Chapter 9: Accounts Payable Setup

CHAPTER 9: ACCOUNTS PAYABLE SETUP

Objectives
The objectives are:

Create a payment schedule.

Create terms of payment.
Create a payment day.
Set up a cash discount.
Create a payment fee.
Create a method of payment.
Set up vendor groups.
Set up posting profiles.
Create a new vendor.

Introduction
This course describes the different Accounts Payable setup options in Microsoft
Dynamics AX. It shows setup procedures and defaults used throughout the
Accounts Payable module. This course explains topics such as payment options,
vendor setup and posting profiles.

Microsoft Dynamics AX offers extensive functionality for setting up different

vendor payment options. These global payment options are used in the Accounts
Payable and Accounts Receivable modules, and include the following:

Payment schedules
Payment days
Terms of payment
Cash discounts
Methods of payment
Payment fees

This course also explains the vendor setup for efficient management of vendors
and vendor transactions.

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Payment Schedule
Use payment schedules to pay invoices in installments. Define the following to
set up a payment schedule:

Number of installments
Amount of each installment
Due date of each installment

A payment schedule consists of consecutive payments in set time intervals. The

payments can be a:

A set amount
A specified number of payments in which the amount owed is
divided to create equal payments

For example, an invoice of 10,000 USD is recorded. It is paid at 2,000 USD each
month until the balance is paid. During this period the invoice is not considered
past due if the scheduled payments are made on time. This is also known as a
finance plan, or contract payments.

Procedure: Create a Payment Schedule

Perform the following to create a payment schedule:

1. To access the Payment schedules form, click Accounts payable,

click Setup, click Payment, and then click Payment schedules.
2. Click the New button to enter a new record.
3. Enter a name to be used as identification of the payment schedule in
the Payment schedule field.
4. Enter a description in the Description field.
5. Click the General FastTab.
6. In the Allocation list, select an allocation method:
o Total - total amount outstanding on the invoice due.
o Fixed amount - a specific, fixed amount is due for each payment
on the specified payment dates.
o Fixed quantity - payment of the total amount is divided into a
fixed quantity of payments.
o Specified - a specified amount is due on each specified payment
date. If Specified is selected, the payment schedules and
amounts must be defined on the Payment lines FastTab.

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Depending on the value selected in the Allocation list, different fields are
enabled on the General and Payment lines FastTabs.

FIGURE 9.1 PAYMENT SCHEDULES FORM

Procedure: Create a Total Payment Schedule

If Total is selected in the Allocation list, no other fields are enabled on the
General FastTab.

Procedure: Create a Specified Payment Schedule

If the Specified option is selected in the Allocation list, Perform the following to
complete the payment schedule setup:

1. From the Payment schedules form, click the General FastTab, in

the Payment per list, select the date interval in Days, Months, or
Years. The system uses this information when it calculates the due
date of each installment.
2. Use the Sales tax allocation list to distribute the sales tax amount to
the payment schedule installments.
3. Click the Payment lines FastTab to define the line information for
the payment schedule, to designate how many different payments
there should be, and to divide how much of the total should be paid
in each payment.
4. Enter the time interval for each installment in the Quantity field.
5. Enter the value of the installment in the Amount in transaction
currency field. Enter either the value of the installment as a
percentage of the amount invoiced or as an absolute amount,
depending on the value in the Percentage/Amount field.
6. Select whether the value entered is a percent or an absolute amount
in the Percentage/Amount list.

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Procedure: Create a Fixed Amount or Quantity Payment

Schedule
If Fixed amount or Fixed quantity is selected in the Allocation list, Perform the
following to complete the payment schedule setup.

1. From the Payment schedules form, on the General FastTab, in the

Payment per list, select the date interval in Days, Months, or
Years. The system uses this information when it calculates the due
date of each installment.
2. In the Change field, enter the number of units related to the payment
per value between the due dates of each installment.
3. If the Allocation field is set to fixed quantity, enter the fixed number
of installments in the Number of payments field.
4. If the Allocation field is set to fixed amount, enter the fixed amount
in the Amount currency field.
5. In the Minimum field, enter the minimum installment amount.
Minimum amounts override calculated payment amounts.

Terms of Payment
Use the Terms of payment form to define all the terms of payment used by a
company and the vendors. Use a term of payment for calculation of a due date
based on the date of the invoice.

Specify terms of payment for each of the following:

Vendor in the Vendors form.

Customer in the Customers form.
Purchase order in the Purchase order form.
Sales order in the Sales order form.

Scenario
Contoso has a standard vendor payment term of Net 30 days. If an invoice with a
Net 30 payment term ships goods on September 15, and the invoice is dated
November 15, then payment is due December 15. With a Net 30 Days settlement,
Contoso must pay the net due within 30 days of the invoice date, according to the
settlement. After that date, if the payment is not completed, an interest charge of
a specified percent per month may be added to the invoice. Other services
charges may also apply.

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Procedure: Create Terms of Payment

Perform the following to create a term of payment:

1. Click Accounts payable, click Setup, click Payment, and then click
Terms of payment.
2. Click the New button to create a new record.
3. In the Terms of payment field, enter a code or a short name for the
term of payment.
4. Enter a descriptive name for the current terms of payment in the
Description field.

FIGURE 9.2 TERMS OF PAYMENT FORM

Procedure: Create Terms of Payment - Setup

Perform the following to define the setup information for a term of payment:

1. From the Terms of payment form click the Setup FastTab.

2. Select the method that is used to calculate the due date in the
Payment method list.
o Net
o Current month
o Current quarter
o Current year
o Current week
o Cash on Delivery (C.O.D.)

