Namith Hosmane's Blog

Accounts payable in general:

Accounts payable is a liability which company owes to vendors for the services or goods provided. Accounts payable operations on the high level involves recording of invoices to making vendor payments timely and accurately.

Accounts payable in D365 Finance:

Accounts payable in D365 finance provides all the capabilities from recording invoices automatically to faster payment processing. Please read through blog below on understanding key configurations\terminologies, key functionalities and reporting capabilities in Accounts payable module.

Key Configurations

Vendor groups:

Vendor groups are mandatory to create a vendor record in D365 finance that provides the ability to set default sales tax, terms of payment, default ledger accounts which applies to one or more vendors. For more details please click here

Vendor posting profile:

Every vendor created should be directly or indirectly related to posting profile that connects subledger to general ledger by defining the ledger accounts to be used during the posting of vendor transactions (Invoicing, Payments).

Methods of payment:

The method of payments are different ways to pay the vendors. For example through cash, check, ACH (Electronic payments). D365 finance provides the ability to cut a check and even process ACH payments. ACH or electronic payments is more preferred payments in today’s day and age.

Terms of payment & Cash discount:

Terms of payments can be defined for vendor which generally an agreement between company and vendors by when the payment should be made. Terms of payment in D365 finance is used to calculate the due date of the invoices and make timely payments. D365 finance also provides an capability to define cash discount, this is when vendors offers discount if the payment is made even earlier than the agreed terms.

Workflows:

There are plenty of workflow options in Accounts payable module but the most asked and commonly used workflows are vendor workflow(recently added) and vendor invoice workflow.

Vendor workflow:

This functionality helps to define rules on specific fields to trigger workflow when the data is changed in the vendor master.  Please click here for more details and configuration.

Vendor invoice workflow:

Vendor invoice workflow helps to define rules and workflow for approval before the invoice can posted to general ledger. Please click here for more details and configuration.

Key functionalities:

Invoicing:

A vendor invoice is document received from vendor listing the items or services provided and the amount owed by the company along with other details like sales tax, billing address, charges and due date etc. There are multiple ways in which vendor invoices can be processed in D365 finance,

Invoice register:

Invoice register journal can be used to pre-register the invoice for verification and approval before actual invoice is booked.  Once the invoice registered it is transferred to the invoice pool for approval and the invoice is booked through approval journal. The invoice register will accrual the expense until the invoice approval journal is posted. Check out this blog to understand more on invoice register functionality Check out this blog to understand on how to create invoice register

Invoice journal :

Invoice journal are used for easy and quick entering of expenses that not referenced to any Purchase orders and not required additional approvals or verification of the invoice.  Invoice journals can be used to book expenses such as utility, rent, payroll etc. With the new global invoice journal feature, invoice journals can be created and posted for multiple legal entities from a single screen. please click here for more details

Vendor invoices :

Vendor invoices can be created for both PO and non PO related invoices. In a manufacturing industry, PO related invoices are used for purchasing a raw material and also used for internal purchases like Laptops, Stationeries etc. Whereas, non PO vendor invoices can be used for utility payments, credit card When its non PO invoices, we can always choose between Invoice register, invoice journal and pending vendor invoices. But, depending on the nature of transactions and business requirement its important to use the right document of journal to post the business transaction.

Vendor invoice automation

Vendor invoice automation is key for improving the AP process for the company. EDI integration is traditional automation framework for AP invoicing. Now with modern D365 finance solution, the D365 finance provides an ability for OCR integration that helps automatically import the vendor invoices along with attachments. Check out my old blog for more information on Last mile invoice automation solution from Microsoft.

Invoice matching:

Invoice matching is performed to make sure the ordered, received and the invoice details matches the invoice details received from the vendor. Two way matching : The ordered quantity and prices will matched between invoiced quantity and price. Three way matching : The ordered quantity and price, received quantity and invoice quantity and prices should match.

Payment processing:

Payment processing in D365 finance is made much easier with Vendor payments workspace which provides quick access to AP clerk and manager to manage payments. Click here to know more details on Vendor payment workspace

Vendor payment proposal:

Vendor payment proposal is used to generate the payments for open invoices quick and easy based on the pre-defined query like due date, cash discount and other criteria. Click here to know more. Microsoft recently released new feature to Automate vendor payment proposals process that can automatically create payment journals based on the criteria. Click here to know more

Key reporting:

Vendor transaction report

Vendor transaction report can be used view all the posted transactions which includes debit and credit. The reports provide both summary and detail view of the customers\vendors transactions with differences.

Vendor balance list

The reports provide both summary and detail view of the customers\vendors transactions with differences.

Vendor to ledger reconciliation

The reconciliation report is used to make sure there are no discrepancies between sub-ledger and general ledger.