides you with the confidence to begin testing the use of ACH to replace your printed checks with D365 Business Central. As always, if we can help you with this or any reporting or automation initiatives in your finance department, feel free to give us a call at 414.347.7876 or contact us at firstname.lastname@example.org.