3. Enter the number of months to add to the payment method to

calculate the due date in the Months field.

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4. Enter the number of days to add to the payment method to calculate

the due date in the Days field.
For example, select Net and enter 20 in the Days field to pay a
vendor 20 days after the invoice date.
Or, select Current month to pay the vendor invoice during the
month of the invoice date. To extend the period add days to the Days
field.
5. Link a payment schedule to the term of payment in the Payment
schedule list. The payment schedule defines how an invoiced
amount is split into installments that must be paid in specific
intervals.

NOTE: If a term of payment is linked to a payment schedule, the rules set up in

the term of payment are used to calculate the due date of the first installment.
The rules set up in the payment schedule are used to calculate the due date of the
following installments.

6. Select a payment day to be used for calculation of the due date in the
Payment day list. The due date is always rounded up to the nearest
specified date. The payment day can be specified:
o For a specific day in the week
o For a specific day in the month

Procedure: Create Terms of Payment - Language

Perform the following to define additional language options for the terms of
payment:

1. From the Terms of payment form, click the Translation button to

translate the search name into more languages. For example, if a
French language text is created the text is shown on invoices for all
vendors that are set up with French as the language.
2. Click the New button to enter a new record.
3. In the Language field, select the language that you are translating.
4. In the Text field, enter the translated text.

Procedure: Create Terms of Payment - C.O.D.

If the C.O.D. (Cash on delivery) payment method is selected, follow these steps,
to complete the term of payment setup.

1. Select the Cash payment check box to indicate if payments should

be made in cash and not by check.
2. In the Ledger posting area from the Cash field, select a ledger
account for settlement of invoices that will be used for cash payment.

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Payment Days
Use payment days to define the payment day used for calculating due date. The
due date always is rounded up to the nearest specified date.

Payment day can be specified for one of the following:

Day in the week

Day in the month

Procedure: Create a Payment Day

Perform the following to create a payment day.

1. Click Accounts payable, click Setup, click Payment, and then click
Payment days.
2. Click the New button to create a new record.
3. In the Payment day field, enter a short identification of the payment
day and enter a description of the payment day identification in the
Description field.
4. On the Payment day lines FastTab, click the Add button to add a
new line to the payment day.
5. Select between Week and Month in the Week/Month field. If
Week is selected, enter a value from the Day of Week field, and if
Month is selected, enter in the Day of month field a value between
1 and 31.

FIGURE 9.3 PAYMENT DAYS FORM

Set up the payment day in the Terms of Payment form on the Setup FastTab to
define the payment date used for calculation of the due date.

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Lab 9.1 - Terms of Payment

Scenario

Cassie, the Accountant at Contoso, has been asked to set up a new term of
payment for a vendor that Contoso has been slow in paying. The vendor,
Southbridge Insurance Co., now requests that payments are paid in 12 days.

Challenge Yourself!
Help Cassie create the new term of payment titled N012 and assign it to the
vendor.

Step by Step
Create the new term of payment and name it N012.

1. Click Accounts payable, click Setup, click Payment, and then click
Terms of payment.
2. Click the New button.
3. In the Terms of payment field, type N012.
4. In the Description field, type Net 12 days.
5. Click the Setup FastTab.
6. Click the Payment method arrow, and then click Net.
7. In the Days field, type 12.
8. Close the form.

Assign the new term of payment to the vendor Southbridge Insurance Co.

1. Click Accounts Payable, click Common, then click Vendors, and

then click All vendors.
2. Double- click the record for vendor 8004 (Southbridge Insurance
Co.).
3. Click the Edit button on the Action Pane.
4. Click the Payment FastTab.
5. In the Terms of payment list, select the newly created term of
payment N012.
6. Close the form.

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Cash Discounts
The following information applies to cash discounts:

Accrue if a company meets the vendor payment terms on time, or are

given to customers when they pay their invoices in a specified
period.
Link to the Customer tables and Vendor tables.
Post to the ledger account specified for the cash discount
automatically if an invoice is settled on time.

Scenario
Contoso obtains a cash discount if it pays vendor invoices within certain dates.
Contoso has set up the following codes:

5D10% - cash discount of 10 percent when the amount is paid within

five days.
10D5% - cash discount of five percent when the amount is paid
within ten days.
14D2% - cash discount of two percent when the amount is paid
within 14 days.

The three cash discounts occur sequentially as the cash discount date nears.
However, only one cash discount is granted.

To specify the cash discounts following the 5D10% code, the 10D5% code is
selected in the Next discount code list. On the 10D5% code, the 14D2% code is
selected in the Next discount code list. Finally, on the 14D2% code the Next
discount code is left blank.

Procedure: Set Up Cash Discounts

Perform the following to set up cash discounts.

1. Click Accounts payable, click Setup, click Payment, and then click
Cash discounts.
2. Click the New button.
3. Enter an alphanumeric code for the cash discount in the Cash
discount field. For example, enter 7D4 to indicate the company
receives a four percent discount if payment is made seven days
before the due date.
4. Enter a brief description for the cash discount in the Description
field. For example, enter 7 days - 4% Discount for the discount code
7D4.
5. Select the cash discount code used when the criteria for obtaining the
current cash discount is exceeded in the Next discount code list.

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This selection lets you to define a set of cash discounts that are
sequential.

