Creating a Payment Proposal in Dynamics 365 Finance & Operations
Are you new to Accounts payable (AP) and want to effectively select which invoices and Vendors to pay in Microsoft Dynamics 365 for Finance and Operations? Perhaps you need a refresher on the topic. In this post, we are going to discuss how to use the Vendor payment proposal in the Accounts payable module to define and refine your payments.
Paying Vendors
When generating payments for your Vendors, there may be some additional factors to consider when generating payments such as:
- Due date
- Early pay discounts
- Method of payment
- Currency
- Vendor group
- Specific Vendor
- Amount of invoice
How can we optimize payment journals to match our specific needs and ensure we are getting what we need when paying vendors?
Using the Payment Proposal
Navigate to Accounts payable > Payments > Vendor payment journal to create a new payment journal, then open the Lines of the payment journal to determine which Vendors get paid on the next payment journal.
In the action pane, select Payment proposal > Create payment proposal to open the Vendor payment proposal form.
Once selected, this will open a form that has numerous filters and parameters that can be selected to define what invoice records to pull into the payment journal.
The Vendor payment proposal form lets a user define criteria for selecting payment such as by due date, cash discount date, or due date and cash discount date. Users can also define a from and to date for invoice records, the minimum payment date, or an amount limit.
Next, this form can be used to filter invoice records by Vendor account, method of payment, currency, and other criteria related to the invoice record. The most used filters are related to method of payment and currency as users will want to run payment proposals based on those criteria specifically.
Finally, specified payment defaults that are listed on the Vendor record such as payment currency and payment weekday can be used to define the records that populate a Vendor payment proposal as well.
Once the criteria are selected, click Okay to generate the Vendor payment proposal based on the criteria entered. Within this proposal, records can be reviewed, moved, changed, or distributed. Once the Vendor payment proposal is set, click Create payments to transfer the lines from the Vendor payment proposal to the Payment journal.
From there, the payment can be generated as usual through the accounts payable process.
Using the Payment Proposal Strategically
Many finance users are savvy when it comes to making payments and want to optimize their cash flow. To effectively manage cash flow, it may make sense to consider the impact of any discounts and the related payment terms before making an early payment or waiting to process the payment on time. Companies may save money with an early pay discount, but often the cost of forgoing a discount may be higher than the return on taking that discount. This is where it is prudent for finance teams to consider the benefits of taking their early pay discount or waiting and earning interest on that money.
The payment proposal is a tool that can help finance teams review discounts and due dates, using that information to effectively determine which discounts to take and which ones to leave on the table.
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