Options for Electronically Paying Vendors

Thoughtware Alert Apr 10, 2020
Person entering a credit card using a keyboard

Business depends on managing payments to vendors and from customers. Managing those payments when you are not in a physical office can be difficult when you are used to working with paper-based systems. This article will provide information on payment options available in or for Dynamics GP. It also will show you how to use that functionality to facilitate working remotely. 

EFT for Payables

Electronic funds transfer (EFT) enables companies to pay vendors using a file. EFT, when combined with payables batch approval workflow and email, provides organizations with a process to pay vendors without requiring physical interaction. Here are the steps to set up EFT for Payables. 

Before setting up EFT, set up these prerequisite items:

  1. Workflow system setup – Administration page > Setup > System > Workflow 
  2. Workflow company setup – Administration page > Setup > Company > Workflow
  3. Purchasing email setup – For vendor remittances

To set up EFT, follow these steps. 

1.    Set up the EFT format – Financial page > Cards > Financial > Checkbook > EFT button
2.    Set up the EFT payables options – Financial page > Cards > Financial > Checkbook > EFT button
3.    Enter the bank information – Financial page > Cards > Financial > Checkbook > EFT button
4.    Enter vendor email information – Purchasing page > Cards > Purchasing > Addresses (Remit To)
5.    Add EFT bank information for each vendor – Purchasing page > Cards > Purchasing > Addresses (Remit To)

Vendor EFT Bank Maintenance

 

Here are the steps to use EFT: 

  1. Create a payment batch. 
  2. Submit for approval.
  3. Once the batch is approved, print the remittances. 
  4. Post the payments. 
  5. Generate an EFT file. 
  6. Submit the file to the bank. 
Check Remittance


Here is an image of the Generate EFT Files window: 

Generate EFT Files

With EFT for Payables, payments can be generated without any physical interaction between users. The process enables one user to process payments and another user to approve the payments. The approver does need to log in to GP or use Outlook with web services implemented. The process for paying vendors can be streamlined and managed remotely. 

Virtual Credit Cards

Virtual credit cards are becoming more popular methods to pay vendors. According to Accenture, 25 percent of Fortune 100 companies are using virtual cards. Moreover, Accenture also estimates that by 2022, purchases by virtual credit cards will rise to $355 billion. 

Why are virtual credit cards so popular? First, they are electronic. Second, unlike a physical card, a virtual card number is used. Using a virtual card number provides a higher level of security. How do you get started using virtual credit cards? 

Many banks and financial institutions are driving this functionality. They provide a file format to you. To create files in the file format, there are many options. 

  1. Custom reporting using tools like SQL Server Reporting Services
  2. Software solutions such as Regal Pay and Mineral Tree 

We have developed custom reports for multiple clients using SQL Server Reporting Services and have had a client use a software solution. 

When using virtual credit cards, you would usually start by creating a checkbook. When you process payments, you would select the checkbook for payment. To make things easier, you can use the Payment Priority field on the Vendor Maintenance window to identify vendors using the credit card. When you build the payment batch, the payment priority would be entered as a restriction. 

Note: You would not set up a credit card because credit cards move the liability to a new vendor. In this case, the virtual credit card is moving money out of your bank account. 
 

Build Payment Batch

The use of virtual credit cards is not a new method of paying vendors, and it is rising in popularity. You can participate in this payment method by using functionality available to you in Dynamics GP and custom reporting or add-on applications. 

Summary 

To facilitate paying vendors while reducing or eliminating physical interaction, companies have at least two options available. EFT for Payables is available in GP and can be used to send payments to vendors via the bank while sending remittance advices. Virtual credit cards are a rising method of paying vendors and can be accomplished using GP and custom reporting or an add-on solution. 

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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