FIGURE 9.4 CASH DISCOUNTS FORM

Procedure: Set Up Cash Discounts - Setup

Perform the following to define setup options for cash discounts.

1. From the Cash discounts form click the Setup FastTab.

2. Select the method applicable for the cash discount from the
Net/Current list. The method specified, with the value given in the
Days field and/or Months field, is used to calculate the last date
make a payment and receive any available cash discount.
3. Enter the number of months during the period when the cash
discount is applicable in the Months field.
4. Enter the number of days during the period when the cash discount is
applicable in the Days field.
5. Enter the cash discount as a percentage of the invoiced amount in the
Discount percentage field.
6. Select the Main account for customer discounts and the Main
account for vendor discounts.

NOTE: Assign cash discounts to vendors, journals, or purchase orders.

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Procedure: Define Accounts Payable Parameters

Perform the following to specify accounts payable parameter values that affect
the cash discount calculation.

1. To access the Accounts payable parameters form, click Accounts

payable, click Setup, and then click Account payable parameters.
2. Click Settlement in the left navigation pane.
3. In the Cash-discount administration field select what to do with an
overpayment or underpayment when a cash discount is not deducted
correctly when the invoice is settled. Select from the following
values:
o Unspecific - the underpayment amount is posted to the vendor
cash discount account.

If the applicable cash discount was posted in the same company

as the overpayment, the system will adjust the cash discount. If
the applicable cash discount was not posted in the same company
as the overpayment, it is posted to the system cash discount
account. If there are multiple cash discounts so that an
overpayment was settled against multiple invoices, the
adjustment to the discount is from the last invoice to the first
discount.

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o Specific - the overpayment or underpayment amount is posted to

the vendor cash discount account.
For example, a vendor's invoice total is 105.00 USD, and the
obtainable cash discount is 10.50 USD. Considering the cash
discount, the vendor will be paid 94.50 USD (105-10.50).
However the amount actually paid to the vendor is 95.00 USD.
If the Cash-discount administration parameter is set to
Unspecific, the invoice is settled, and the difference of 0.50
USD is posted to the ledger account specified for cash discount
differences.
If the Cash-discount administration parameter is set to
Specific, the invoice is settled, and the difference of 0.50 USD is
posted to the vendor's cash discount account.

FIGURE 9.5 ACCOUNTS PAYABLE PARAMETERS

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Procedure: Define General Ledger Parameters

Perform the following to specify general ledger parameter values that affect the
cash discount calculation.

1. To access the General ledger parameters form, click General

ledger, click Setup, and then click General ledger parameters.
2. Click Sales tax on the left navigation pane.
3. Expand the Tax options FastTab. Select the Cash discount is
calculated on amount including sales tax check box in the Vendor
cash discount Area to specify that the cash discount is calculated
based on the amount plus sales tax.

FIGURE 9.6 GENERAL LEDGER PARAMETERS FORM

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Payment Fee
Use payment fees to do the following:

Specify if any additional charges are added to the vendor invoice.

For example, a vendor might add a fee for issuing a promissory note
or a company might be charged a vendor bank remittance fee.
Define fee identifications, specify bank relations, and identify how to
generate fees.

Scenario
Contoso electronically transfers invoice amounts (that are due to the vendor) to
its bank. The bank then transfers the money directly into a vendor's designated
banking account. After the invoice amount is transferred, a paper remittance
invoice is sent automatically to each vendor explaining the specific account the
payment is posted to and the amount of the payment issued.

To manage the payment fees from the bank, Contoso decides to set up payment
fees for vendor invoices.

Procedure: Create a Payment Fee

Perform the following to create a payment fee.

1. Click Accounts payable, click Setup, click Payment, and then click
Payment fee.
2. Click the New button to create a new record.
3. Enter an identification in the Fee ID field.
4. Enter a brief description in the Description field.

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5. Select whether to charge the Vendor or Ledger to use a financial

cost for the fee in the Charge field. If Ledger is selected, select an
account in the Main account field for posting in the ledger.
6. Select the journal type for which the fee is valid for in the Journal
type field. This journal type is typically vendor bank remittance.

FIGURE 9.7 PAYMENT FEE FORM

Procedure: Define Payment Fee Setup

You can define a payment fee to set up lines for each fee used for different
banks, methods of payment, remittance types, payment specifications, currencies,
time periods, and amount intervals. Perform the following to set up a payment
fee.

1. From the Payment fee form, click the Payment fee setup button.
2. Select the kind of bank information that is required to start the fee in
the Grouping field. The fee is valid for each field for:
o Table - the bank account selected in the field Bank relation
o Group - the bank group selected in Bank relation
o All - all the bank accounts

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3. Select a bank relation from the Bank relation field if:

o A bank account - table is selected in the Grouping field
o Bank groups - group is selected in the Grouping field
o Skip - all is selected in the Grouping field Select a method of
payment used for the actual payment fee in the Method of
payment field.

FIGURE 9.8 PAYMENT FEE SETUP FORM

4. If the company agrees with the bank to specify the payment, select
the payment specifications in the Payment specification field.
5. Select the currency that enables the fee in the Currency field. Only
transactions with this currency can enable the fee. If you leave this
field blank, all currencies enable the fee.
6. Select the calculation method in the Percentage/Amount list. Select
among:
o Amount
o Percent
o Interval

7. Enter the size of the fee in the percentage of the payment or the
amount for one payment in the Fee amount field.
8. Select the currency code for the fee in the Currency field.

