Paying vendors with electronic payments in Business Central

How Business Central electronic payments reach the bank

The process begins in the payment journal. Suggested vendor payments are listed there, just as they would be for a check run. You mark lines for electronic payment and export them. Then Business Central makes a file in the format your bank account uses.

In the United States that is normally an ACH file. Other regions have their own standards, such as SEPA credit transfers in Europe. You upload the file through the bank's portal or a secure transfer channel. Once the bank accepts it, you post the journal, and the vendor entries close.

When to move from checks to Business Central electronic payments

Paper checks need stock, a printer, signatures, envelopes and postage. Then they sit in the mail. Vendors increasingly ask to be paid by transfer, and some offer better terms to customers who do. A lost check means a stop payment and a reissue. Staff handle each one by hand.

Electronic payment also gives treasury a firmer grip on timing. Funds leave on a chosen date, not whenever a check happens to be deposited. Companies usually call us when check volume has grown tiresome. Others call when a new bank relationship begins or when an auditor questions signature controls.

Setting up Business Central electronic payments

Three areas need attention. The company bank account needs its routing details and a payment export format. Each vendor needs a bank account record flagged for electronic payments. The bank export and import setup ties the format to the code that makes the file. All three must agree.

We collect your bank's file specification and the identifiers the bank gives you as an originator. We enter them and produce test files in a sandbox. Most banks ask for a small test before live use. We stay with your team through that exchange. Then we adjust the format until the bank confirms it.

Controls around vendor bank details

The main risk with transfers is a changed bank account. A convincing email asks you to update a vendor's details, and the next payment goes to a stranger. The defense is a set procedure, backed by permissions in the system. Software alone will not stop it.

We restrict who may edit vendor bank accounts and switch on the change log for those fields. We can also add an approval workflow. Then a changed vendor record stays blocked for payment until a second person releases it. Payment journal approval adds another pair of eyes before any file leaves Business Central.

Remittance advice for Business Central electronic payments

A transfer with no explanation creates phone calls. Business Central can email a remittance advice to each vendor. It lists the invoices that the payment covers. It uses the email address held for that document type on the vendor. You can send the advice as part of the payment run.

We design the advice layout and set up the sending. We also show your team how to void an exported payment that the bank rejected, which is different from voiding a check. Pitfalls we cover in training include exporting the same batch twice and mixing check and electronic lines in one journal. Another is vendors with incomplete bank details.

Business Central electronic payments questions

Does Business Central send the payment to the bank itself?

In the standard product, it creates the file and you deliver it to the bank, usually through the bank portal. Direct delivery is possible with banking add-ons or an integration. Our banking integration page describes that route.

Which file formats are supported?

The United States version includes formats for domestic ACH payments and international ACH transactions. European versions support SEPA credit transfers. We build other layouts with data exchange definitions or an extension, depending on what your bank requires.

Can we pay some vendors by check and others electronically?

Yes. The payment method on the vendor card and the bank payment type on the journal line decide how each vendor is paid. Many companies move vendors across step by step as they collect and confirm bank details. So you do not have to switch everyone at once.

Can electronic payments be used to collect from customers?

Collection works differently. Business Central supports direct debit collections where the banking standard allows it. It also supports online payment links on invoices through payment service extensions. For card and link payments, see our payment services page.

What if the bank rejects one payment in the file?

You void or reverse the rejected payment in Business Central. The vendor invoices reopen. You correct the vendor's bank details, and the payment goes into the next run. We write this procedure down for your team, so anyone can follow it when a rejection happens.

Related payables pages

Electronic payment is one step in paying vendors. The pages below explain the payment journal itself, the payables process around it, protection for the checks you still write and direct bank connections. Read them to plan your Business Central electronic payments. Then tell us which bank you use, and we will check the file format with you. For the product detail, see Business Central documentation on Microsoft Learn.