Automating Accounts Payable (AP) in Business Central

One of the biggest pain points for new businesses can be tracking invoices for payment. Microsoft Dynamics Business Central’s Accounts Payable module automates these functions for companies, ensuring timely vendor payments. You can integrate AP automation for Business Central into other areas like purchasing, inventory, and the general ledger. This article explores some of the ways you can automate critical AP functions.

Getting Started

Before you start, you need to understand all the stages of invoice processing. That includes points of receipt, how to ensure accuracy when matching to a purchase order, and methods of accepted payment. From there, you should analyze your current manual processes to find ways of eliminating efficiencies through automation. Finally, you should set goals for what you want to accomplish through your automation efforts.

You’ll need a valid Business Central license to get started on the Accounts Payable module. From there, start setting up a master vendor list that includes each vendor’s payment terms and contact information. You’ll also need to configure your general ledger accounts for invoice recording. 

1. Setting Up a Master Vendor List

One of the first tasks you need to complete for Accounts Payable Business Central is setting up a master vendor list.

1. Go to the search icon, look up Vendors, and select the link.
2. Once the Vendors page appears, click New. If there are multiple templates, you can select the one you want to use for your new vendor.
3. Click OK to open a new vendor card with some fields already completed from a template. 
4. Fill in additional details for the vendor and save the information. It’s now ready to use with your documents. 
5. Repeat until you have a complete master vendor list.

You can use an existing vendor card as a template.

1. While on a Vendor Card page, select the Save as Template option. 
2. The Vendor Template appears with the vendor card now available as a template.
3. Add information to the appropriate fields.
4. Once the card is complete, click OK. The information from this card will be available when you use it as a template. 

2. Configuring General Ledger Accounts for Invoice Recording

You’ll need to set up your General Ledger (G/L) accounts before you can record invoices.

1. Go to the search bar, enter Chart of Accounts, and select the link.
2. Click the + symbol to add a new account. 
3. Add all the details for the account, including: 
   1. No: Account Number
   2. Name: Descriptive name for the account
   3. Account Type: Label it as Expense, Liability, or Income based on the account’s purpose
   4. Balance Account Type: Can leave blank unless required to balance another account
4. Click OK when completed.

3. Setting Up Vendor Posting Groups

Vendor posting groups are used to link vendors to G/L accounts.

1. Go to the search bar, look up Vendor Posting Groups, and select the appropriate link.
2. From here, you can create a new group or edit the definition: 
   1. Payable Account: Used to record accounts payable
   2. Purchase Account: Used for expenses or purchases
   3. Direct Cost Applied Account: An optional account used to track direct inventory accounts
3. Click OK to save the information.

Once you’ve created a posting group, you can assign them to vendors.

1. Search for Vendors in the search box and click the link.
2. A list of all vendors should appear. There’s also a search and filter option to locate vendors. 
3. Select a vendor to open their Vendor Card.
4. Go to the Invoicing Tab and search for the Vendor Posting Group to assign.
5. Click OK. Invoices for this vendor will now be posted to the correct G/L account. 

4. Establishing Invoice Approval Workflow

You’ll need to create a workflow to approve invoices. 

1. Go to the search icon, look up Workflows, and click the related link.
2. Select New to open the Workflow page.
3. Go to the Code field and enter a workflow identifier.
4. If you already have a workflow template, select New Workflow From Template.
5. Go to the Description field to add a workflow description.
6. Go to the Category field and add a category for the workflow. 
7. Go to the When Event field and specify the vent that must happen to trigger the workflow step. Select one from the Workflow Events page.
8. Navigate to the On Condition field and specify the conditions that must be met to start a When Event.
9. Go to the Response field and specify a response following a workflow event.
10. Navigate to the Options for Response FastTab and select the options for the workflow response by choosing values in the available fields. 
11. Once you’re done, go to the Increase Indent and Decrease Indent buttons to order the steps in the workflow. 
12. Repeat steps 7 through 11 to add additional workflow steps.
13. Turn on Enabled to indicate the workflow should start when the Entry Point event occurs in the first step.

5. Defining Matching Rules

Matching rules govern how to match payments from bank transactions to unpaid invoices. 

1. Go to the search icon, enter Payment Application Rules, then choose the link.
2. Fill in the applicable fields on the line that appears. 
   1. Match Confidence: Confidence level of application rule
   2. Priority: Priority of current rule over other defined rules
   3. Related party matched: Specifies how much information must match to apply a rule automatically
   4. Document N: Specifies if the payment reconciliation journal line must match the Document No. field or the External Document No. field.
   5. Number of Entries Within Amount Tolerance Found: Specifies the number of entries that must match the amount before applying the application rule.
   6. Review Required: Indicates if the payment should undergo manual review before posting.

Optimize Your Accounts Payable Processes With Business Central

Internet eBusiness Central can guide you through setting up your Accounts Payable processes to ensure seamless operations. Contact us today to get the most out of your Microsoft Dynamics instance.