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Procedure: Define Payment Fee Setup - General

Perform the following to define additional options for the Payment Fee Setup.

1. From the Payment fee setup form, click the General tab.
2. Enter the minimum transaction amount to enable the fee in the
Minimum field.
3. Enter the maximum transaction amount to enable the fee in the
Maximum field.
4. Enter the date the date interval starts for fee calculation in the From
date field.
5. Enter the ending date for date interval for fee calculation in the To
date field.
6. If the calculated fee is less than the value entered in the Minimum
fee field, it will not be applied.
7. If a financial cost is selected, you can select a Sales tax group and
an Item sales tax group to generate the relevant taxes.

NOTE: If sales tax is calculated, the net amount is posted on a ledger account,
and the sales tax amount is posted on a sales tax account.

FIGURE 9.9 PAYMENT FEE SETUP FORM, GENERAL TAB

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Procedure: Define Payment Fee Setup - Interval

You can enter fees for the selected payment fee setup line that depend on the
interval between the remittance and due dates.

Perform the following to define an interval payment fee setup.

1. From the Payment fee setup form, click the Interval tab.
2. Enter the number of days between the posting date (discounting date)
of the remittance and the due date of the promissory note in the Days
field.
3. Select whether the specification is a percentage or an absolute
amount in the Percentage/Amount field.
4. Enter the size of the fee in percent of the payment or amount for one
payment in the Fee amount field.

FIGURE 9.10 PAYMENT FEE SETUP FORM, INTERVAL TAB

Methods of Payment
Many companies offer several methods to pay due invoices, such as the
following:

Credit
Cash in advance
Bill of exchange
Check and electronic payments

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In the Methods of payment form, specify all the methods of payment the
company uses to pay its vendors. For each method of payment, enter information
that states how payments should be summarized and posted.

Methods of payment can be assigned to:

Vendors
Journals
Purchase orders

Procedure: Create a Method of Payment

Perform the following to create a method of payment.

1. Click Accounts payable, click Setup, click Payment, and then click
Methods of payment.
2. Click the New button to create a new record.
3. Enter a name for the new method of payment in the Method of
payment field.
4. Select whether the system should total the invoices in an automatic
payment proposal. Options include the following:
o Invoice - creates one payment transfer for each invoice
o Date - combines the payment for all invoices for vendors with
the same due date
o Week - combines all invoices for vendors with a due date within
the same week
o Total - combines all invoices from vendors for the same
payment

5. Enter a description of the method of payment in the Description

field.
6. Enter the number of days the vendor gives to make the payment after
the specified method of discount, and still give a cash discount in the
Grace period field.
7. Select the payment status that is required to post a payment with this
method of payment in the Payment status field.

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8. Select what type of payment is allowed in the Payment type field.

o Other - method of payment is none of the other choices or is not
yet assigned. This is the default value.
o Check - the method of payment is a check.
o Electronic Payment - the method of payment is electronic, such
as electronic funds transfer (EFT). When this payment type is
used, the system performs bank validations that are skipped if
you use other payment types.
o Promissory note - the method of payment is a promissory note.

9. Select the Allow copies of payments check box to allow users to

print non-negotiable copies of payments for the selected method of
payment. Users might need to print copies of payments to resolve
payment disputes, or to let vendors know which invoices were paid
on a particular date.

FIGURE 9.11 METHOD OF PAYMENTS

Procedure: Create a Method of Payment - General

Perform the following to add general information to the method of payment:

1. From the Methods of payment - vendors form click the File

formats FastTab.
2. In the Posting area in the Account type field, select the kind of
offset account that is used for payments. The most common account
type is Bank.
3. Select the liquidity account for payment in the Payment account
field.

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4. Enter the transaction type for a bank account in the Bank

transaction type field. The transaction type is marked on every
transaction generated in the payment proposal. This field is active
only when the account type is Bank.
5. In the Promissory note area, select one of the following in the Type
of draft field:
o No draft - no draft is created.
o Bill with no acceptance - the bill of exchange can be included
directly in a bank remittance. The bill is not printed and you
agree to pay without an acceptance step.
o Bill with acceptance - you accept the bill of exchange from the
vendor and include a remittance. The bill can be printed and sent
from the vendor with an invoice or an account statement. When
you receive the draft, enter the acceptance date or approval date.
o Promissory note - you promise to pay the vendor on a specified
date. You do not receive a bill of exchange from the vendor, and
you agree to pay without an acceptance step.
o Bill of exchange with bank acceptance - a bill of exchange can
be included directly in a bank remittance. The bill is not printed,
and the bank is responsible for paying the bill to the vendor.

Procedure: Create a Method of Payment - File Formats

Perform the following to specify the file format.

1. From the Methods of payment - vendors form click the File

formats FastTab.
2. Specify the file formats to use with this Method of Payment by using
the following table to complete the File formats tab:

Format Action
Export Specify the format to export payment, for example, a
format promissory note or a check format. The export format tells the
system how to communicate with the bank.
Return Enter a format to return a message from the export format, if
format the bank supports an electronic return file.
Remittance Enter a format for remittance to a specific bank.
format

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NOTE: If the format list is empty, click the Setup button and select from the
available formats.

FIGURE 9.12 METHODS OF PAYMENT , FILE FORMATS FASTTAB

Procedure: Create a Method of Payment - Payment

control
Perform the following to select the validation for the method of payment.

