Multi-Company Customer & Vendor Payments in Microsoft Dynamics AX: Part 3 Using Centralized Payments

 
 
 
 

In our two previous blogs Multi-Company Customer and Vendor Payments – Part 1 Overview and Part 2 – Intercompany Accounting, we reviewed the two methods available from Microsoft Dynamics AX, now called Dynamics 365 for Operations, to allow vendor payments and/or customer receipts across multiple legal entities, and we went through the setup for the first method – using Intercompany Accounting.  In this blog, we will go over the setup for the second method – Centralized Payments.  (The screen shots in this blog post are from the New D365FO, but the functionality and setup are the same in Dynamics AX 2012.)  Although these blogs primarily discuss multi-company vendor payments, the same functionality and setup apply for configuring multi-company customer receipts.

Centralized Payments is the preferred method of handling multi-company cash receipts and disbursements.  The one-time setup is a little more complicated but the selection of customers/vendors and specific invoices to be settled is much more efficient, and so you will save time with each payment journal.

Setup

1.Complete Intercompany Accounting Setup.  In the previous blog Multi-Company Customer and Vendor Payments – Part 2 Intercompany Accounting, we partially configured Intercompany Accounting.  To use Centralized Payments, we must now finish the setup.  Go to General Ledger > Posting Setup > Intercompany Accounting. 

The bottom part of this window defaults to using the Cash Discount and Currency Exchange Gain/Loss parameters from the legal entity of the company into which the vendor invoice was posted.  If appropriate, you can change the defaults here.

 

  1. Setup Organization Hierarchy for Centralized Payments.  A new (and under-utilized) feature of Dynamics AX 2012 is Organizational Hierarchies.  For Centralized Payments, we need to set up an Organizational Hierarchy with Purpose = Centralized Payments.  All of the legal entities which will participate in the multi-company cash receipts and disbursements must be included in this hierarchy.

Go to Organization Administration > Organizations > Organization Hierarchies.  Click New to create a new hierarchy, assign a purpose of Centralized Payments and select Allowed Organization Types = Legal Entities.  Click View > Edit > Insert to add the appropriate legal entities.  In our scenario, the included legal entities are USMF, DEMF, and USRT.

 

 

When you are finished, Save and Publish the hierarchy.

  1. Map Customer/Vendor Accounts Across Legal Entities.  In our scenario, we have one vendor company which is set up as a vendor account in each of our three legal entities.  You will note that the vendor has a different vendor number in each the company.  Not a problem.

Legal Entity

Vendor #

Vendor Name

USMF

US-109

Property Management

DEMF

DE-01001

Property Management

USRT

1009

Property Management

 

Regardless of their vendor number, however, each of these vendors must be attached to the same Party ID in the same Address Book ID in the Global Address Book.  If your multi-company vendors (or customers) are not set up this way, don’t worry.  The vendors don’t have to be deleted and re-created – there is a process to Merge Records in the Global Address Book. 

 

To confirm that the vendor accounts are linked correctly in the Global Address Book, go to the vendor account in any of the companies and note that all the vendor accounts and legal entities are displayed in Roles.

 

  1. Confirm Consistent Currency Codes.  To use Centralized Payments, all the Centralized Payment legal entities must use the same Currency Code.  For example, if one company uses Currency Code = USD, all companies must use Currency Code = USD.  Go to General Ledger > Currencies > Currencies.

 

  1. Confirm Consistent Vendor Posting Profile IDs.  As with Currency Codes, all the Centralized Payment legal entities must use the same Vendor Posting Profile IDs.  Go to Accounts Payable  > Setup > Vendor Posting Profiles.

 

  1. Confirm Consistent Methods of Payment IDs.  Same as Currency Codes and Posting Profile IDs – all the Centralized Payment companies must use the same Method of Payment ID.   Also, make sure that all the instances of a vendor which you will be paying via Centralized Payments have the same Method of Payment, regardless of the legal entity.   Go to Accounts Payable > Payment Setup > Methods of Payment.

 

  1. Default Descriptions (optional).  To make the resulting multi-company cash receipts and disbursements intercompany transactions easier to trace, we often use default descriptions.  Go to Organization Administration > Setup > Default Descriptions.

 

Processing Multi-Company Vendor Payments Using Centralized Payments

Above is the setup.  Here is a short video of the actual process to select vendors, settle transactions and pay vendors across multiple legal entities using out-of-the-box Microsoft Dynamics AX Centralized Payments functionality.

 

 

 

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