Set up methods of payment for vendors

  • 8 minutes

Many companies offer several methods to pay due invoices, such as the following:

  • Credit
  • Cash in advance
  • Bill of exchange
  • Check and electronic payments

Watch this video to learn how to create a method of payment.

Using the Methods of payment page, you can specify all the methods of payment that your company uses to pay vendors. For each method of payment, enter information that states how payments should be summarized and posted.

Methods of payment can be assigned to vendors, journals, and purchase orders in the Accounts payable module.

On the Methods of payment page, you can select whether the system should total the invoices in an automatic payment proposal.

Accounts payable > Payment setup > Methods of payment

Screenshot of the Methods of payment page, with the Period dropdown list highlighted.

The following options are available:

  • Invoice - Creates one payment transfer for each invoice.
  • Date - Combines the payment for all invoices for vendors with the same due date.
  • Week - Combines the payment for all invoices for vendors with a due date within the same week.
  • Total - Combines all invoices from vendors for the same payment.

You can also enter the number of days that are added to the cash discount date or the due date to define the broadest period of time in which a cash discount could be obtained. In other words, you can enter the number of days the vendor gives to make the payment after the specified method of discount, and still give a cash discount in the Grace period field.

Screenshot of the Methods of payment page, with the Grace period and Payment type fields highlighted.

You can select what type of payment is allowed in the Payment type field, the following options are available:

  • Other – The method of payment is none of the other choices or is not yet assigned. This is the default value.
  • Check - The method of payment is a check.
  • Electronic Payment - The method of payment is electronic, such as electronic funds transfer (EFT). When this payment type is used, the system performs bank validations that are skipped if you use other payment types.
  • Promissory note - The method of payment is a promissory note.

You must enable the Allow copies of payments field to allow users to print non-negotiable copies of payments for the selected method of payment. You might need to print copies of payments to resolve payment disputes, or to let vendors know which invoices were paid on a particular date.

Screenshot of the Methods of payment page, with the Allow copies of payments field highlighted.

You need to specify the format to export payment, for example, a check which informs Finance how to communicate with the bank. This option is called Export format.

If the format list is empty, select the Setup button and select from the available file formats

Screenshot of the Methods of payment page, with the File formats section highlighted.

If the bank supports an electronic return file, choose a format in Return format to return a message. Finally, you can enter a Remittance format for a bank.

You can enable the Generic electronic Return format option to benefit from the electronic reporting features in Finance, instead of using the return, remittance, and export formats. You can learn more about electronic reporting in Configure electronic reporting in Dynamics 365 Finance.