1. From the Methods of payment - vendors form click the Payment

control FastTab.
2. Select the validation for the method of payment. Validation is
executed during posting if a method of payment is selected on a
journal. Select one or more of the following validation methods:
o Payment reference is mandatory - verifies that a payment
reference is entered
o Payment note is mandatory - verifies that a note follows the
payment
o Payment ID is mandatory - verifies that a payment
identification is filled in

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o Payment specification is mandatory -verifies that the payment

method's specification is entered
o Check number is mandatory - verifies that the check number is
entered
o Offset account has the type bank - verifies that the offset
account type selected is Bank
o Bank transaction type is mandatory -verifies that a bank
transaction type is selected

FIGURE 9.13 METHODS OF PAYMENT, PAYMENT CONTROL FASTTAB

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Lab 9.2 - Method of Payment, Terms of Payment, and Cash

Discount
Scenario

April, the Accounts Payable Clerk at Contoso has been asked to set up a new
method of payment called special cash discount (SCD). The SCD was requested
by Lake Electronics, a vendor with whom Contoso collaborates. The vendor has
asked Contoso to pay cash with a special discount, for the next few months to
help them with some accounts receivable shortfalls. Lake Electronics is offering
good terms with a two percent cash discount if the invoice is paid within seven
days and net payment due in 14 days.

Other details are as follows:

Field Value
Payment status None
Account type Bank
Payment account EUR OPER
Bank transaction type 03
Export Format 1 (Test)
Return Retur. Format 1 pr. payment

Challenge Yourself!
Help April set up the method of payment. Attach the new terms of payment and
cash discount to the vendor.

Need a Little Help?

1. Create a new method of payment and name it SCD, Special Cash

Discount.
2. Assign the new method of payment to the vendor. Also, assign the
N014 terms of payment to the vendor, which specifies that the
balance is due in 14 days.

Step by Step
Create a new method of payment called SCD, Special Cash Discount.

1. Click Accounts payable, click Setup, click Payment, and then click
Methods of payment.
2. Click the New button to create a new method of payment.
3. In the Method of payment field, type SCD.
4. Click the Period arrow, and then click Invoice.

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5. In the Description field, type Special Cash Discount.

6. In the Grace period field, type 0.
7. Click the Payment status field, and then click None.
8. Click the General FastTab.
9. Click the Account type arrow, and then click Bank.
10. Click the Payment account arrow, and then click EUR OPER.
11. Click the Bank transaction type arrow, and then click 03 (Checks-
Printed).
12. Click the File formats tab.
13. Click the Export format arrow, and then click Format 1 (Test).
14. Close all the forms.

Assign the new method of payment to the vendor. Also assign the N014 Terms of
payment to the vendor, which specifies that the balance is due in 14 days.

1. Click Accounts payable, click Common, and then click All

vendors.
2. Double-click Vendor account 4103.
3. Click the Payment FastTab.
4. Click the Edit button on the Action pane.
5. Click the Terms of payment arrow, and then click N014.
6. Click the Method of payment arrow, and then click SCD.
7. Click the Cash discount arrow, and then click 2%D07.
8. Close the form.

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Vendor Groups
Use vendor groups to set up certain information that always defaults when you
enter a new vendor.

For example, use the vendor group to set up automatic posting to General Ledger
accounts for consumption generated by vendor transactions.

In the Vendor groups form, set up vendor groups. You must set up at least one
vendor group, because a vendor group must be specified when you create a new
vendor.

Scenario
Contoso has multiple vendors to monitor. To simplify the management of
vendors, Contoso has set up several vendor groups to do the following:

Specify ledger posting per vendor group - to specify accounts for

each vendor group. You can specify accounts, that is, for vendor
debts, an arrival account for a vendor with a corresponding offset
account, a receipt account, item consumption account and account
for vendor line discounts.
Record sales budgets per vendor group - find additional
information about how to set up budgets for each vendor group in
Financials II training material.
Generate trade statistics per vendor group - to generate sales
statistics that, for example, show monthly consumption for each
vendor group.

Procedure: Create a Vendor Group

Perform the following to create a new vendor group:

1. Click Accounts payable, click Setup, click Vendors, and then click
Vendor groups.
2. Click the New button to create a new record.
3. Enter a short name for the vendor group in the Vendor group field.
This name is used throughout the system.
4. Enter the full name of the vendor group in the Description field. The
name acts as additional specification of the vendors included in the
vendor group. To view the name of the vendor in all dialog boxes
that display a vendor group move the pointer over the vendor group
and wait until the name is displayed.
5. Specify a payment term that corresponds to the default time interval
between the purchase of an item and the invoice due date in the
Terms of payment field. Use the Terms of payment list for cash
flow forecasting.

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For example, the payment term is used for vendor payment coverage
based on one purchase budget per vendor group. If a purchase budget
is set up for vendor group X and a purchase of 10,000 USD is
budgeted for June 15, a payment term is specified to correspond to
the current month + 30 days. On this basis, coverage is arranged so
that the budgeted item price of 10,000 USD is due for payment on
July 30.
6. Specify a term of payment that corresponds to the default interval
between the due date and the actual payment time in the Settle
period field. Use the payment terms with vendor payment coverage
based on one purchase budget for each vendor group. Use the Settle
period field in cash flow calculations.
7. Enter or select the default tax group for the selected vendor group in
the Default tax group field.

