Issue and settle vendor payments overview
Applies to: Dynamics 365 Finance, Dynamics 365 Project Operations, Dynamics 365 Supply Chain Management
This article describes how you can use Dynamics 365 products to support the organization's requirements to issue and settle vendor payments.
Introduction to issue and settle vendor payments
The issue and settle vendor payments business process area focuses on paying vendors according to the agreed-upon payment terms, ensuring that payments are made accurately and on time, and settle them against invoices manually or using an automated process.
Issue and settle vendor payments is an essential step in the procure to pay end-to-end business process flow and structured and defined approach to issuing and settling vendor payments is critical to prevent financial risks and payment delays and ensure financial stability within your organization.
The issue and settle vendor payments business process area should be defined and incorporated into the overall implementation during the plannings phase. This phase typically occurs at the beginning of a project's lifecycle and involves establishing project goals, defining project scope, and developing a detailed project plan.
Stakeholders
Many people across the organization should contribute to the decision-making process and design of the issue and settle vendor payments area. The following list provides examples of such stakeholders:
Accounts payable clerks – responsible for processing accounts and incoming payments in compliance with financial policies and procedures, verify, classify, and record accounts payable data, prepare bills, invoices, and bank deposits. The accounts payable clerk may also be responsible for reconciling the accounts payable ledger to ensure that all bills and payments are accounted for and properly posted. They may also verify and investigate discrepancies, if any, by reconciling vendor accounts and monthly vendor statements.
Finance department – responsible for financial supervision, financial reporting, and analysis.
Executive leadership – responsible for payment oversight, approvals, and alignment with strategic organization's goals, which helps in secure the necessary resources and funding.
Issue and settle vendor payments process flow
The following diagram illustrates the issue and settle vendor payments business process area. Each solid gray rectangle on the diagram represents an end-to-end business process. The solid blue rectangle represents the business process area. The diagram shows the subprocesses for the business process area. The arrows on the diagram show the flow of the business process in an organization. If a subprocess can lead to more than one other subprocess, the parallel subprocesses are shown as branches.
The issue and settle vendor payments process area flow diagram cover the following steps:
Start
Procure to pay end-to-end process
Parallel branches to this end-to-end process are the Design to retire end-to-end process, Inventory to Deliver end-to-end process, and Concept to market end-to-end process.
Define policies and procedures for procurement
Manage vendor relationship
Procure materials and services
Process inbound goods
Process vendor invoices
Issue and settle vendor payments
Condition Does cash discount apply?
A parallel branch for Yes leads to the subprocess Configure and apply cash discounts
A parallel branch for No leads to the condition Is pre-payment?
Configure and apply cash discounts
Condition Is pre-payment?
- A parallel branch for Yes leads to the subprocess Generate and post prepayments
Downstream to this subprocess is a subprocess Record financial transactions that connects to the end-to-end business process Record to Report
A parallel branch for No leads to the subprocess Generate and post payments
Downstream to this subprocess is a subprocess Record financial transactions that connects to an end-to-end business process Record to Report
Generate and post prepayments
Generate and post payments
Condition Does promissory notes apply?
- A parallel branch for Yes leads to the subprocess Generate and process promissory notes
- A parallel branch for No leads to the condition Settle vendor transactions
Generate and process promissory notes
Settle vendor transactions
Condition Has payment been canceled?
A parallel branch for Yes leads to the subprocess Cancel a vendor payment
A parallel branch for Yes leads to End
Cancel a vendor payment
Design to retire end-to-end process
Introduce new products and services
This process connects to the subprocess Procure materials and services
Inventory to deliver end-to-end process
Process inbound goods
Process vendor invoices
Downstream of this subprocess is a subprocess Issue and settle vendor payments
Concept to market end-to-end process
Introduce new services
This subprocess connects to a subprocess Procure materials and services
End
Issue and settle vendor payments benefits
There are many key benefits that can be used to monitor and measure the success of implementing technology to support the issuing and settling of vendor payments. The following sections outline the key benefits that an organization might monitor and measure for this process.
Automated vendor payment proposal
In Dynamics 365 Finance, you can use vendor payment proposals to settle invoices manually or with an automated process. Organizations that pay vendors on a recurring schedule can automate the process of generating vendor payment proposals with certain criteria and scheduled time.
Learn more at Automate vendor payment proposals.
Various payment formats
Dynamics 365 supports various payment formats, including checks, electronic payments such as ACH, NACHA, Wires, and BAC, credit cards, and more. The process also covers communication with financial institutions and the generation of files or documents to be sent to the vendor either through mail or electronically.
Learn more in the following articles int he documentation for Dynamics 365 Finance:
- Electronic reporting sample vendor checks
- Create and export vendor payments using ISO20022 payment format
- File formats for methods of payment.
Centralized payments
Organizations that include multiple companies can create and manage payments by using a single company that handles all payments. It brings better visibility into the payment process as payment clerks can view invoices across companies. In addition, a dedicated payment workspace provides better visibility for overdue invoices and gives an easy way to keep track of invoices and payments across organization.
Learn more at Centralized payments for Accounts payable.
Efficient settlement process
Dynamics 365 allows you to settle transactions between different document types, such as invoices, payments, credit memos, and fees. The settlement process can also generate new transactions, which can help streamline the payment process.
Learn more at Settlement overview.
Next steps
If you want to implement Dynamics 365 solutions to assist with your Manage travel and expenses business processes, use the following resources and steps to learn more. (Links are added, when articles are ready.)
Manage vendor relationships
Develop sourcing strategies
Define procurement catalogs
Define policies and procedures for procurement
Plan supply
Procure materials and services
Process vendor invoices
Issue and settle vendor payments (the article that you're currently reading)
Manage vendor debits and chargebacks
Create and process promissory notes
Process vendor rebates and incentives
Analyze vendor performance
Related resources
You can use the following resources to learn more about the issue and settle vendor payments process in Dynamics 365.
Contributors
This article is maintained by Microsoft. It was originally written by the following contributors.
Principal author:
- Milda Beinaryte (https://www.linkedin.com/in/beimilda/) | FastTrack Solution Architect
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