How to setup EFT, generate ACH file and generate Positive Pay in Business Central

In today’s fast-paced business world, efficiency and security are key when it comes to managing finances. Electronic Funds Transfer (EFT) has emerged as one of the most effective methods for transferring funds, offering the benefits of speed and a paperless process. 

To enhance security, features like Positive Pay further safeguard your payments, providing banks with the necessary information to prevent fraud. In this blog, we’ll explore how you can leverage these powerful tools within Business Central to streamline your financial operations and protect your transactions.

You can setup EFT (electronic funds transfer) in Business Central. There are 3 main places where information must be setup properly for this functionality to work.

1. Company Information
2. Bank Account
3. Vendor Bank Account

We will be using Business Central (US Localization) with sample data of Cronus entity. If you find any of the information missing in your database, feel free to use the sample data provided in this blog. You will, of course, eventually be using your actual data to use this functionality in your production environment.

Let us begin with ‘Company Information’

Search ‘Company Information’ in the global search bar,

Click the correct link and open the Company Information card,

Fill out the information highlighted above as per your bank information.

In your Bank Account card, following are the important fields that must have valid information,

Now, let's open the vendor card to fill in the details required on the vendor to make payment to the vendor with this functionality.

To reach to the vendor list, we search 'Vendor' in the global search bar and click the right option as shown below.

Open the vendor which you want to pay using this functionality.

Let's use the vendor '20000' from Cronus database as shown above. Click on the number to open the vendor card. Once you open the vendor card, click on the 'Bank Account' from the vendor card as shown below,

When you click on the 'Bank Accounts' option from the ribbon. You will be able to add/edit/view Bank Accounts of this vendor.

Let's say we want to view TD Bank from existing list of Bank Accounts that this vendor has provided.

In the Bank Account card, the highlighted fields are important to have been filled with valid information. The country must be US, and the transit no. must be valid. You can use the number given in below example if you would like to test this first in Sandbox.

Another important information to update on the vendor card is 'Payment Method'. Coming back to the vendor card, below is the snapshot of the vendor card with Payment Method Code highlighted. For example, we give it a code 'USEFT'.

Following are the details required to fill in the payment method. It should have the bank selected which will be used in this process.

Generate ETF File

So far what we saw was only the masters and setups configuration. Now we see an example of how this functionality can be used.

Let's use an example: John is an Accounts Payable Executive who creates and post payments of the vendors. The first thing he does is create a list of vendors that need to be paid and create journal entry. Then, he will need to issue checks, well, in this case an export of the file.

Go to 'Payment Journals' by searching on the global search bar and click the appropriate link until you get to the below screen,

Select the batch in which you would like to create the entry. We select the vendor, and balancing will be the Bank Account.

Now, go to 'Bank' and then click on 'Export'

You can select the options as follows. If you want to directly print, then you can choose that as an option.

Let's say we want the file in PDF and we click 'Ok'

You will find the exported file downloaded in PDF as shown above.

The format should look like this unless the database you are testing on has a customized report,

Now, let's say we want to protect our check from any possible fraud before releasing it to the vendor.

We can inform the bank with Positive Pay.

Again, using a practical example, John has just created an export of the payment entry, but he is afraid of issuing the check to the vendor. The vendor (or someone else) might edit something in the check and receive more money than issued. The vendor might disappear, and it could go into another level of efforts and trouble. The good thing is that John can use Positive Pay from within Business Central and never worry about such fraud.

Go to 'Bank Accounts' and open the bank card of the bank using which you generate payment export files.

When you click on 'Positive pay Export' option, the page will open that will show all the exported entries for which you can export positive pay. You can then click on 'Export' when you are ready.

This will export the 'Positive Pay' file which you can submit to your bank so that bank can ensure when the check is deposited at the other end it matches with the details you provided here.

In above screenshot you can see the txt file that is downloaded.

Now, it is safe to Generate EFT file and ask the bank to make the payment to the vendor.

We go back to 'Payment Journal' and generate EFT file.

Clicking on the option shown above will open one more page that looks like this,

Click on 'Generate EFT Files' option as shown above.

This file can be sent to the bank for processing the payment.

This completes the end-to-end process of payment through EFT file.

What does Business Central really include?

If you have signed up for the free version of Busiess Central to try it out and you login for the first time, you will see a dashboard full of options, shortcuts, tiles and some graphics etc. at a first glance. You then quickly notice the famous global search which you will mostly be using during your testing by typing anything you want to explore and reaching out to various pages and lists in the system.

However, let’s say you did not have the global search, how can you get to all of the lists, pages, tasks, reports etc. in the system? What if you WANT to click and go instead of search and go. Well, here’s how you can find out:

On the very right corner of the screen, you will see this 3 lines icon.

Clicking on that takes you to the options you have available for your user role but that's not everything.

You click on 'Explore more roles' as shown in the screenshot above and you see the following,

In this page you can keep expanding the options to find everything. You can click on these options, reports, tasks etc. to explore the system and learn the terminologies used for various features available in Business Central. Once you know the terminologies you will, of course, use the global search function to reach to any of these but it's good to know there is a place where you can find what everything you've got when you signed up for Business Central.

I spend time on this page when I find some time to explore the system further to see what all new, I can find which I probably did not know before. Business Central is a comprehensive ERP system with all the important modules that a business requires when they start growing.

Version: IN Business Central 25.4 (Platform 25.2.30960.0 + Application 25.4.29661.31031)

5 simple ways to apply vendor payment with vendor invoice

Introduction: Managing payments and invoices can be complex, but Business Central makes it easier with multiple ways to apply payments directly to invoices. Whether you're applying an advance payment, processing invoices after posting, or using the vendor card, Microsoft Dynamics 365 Business Central has got you covered!