FIGURE 9.14 VENDOR GROUPS FORM

Procedure: Define Inventory Posting

Perform the following to set up automatic postings to ledger accounts for a
vendor group:

1. From the Vendor groups form, click the Item posting button.
2. Set up general posting rules for all items, accounts, and sales-tax
codes by selecting one of the following in the Item code field.
o Table - This option is the highest in the hierarchy. By selecting
Table, the posting in ledger only applies to a specific item
number.
o Group - The posting in the ledger only applies to a particular
item group.

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o All - Each transaction is posted for all item numbers in the same
account in the ledger. The first matching account is used for
posting.

Based on the kind of business that you run, decide which accounts you must set
up. The focus of finance is related to consumption and revenue accounts, whereas
the focus of logistics is the issue, receipt, and packing slip accounts.

FIGURE 9.15 INVENTORY POSTING FORM

Perform the following to further define parameter values:

1. To access the Accounts payable parameters form, click Accounts

payable, click Setup, and then click Accounts payable parameters.
2. Click Ledger and sales tax on the left navigation pane.
3. Click the Posting FastTab and select whether the primary posting
should be assigned to Item or Vendor in the Primary receipt
posting field.

For example, set up the Primary receipt posting list to prioritize the Item. If
you buy some of item type B-R14 from vendor 3000, which is part of vendor
group 50, the system posts the transaction to account number 510120, because
the item relation is more specific than the account relation.

Item Item Account Account Main

code relation code relation account
All All 510100
All Group 50 510800
Table B-R14 All 510120

If the posting is set up as illustrated in the following table, and the Primary
receipt posting list is set to Vendor, and you bought some of item type B-R14
from vendor 3000, the transaction is posted to account number 510100 because
of the Accounts Payable parameter setup.

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Item Item Account Account Main

code relation code relation account
All Table 3000 510100
Table B-R14 All 510120

FIGURE 9.16 ACCOUNTS PAYABLE PARAMETERS FORM, LEDGER AND

SALES

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Lab 9.3 - Create a Vendor Group

Scenario

Phyllis, the Accounting Manager, has asked April, the Accounts Payable Clerk,
to create a new vendor group. Phyllis will use the vendor group to group vendors
who require Contoso to pay cash on delivery. The new group should be called 83,
and the description should be cash vendor group. After April creates the vendor
group, she must set up automatic posting of receipts to General ledger accounts.
The posting should have the account relation of 80 (other vendors), and post to
account number 211300.

Challenge Yourself!
Help April create a new vendor group that has automatic posting.

Need a Little Help?

1. Create a new vendor group, which is titled 83 for cash vendors.

2. Assign the terms of payment as cash and the settle periods as COD.

Step by Step
Create a new vendor group, which is titled 13 for cash vendors. Assign a cash
terms of payment and COD settle period.

1. Click Accounts payable, click Setup, click Vendors, and then click
Vendor groups.
2. Click the New button to create a new group.
3. In the Vendor group field, type 83.
4. In the Description field, type Cash Vendors for the description.
5. Click the Terms of payment arrow, and then click P007.
6. Click the Settle period arrow, and then click P007.

Assign the automatic posting to the new vendor group.

1. From the Vendor groups form, click the Item posting.

2. Select Purchase inventory receipt and click the Add button.
3. Click the Item code arrow, and then click All.
4. Confirm that the Account code field is set to Group.
5. In the Account relation field, type 80 Other vendors.
6. In the Main account field, type 141250.
7. Close the form.

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Accounts Payable Posting Profiles

Posting profiles are common throughout all modules in Microsoft Dynamics AX.
In Accounts Payable posting profiles, the summary accounts are defined for
vendors. Summary accounts are temporary accounts where all invoices are
posted to and offset when the vendor is paid. Assign posting profiles to the
following:

All vendors
Groups of vendors
Single vendor

When you post a vendor transaction automatically, the system searches for the
ledger accounts shown in the previous order. Consider the following examples:

A posting profile line exists for the vendor, this line is used.
No posting profile line exists for the vendor, however, the line
specified for the vendor group that the vendor is attached to is used.
Neither of these exists, the posting profile line for all vendors are
used.

In the Vendor posting profiles dialog box, you can set up many vendor posting
profiles. If all vendor transactions are processed together, set up only one posting
profile for all vendors.

Procedure: Create a Posting Profile

Perform the following to create a posting profile:

1. Click Accounts payable, click Setup, and then click Posting

profiles.
2. Click the New button to create a new record.
3. Enter a code or a short name for the posting profile in the Posting
profile field.
4. Enter a description of the posting profile in the Description field.
5. Click the Table restrictions FastTab.
6. Select the Settlement check box to indicate whether entries should
be created by using this posting profile for automatic settlement or
the settlement must be manual and use open-transaction editing.

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7. Select the Cancel check box to indicate whether you want to be able
to cancel transactions created that have this posting profile.
8. Select the name of any other posting profile to change to when
transactions with this posting profile are closed in the Close list. A
transaction automatically becomes closed when it is settled in full.

FIGURE 9.17 VENDOR POSTING PROFILES FORM

Procedure: Create a Posting Profile - Setup

Perform the following to set up the ledger accounts that are posted to when you
post transactions in Accounts payable:

1. From the Vendor posting profiles form, click the Setup FastTab.
2. Click the Add button to add a new line.
3. Select an Account code:
o Table
o Group
o All

4. Specify which vendors belong to the current posting profile in the

Account/Group number field.
o If Table is selected in the Account code field, enter the account
number of the vendor to whom the posting profile relates.
o If Group is selected in the Account code field, enter the vendor
group to which the posting profile relates.
o If All is selected in the Account code field, do not fill in the
field.

