Implementing Payments
What this domain tests
This domain tests payment setup and execution: payment methods and formats, payment process requests, payment schedules, bank and cash accounts, formatting, transmission, confirmation, and void or cancel handling.
Core rules
- A payment method defines the instrument, such as check or electronic; a payment format defines the file or print layout, such as check print or an EFT or ACH format. A method without a working format cannot produce a usable payment.
- Supplier site payment details supply the default payment method, bank account, and payment currency. The payment process request can override selection criteria, not the supplier bank instructions.
- A payment process request selects invoices and builds payments. The usual sequence is select, build, format, print or transmit, then confirm. Until confirmation, the payment is not final.
- Payment terms create payment schedules. Discounts are taken only when the payment date and terms qualify; paying late can lose the discount and create interest.
- Cash accounts are linked to bank accounts. Reconciliation and clearing happen in Cash Management, while Payables owns the payment record.
- Void, stop, and cancel are different actions. Void reverses a payment; cancel stops an unconfirmed payment; stop payment instructs the bank.
Worked example
A PPR is submitted with a pay-through date of January 31 and a payment date of February 5. It selects three invoices, builds one electronic payment, formats an ISO 20022 file, and transmits it. The payment remains unconfirmed until the confirmation step; only then is it treated as issued and available for reconciliation.
Traps
- Confusing pay-through date with payment date.
- Assuming a PPR pays immediately on submission.
- Choosing a payment method at the PPR that conflicts with the supplier site.
- Treating bank reconciliation as a Payables payment step.