10.5 Customer Payment Methods, Payment Processing & Customer Bank Accounts

10.5 Customer Payment Methods, Payment Processing & Customer Bank Accounts

Quick Summary: Invoicing a customer only creates the receivable — the Accounts receivable cycle is not complete until the cash is received, applied to the right invoice, and the resulting bank movement is reconciled. This section covers methods of payment for customers, the customer payment journal, settlement of open transactions, customer bank accounts for direct debit collection, and Accounts receivable foreign currency revaluation.

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1. Methods of Payment for Customers

Accounts receivable > Payment setup > Methods of payment defines every way money can arrive from a customer. Dynamics 365 Finance supports bills of exchange, cash, checks, credit cards, and electronic payments.

Bridging Accounts: the Most-Tested Setting

With Bridging posting enabled, posting a customer payment debits a bridging account rather than the bank account directly. The balance sits in the bridging account until the bank statement confirms clearing, at which point the reconciliation moves it to the bank account. This models the real gap between "the check is in the drawer" and "the funds are in the bank", and it is the standard design for check and deposit-slip collections.

Exam trap: A scenario in which the bank account balance does not increase when a customer payment is posted is usually correct behaviour — the method of payment is configured with bridging posting.

2. Customer Bank Accounts

A customer's own bank details are stored on the customer record under Customer > Set up > Bank accounts, holding the bank group, account number, IBAN, SWIFT/BIC, and the routing information required by the collection file format.

Customer bank accounts are needed whenever money is pulled rather than pushed:

• Direct debit mandates — a SEPA or ACH mandate is attached to a customer bank account, with its own mandate identifier, signature date, and scheme.
• Electronic payment file generation — the ISO 20022 pain.008 direct debit message is built from the customer bank account plus the mandate.
• Customer refunds — reimbursing an overpayment electronically requires the customer's bank details.

A customer paying by check or wire transfer needs no customer bank account at all, because the customer initiates the movement.

3. The Customer Payment Journal

Cash receipts are entered in Accounts receivable > Payments > Payment journal, which uses the Customer payment journal type.

1. Create the journal and open Lines.
2. Set the account type to Customer and select the customer account.
3. Enter the Credit amount received, the Method of payment, and the offset Bank account.
4. Choose Settle transactions to open the Settle open transactions page.
5. Mark the invoices this receipt pays. Dynamics 365 Finance shows the cash discount available and the resulting settlement amount.
6. Validate and post.

Posting debits the bank (or bridging) account and credits the customer summary account taken from the customer posting profile, then closes or partially closes the marked invoices.

Settlement Mechanics and Cash Discounts

The Automatic settlement parameter in Accounts receivable parameters decides whether Dynamics 365 Finance applies a payment to the oldest open invoices automatically or waits for the clerk to mark transactions.

Payment Fees

Customer payment fees charge the cost of a payment method to either the customer or a ledger account, and are set up per journal type, bank relation (bank group or bank account), and method of payment. This is how a fee is applied to check payments but not to electronic ones.

4. Reversing a Customer Payment

A posted receipt is undone with Reverse transaction on the customer transaction, which reopens the settled invoice and reverses the bank entry. A returned or bounced check is handled through the NSF (non-sufficient funds) path on the deposit slip so the customer transaction, the bank entry, and any fee are all recorded together.

5. Accounts Receivable Foreign Currency Revaluation

Open customer transactions denominated in a foreign currency must be restated at period end. Run Accounts receivable > Periodic tasks > Foreign currency revaluation, choosing the legal entity, the revaluation date, and the exchange rate type.

• Only open customer transactions are revalued; settled invoices have already crystallised into a realised gain or loss at settlement.
• The unrealised gain and loss accounts come from the currency revaluation posting profile, not from the customer posting profile.
• Accounts receivable, Accounts payable, Bank, and General ledger each have their own revaluation process. Running the general ledger revaluation does not revalue the AR subledger, and vice versa.

Exam trap: Realised gain or loss is recognised when the invoice is settled at a different rate from the invoice rate. Unrealised gain or loss is recognised when an open invoice is revalued at period end. A case study that mentions a payment being applied is describing a realised difference.

6. Centralised Payments for Accounts Receivable

Where a group collects centrally, one legal entity can record customer payments on behalf of the others. The receiving entity posts the cash; intercompany due-to and due-from entries move the receivable relief to the entity that owns the invoice. The customer must exist in both entities — normally through shared customers — before centralised receipt is possible.