Microsoft Dynamics 365 Account Payable Module Domain Knowledge
Usama Mehmood
Senior Technical Consultant ERP / Microsoft Dynamics 365 Finance & Operations | Integration & Customization specialist | Enabler of Business | Digital Transformation
In this article, we will discuss the functionalities and core components of Account Payable module in finops. Basically the Accounts payable are a liability due to a creditor when you order goods or services without paying in cash up front, which means that you buy goods on credit. In this article we will learn how to configure accounts payable in Dynamics 365 Finance, record vendor invoices, and distribute expenses, tax, and charges across accounts.
The payment options are set up and used in the Accounts payable and Accounts receivable modules:
Prerequisites for Accounts payable setup
In the initial phase to configure / setup the Accounts payable, you must have completed the setup of the General ledger and Cash and bank management modules.
For example, we must need to create payment journals. You use payment journals to pay the vendor invoices. To run exchange rate adjustments, you need to set up:
Configure the payment schedule
In this phase we will cover the use of payment schedules to pay invoices in installments. To set up a payment schedule, you need to define the following elements:
A payment schedule consists of consecutive payments in set time intervals. The payments can be:
For example, an invoice of 10,000 US dollars (USD) is recorded. It is paid at 2,000 USD each month until the balance is paid. During this period, the invoice is not considered past due if the scheduled payments are made on time. This is also known as a finance plan, or contract payments.
The following list shows methods of allocation in a payment schedule:
The?accounts?payable module manages and controls vendor transactions from the accounting point of view, where it records vendor master information and the basic transactions related to vendor invoicing, payment, and settlement. The accounts payable function is integrated with other business functions.
The first integration point with procurement and sourcing business functions is procuring goods and services for the company, the second integration is invoicing the purchase order based on received goods in the warehousing, and the third integration, with cash and bank management business functions, is performing vendor payment and settlement against invoices. The full cycle of procure-to-pay is shown in the following diagram:
Essential components of Accounts Payable module are as follow:
1. Planned order and purchase requisitions
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Planned orders are generated automatically in operations planning (master planning)
Purchase requisitions are internal documents, entered manually, by the person who needs the material. Runs through an approval workflow
2. Request for quotation
???Sent to vendors to require information about the prices and delivery dates
3. Purchase order
Consists of header – line format. If not approved the status is Draft. If approved or if change management is not active (no need for approval) the status is Approved
Optionally you can post a purchase inquiry to vendors for validation purposes
Posting a purchase order confirmation means to save it. All PO confirmations are saved with its original info even after the order maybe subject to changes
The PO status is indicated by order status and document status?
4. Product receipt
Reduces the open quantity in PO and increases the the physical quantity in inventory
The order status becomes Received
5. Invoice receipt
Register the invoice in the pending vendor invoice form which is usually matched with the PO and product receipt, or otherwise manually in invoice journal
The order status becomes Invoiced
6. Vendor payment
???Record the payment manually or as a result of payment proposal
???Generates an open vendor transaction , waiting for payment.
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