In this post, we explore step-by-step how to apply advance payments, post invoices, and manage payments in various ways. If you are already a user, you are using one or two of these methods but knowing them all will give you extra flexibility in how you use the system and be more efficient.

Disclaimer: This post has some Indian localization related features which may not apply in localization in other countries. The BC version used at the time of this post is IN Business Central 25.4 (Platform 25.2.30548.0 + Application 25.4.29661.30648)

1. Applying advance payment with invoice

Let’s say you made an advanced payment which reflects in your vendor’s ledger and is waiting for the invoice to be posted in the future. The time arrives when the invoice needs to happen, and you know at the time of posting the invoice which payment it should be applied to. You don’t have to post the invoice and then apply payment with it. You can do it from within the invoice card.

To understand this scenario, let’s first post a payment entry to the vendor as an advance payment,

Go to ‘Bank Payment Voucher’ by typing the same in the global search bar

Fill in the necessary fields that complete a payment entry. If you have made the payment online then you just want to make vendor to bank entry.

When you click on 'Bank Payment Voucher' as shown above then you will be able to create the vendor payment entry

List of important fiends on this page

• Posting Date: Usually the date when the payment is being made
• Document Type: In case of payment (or receipt) select 'Payment'
• Document No.: From number series or manual depending on what you setup
• Account Type: In case of vendor payment, this will be 'Vendor'
• Account No.: You can select the vendor number here to which you would like to post the payment entry
• Amount: This will be the amount in the currency that you are posting the transaction in
• Bal. Account Type: If the payment is made from a Bank then select 'Bank Account' here
• Bal. Account No.: This will be the bank you select since you selected type as 'Bank Account'
• Comment/Line Narration/Voucher Narration: You have the ability to write information which you would like to use for future.

You will see that some fields are auto filled from the accounts we select in this entry. In general, you can leave them as it is.

Now, let's post this payment.

The payment is posted and now you receive the invoice from this vendor. The invoice is a different amount than the payment received (it could be the same also, but let's take a unique scenario) but you still want to apply the invoice with this payment.

Create Invoice,

Search 'Purchase Invoice' in the search bar and fill in the required details.

You click on 'New' to create a new invoice

You select the vendor and insert lines. We will not discuss invoice creation in detail and jump right into the assignment option,

Next when you click on the 'Applies-to Doc. No.' you will have the option to select the payment entry you would like to apply with this invoice.

After selecting the entry, you can go ahead ad post the entry. But let's check the 'Preview Posting' of this entry to check what it looks like,

Let's check the 'Detailed Vendor Ledg. Entry'

Here we can see that the application to the advance payment has been done. You can now go ahead and post tne purchase invoice.

2. Apply after both the entries are posted

You may post invoice first and payment second and vice versa, and you do not have to apply them with each other at the time of entry.

To apply invoice and payment after posting, go to vendor ledger.

Search 'Vendors' in the search bar and find the vendor you want to check ledger for

Open the vendor card from the list,

Once you click on the vendor no., the vendor card opens

Now, let's click on 'Ledger Entries' and reach to the list

The 'Remaining Amount' shows the entries that are yet to be applied. You can select one and click on 'Apply Entries' option as shown below,

The application page will allow you to select the entry you would like to apply with by selecting the entry and click on 'Set Applies-to ID'. In below example, when clicked on Set Applies-to ID, it generated user's name as the applies to ID.

Now you can go ahead and post the application. You will see a pop up window as shown below. The 'External Document No.' can be used to enter any reference number for this application entry.

Once we click 'Ok' to this screen, we can see the confirmation that application has been posted.

The 'Remaining Amount' field shows the application has been done. Please note that you can always 'Unapply' an entry if you posted it by mistake or want to change it in the future. The option is as highlighted in the below screenshot.

3. Apply invoice when posting payment on journal

Usually the invoices are posted first and payments are received after. You can go to 'Bank Payment Voucher' to post a payment entry and apply it with invoice before posting.

Create payment entry and click on 'Apply Entries' option. You can enter the amount or leave it blank. If you leave it blank you can expect to have the invoice amount filled in the amount field once you select the invoice for application.

Let's say we select one invoice and click 'Set Applies-to ID' option. In this case, we don't have to post application. Just click 'Ok'.

Here we have chosen to let system automatically give us the amount based on the invoice and not entered any amount. The application brings the value to the 'Amount' field.

The preview posting shows how the entries got applied and we can proceed with posting.

4. Payment from vendor card with application

The latest and probably the most convenient method is making payment from vendor card.

Reach the vendor card and find the option called 'Pay Vendor'

It will show open invoices and you can click on 'Create Payment' option to make the payment.

You will see this window that helps select the batch, posting date, document number and bank account.

When you hit 'Ok', you will find that the entry has been applied and is ready to be posted.

You click 'Post' to post the applied entry

You will find that the entry has been posted.

5. Payment from vendor ledger

Let's say the vendor is calling you regarding their specific invoice which they want you to clear. You check their ledger and find the invoice and check necessary details and decide to make payment immediately.

You can click on 'Create Payment' option, and you will find the pop up to verify or update following info,

Once you fill in the necessary details, click 'Ok'

You will be taken to the payment journal where you can complete the payment entry.

Post the payment and it will be already applied to the invoice you had selected.

Conclusion

Business Central offers multiple ways to apply payment with the invoice. Users can use one or multiple based on their business scenario. This same functionality works for customer as well when the receipt is posted and requires to be applied with the invoice.