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5. Select the account number of the ledger account that is used as the
vendor summary account for the vendor(s) to whom the posting
profile relates in the Summary account field.
If you use an invoice register and invoice approval journal, all
vendor invoices recorded as having arrived but not yet approved are
posted in the Arrivals account and the Arrivals offset account. When
these invoices are approved, the debt is transferred to the vendor
summary account. If your company does not use an invoice register
and invoice approval journal, all vendor invoices are updated directly
in the vendor summary account.
6. Select the liquidity ledger account that is used for cash flow forecast.
Cash flow forecast in the Settle account field. For more about Cash
flow forecast refer to the Microsoft Dynamics AX Financials II
course.
7. Select the account used for Sales tax prepayments.
8. Select a ledger account number that is used to make temporary
postings of unapproved vendor invoices, which are updated through
invoice register in the Arrival list.
9. Select in the Offset account list, the ledger account number that is
used for offsetting unapproved vendor invoices, which are updated
through the invoice register. The offset account acts as the offset
account for arrival and contains unapproved vendor purchases.

Procedure: Set Parameter Values

Perform the following to define parameter values:

1. To set up default values for posting click Accounts payable, click

Setup, and then click Accounts payable parameters.
2. Click Ledger and Sales tax on the navigation pane.
3. In the Posting profile field, enter or select the short name of the
default vendor posting profile. A posting profile must be specified
for every update of a vendor transaction.

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Lab 9.4 - Vendor Posting Profile

Scenario

Phyllis, the Accounting Manager has asked April, the Accounts Payable Clerk, to
set up a new posting profile for a group of vendors to be paid from a different
cash account than other vendors. Phyllis explained that the profile should be
selected for automatic settlement and should allow for cancellation. The
following details apply:

Field Value
Posting Profile COD
Description Cash on Delivery Profile
Account Code Group
Account/Group Number 80 - Other Vendors
Summary Account 211100
Settle Account 110180
Arrival 211310
Offset Account 211320

Challenge Yourself!
Help April create the new vendor posting profile for group 80.

Need a Little Help?

You can find the Automatic settlement and Cancel check boxes on the Table
restrictions FastTab.

Step by Step

1. Click Accounts payable, click Setup, and then click Vendor

posting profiles.
2. Click the New button to create a new profile.
3. In the Posting profile field, type COD.
4. In the Description field, type Cash on delivery profile.
5. Click the Table restrictions FastTab.
6. Verify the Settlement check box is selected.
7. Verify the Cancel check box is selected.
8. Click the Setup FastTab.
9. Click the Account code arrow, and then select Group.
10. In the Account/Group number, type 80.
11. In the Summary account field, type 211100.

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12. In the Settle account field, type 110180.

13. In the Arrival field, type 211310.
14. In the Offset account field, type 211320.
15. Close the form.

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Accounts Payable Vendors

A company purchases goods and services from vendors. Each accounts payable
transaction must be associated with a vendor. Use the Vendors form to create,
maintain and inquire about vendors.

Enter as much data as possible when you set up Microsoft Dynamics AX because
the data is used throughout the system for:

Invoices
Payments
Reports

The base data automatically appears as the default for all transactions involving
the vendor.

Default information can always be changed.

Procedure: Create a Vendor - General

Perform the following to create a new vendor:

1. Click Accounts payable, click Common, click Vendors, and then

click All vendors.
2. Click Vendor in the New group on the the Action Pane.
3. Enter a Vendor ID with up to 10 characters in the Vendor account
field, and a vendor name with up to 30 characters in the Name field.
The Vendor account is generated automatically if the vendor
account number sequence is specified in the Accounts payable
parameters form in the Number sequences section. Some
companies prefer to enter the number sequences manually. To do
this, select the Manual check box on the General FastTab in the
Number sequences form. Avoid using numbers that can be changed,
such as telephone numbers.
4. Select a Record type of either Person or Organization. This
selection will determine what fields are available on the form.
5. Enter the name to use when you search for the vendor in the Search
name field. If it is not entered, the Name field is used by default.
6. Select the vendor group to which the vendor belongs in the Group
list.
7. As appropriate, enter values in the other fields in the Organization
details and Other information area.

NOTE: In the Other information section, select the language that is used for all
external documents, such as purchase orders in the Language field. The
language code is mandatory.

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NOTE: To display more fields on the General FastTab, click the Show more
fields button.

FIGURE 9.18 VENDORS FORM

Procedure: Create a Vendor - Address and Contact

Perform the following to add addresses and contact information about the
vendor:

1. From the Vendors form, enter the vendor's address and contact
details on the Addresses and Contact information FastTabs.
2. If a vendor has more than one address, such as invoice, delivery,
purchase, alternative delivery address, or SWIFT, enter additional
addresses by clicking the Add button.
3. Additionally, enter address, contact information, and parameters for
access from the Internet. Click the Add button on the Contact
information FastTab.

NOTE: This Area is for non-postal contact information for the vendor
organization. Example: Website URL, additional phones numbers

NOTE: If alternative delivery addresses are in different states or countries,

ensure that you enter the appropriate tax group for each alternative address. You
must associate tax groups with a delivery address.

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Procedure: Create a Vendor - Miscellaneous Details

Perform the following to set Miscellaneous vendor details.

