• 12 minutes

Vendor bank accounts are required for electronic payments, such as automated clearing house (ACH) or wire payments. Dynamics 365 Finance stores information that's required for transferring funds to a vendor’s account as vendor bank accounts. You can create many bank accounts, but the system only uses one as the current or default account for electronic payments. Required fields differ based on the bank that receives the payment file and the country/region of the recipient.

This unit describes how to create vendor bank accounts, set the default electronic payment bank account, and create a workflow for approval of vendor bank account changes. An incorrect account that's still valid would transfer funds, but not to the correct party. The approval process adds a review cycle to prevent incorrect bank account information from being stored.

Create vendor bank accounts

To set up vendor bank accounts, go to the All vendors page and select the Vendor group on the Action Pane. In the Setup menu group, select the Bank accounts menu item.

The General FastTab contains the vendor bank account number and other information that's required for identifying the bank. In the United States, the Routing number and Bank account number are required. In other countries/regions, SWIFT and IBAN codes might be required. An electronic payment from the United States to a bank account that requires SWIFT or IBAN codes must use those codes instead of the Routing number and Bank account. The General FastTab also allows you to inactivate the vendor bank account by a date range (Active date and Expiration date).

Some banks require the address of the vendor’s bank, phone numbers, and other information that's available on the Vendor and Vendor bank account pages. The Address and Contact information FastTabs allow you to provide address and phone number information for the vendor’s bank if necessary. Make sure that you understand the detailed requirements when you set up electronic payments.

The Setup FastTab contains currency information and a Text code. You use the Text code for some electronic transfers, especially wires, to validate the requester of the transfer. If you specify an incorrect code for the vendor bank account, the transfer doesn't complete.

Some banks require or suggest prenotes to validate vendor bank information before you make the first electronic payment. A prenote is an ACH request for a small dollar amount or zero amount. If the transfer is successful, the system considers the vendor bank account as tested and set up correctly.

The Prenotes FastTab indicates the status of prenote requests. When prenotes are required, you need to issue one for each company bank account that you use for electronic payments. When you issue a prenote, the system sets an active date for the prenote based on the Prenote response days field in your company’s (not the vendor’s) bank account. In this case, you don't receive a "valid" response from the bank. Instead, assume that the prenote is successful if the bank doesn't indicate failure and that the system considers it automatically valid on the specified date.

Prenotes aren't always required. The Prenotes required toggle on your company’s bank account indicates whether a valid prenote must be in place before you can make electronic payments for this vendor bank account. The prenote fields are on the Payment management FastTab on the Bank account page. Go to Bank accounts from the Cash and bank management module or from the Bank management workspace.

Set a default vendor bank account for electronic payments

A vendor might have many different bank accounts that accept electronic payments. Dynamics 365 Finance doesn't ask which bank account it should use for an electronic payment. Rather, it uses the vendor bank account that you set as the default for the vendor. To specify the default account, go to the All vendors page, select the Payment FastTab, and then enter the account in the Bank account field.

To copy this default account to the vendor payment journal's Third party bank group, go to the Bank FastTab of the payment journal line and then select the default account in the Account information field. You can modify the payment journal line to select another vendor bank account. If you don't specify a bank account on the payment journal line (which often happens when no default bank account is specified for the vendor), the request to generate the payment file fails, indicating that no vendor bank account exists, even if many vendor bank accounts exist for that vendor.

Set up workflow approval to create and update vendor bank accounts

Vendor bank accounts include sensitive information that you should carefully monitor. A workflow approval process is available to have a separate person review and validate a proposed change to a vendor bank account. The workflow type is Workflow approval for proposed vendor change. You would set up this workflow like any other workflow in Finance. The submitter is the person who makes the changes to the vendor bank account. Set the Workflow parameters in the System Administration menu to Disallow approval by submitter to ensure review by another person. This parameter is system wide and impacts all workflows.

Using the vendor bank account approval workflow requires three setups:

• Ensure that you turn on the Vendor bank account change proposal workflow feature in the Feature management workspace. In application version 10.0.3, this feature was turned on by default.
• Set up the vendor bank account approval options in Accounts payable parameters.
  1. On the General tab, open the Vendor bank account approval FastTab.
  2. Set the Bank account approval (create) and Bank account approval (update) toggles to Yes.
  3. In the Enable list, select the fields that you want to review before accepting the change. Most fields in the General and Setup FastTabs are supported.
  4. Set the Data entity behavior to Create change proposals.
• Create and activate Workflow approval for the proposed vendor change.

After you turn on the workflow, the following changes to the vendor bank account process become effective:

• For new bank accounts, the Workflow menu appears on Vendor bank account when the user saves the new vendor bank account. The Review status shows as Draft.
• For existing bank accounts, a dialog showing Proposed changes displays to the user, indicating the changes to occur. The user can select the Discard button to back out the changes or the Close button to turn on the workflow. A new menu item named Proposed changes appears, displaying the same Proposed changes dialog. Each change shows in the dialog, and the user can discard individual changes without discarding the entire request. After the user reviews and agrees to the list of changes, they can submit the proposal to the workflow.

Many workflows support link usage in the workflow notification for the approver which directs them to the record for review. The Workflow approval for proposed vendor change feature allows you to place a link in the notification message, but that link displays an error and doesn't direct the approver to the vendor bank account record. Instead, you need to put the vendor account and vendor bank account information in the notification message so that the approver knows which changed account they need to review.

For more information, see Vendor bank account workflow.