1. From the Vendors form, click the Miscellaneous details FastTab.

2. Enter the vendor credit rating in the Credit rating field. It is used for
statistical purposes only.
3. Enter the maximum outstanding amount allowed in the balance of
the vendor's account in the Credit limit field. This amount always is
stated in the default currency.
4. As part of updating purchase orders or invoices, set up the system to
verify whether an account is over its credit limit in the Credit rating
section of the Accounts payable parameters form. If an account is
beyond the credit limit specified, the update is stopped.
5. To apply vendor holds, click the Vendor tab, then click the On hold
button in the Maintain group of the Action Pane. The following
types of holds are available:
No - the vendor has no holds. All types of transactions are
permitted
o Invoice - no invoices can be created or posted for this vendor.
o All - all transactions for this vendor are on hold
o Payment - no payments can be generated for this vendor.
Payments that were generated before the hold was applied can
still be posted.
o Requisition - no requisitions can be generated for this vendor.
o Never - prevents vendors from being put on hold for inactivity.
This may occur if a batch job is configured to periodically sweep
the vendor master for inactive vendors.

6. After selecting a type of vendor hold, select the Release date and
Reason code for the vendor hold in the same drop down menu.

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7. Select a buyer group in the Buyer group list. Your selection creates
links between vendors, employees, and items/planned orders when
you create purchases and productions.
For example, use buyer groups to determine which employees are
associated with the current buyer group and to change the buyer
group if an employee changes an area of responsibility.
8. Select a Customer account number if vendor is also a customer and
used in Intercompany transactions.

FIGURE 9.19 VENDORS FORM, MISCELLANEOUS FASTTAB

Procedure: Create a Vendor - Define Vendor Profile

Vendor profiles allow organizations to track specific details about vendors.
Perform the following to define vendor profiles.

1. From the Vendors form, click the Vendor profile FastTab.

2. Select the Bid only check box if the vendor has submitted quotes or
proposals but has not yet been approved for purchases. You can use
this indicator to associate bids and other documentation with the
vendor account.
3. Select the One-time supplier check box if the vendor is a one-time
supplier. If the One-time supplier check box is selected when a
purchase order is created, the distinction is indicated here.
4. Select the Locally owned check box if the vendor meets your
guidelines for being a locally owned business. Collecting this data
allows local businesses to have priority on certain contracts.
5. Select the Small business check box if the vendor meets your
guidelines for being a small business. You can collect this data to
generate reports about this information.

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6. Select the Woman owner check box if the vendor is owned by a

woman. This field is used for statistical purposes only.
7. Continue selecting the appropriate check boxes as appropriate in this
section.

NOTE: If you are using one-time suppliers you must set up a number sequence
for one-time suppliers in the Accounts payable parameters form in the Number
sequence section. In the General section of the Accounts payable parameters
form, select a vendor's account number that can serve as the default template for
one-time suppliers. Information is copied automatically when you create a one-
time supplier in the Vendors form. The system automatically creates a one-time
vendor when a purchase order is created for a one-time supplier. Except for the
vendor number, the one-time supplier inherits all base information from the
vendor number specified in this field. The one-time vendor number sequence
must be specified in the Number sequences form. If you have no one-time
suppliers, leave the Default vendor number blank.

Procedure: Create a Vendor - Purchasing Demographics

Enter or view the currency, line of business, chain and contact name for the
vendor in the Vendors form, on the Purchasing Demographics FastTab.

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Procedure: Create a Vendor - Invoice and Delivery

Enter or view invoice defaults, delivery, and tax for the vendor in the Vendors
form, on the Invoice and Delivery FastTab.

FIGURE 9.20 INVOICE AND DELIVERY FASTTAB.

Procedure: Create a Vendor - Purchase Order Defaults

and Payment
Enter or view the default location, discounts and change management for
purchase orders when created for the vendor in the Vendors form, on the
Purchase Order Defaults FastTab.

Enter information about how to manage payments on the invoices entered in

Accounts Payable in the Vendors form, on the Payment FastTab.

Procedure: Create a Vendor - Tax 1099 and Financial

Dimensions
Enter or view information for tax 1099 reporting in the United States for the
selected vendor in the Vendors form, on the Tax 1099 FastTab. This option is
available only to legal entities whose primary address is in the United States.

Set up specific dimensions for a vendor on the Financial dimensions FastTab.

Throughout Microsoft Dynamics AX, you can use dimensions to group data in
different ways.
If you designate dimensions for a vendor, those dimensions automatically default
for transactions made that use that vendor.

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Lab 9.5 - Vendors

Scenario

Contoso has begun working with a new vendor, Dakota Travel. April, the
Accounts Payable Clerk, must set up this new vendor. The following details
apply:

Field Value
Vendor group 80 - other vendors
Credit limit 10,000
Method of payment Check payment - USD
Cash discount 4%D10
Terms of payment N015

Challenge Yourself!
Help April create a new vendor.

Step by Step
Create the new vendor.

1. Click Accounts payable, click Common, click Vendors, and then

click All vendors.
2. Click the New Vendor button on the action pane to create a new
vendor. A new vendor account number will be assigned
automatically.
3. In the Name field, type Dakota Travel.
4. Tab to the Group field and type 80.
5. Click the General tab.
6. Click the Miscellaneous details FastTab and then type 10,000.00 in
the Credit Limit field.
7. Click the Payment FastTab.
8. Click the Terms of payment arrow, and then click N015.
9. Click the Method of Payment arrow, and then click
USAUSD_CHK.
10. Click the Cash discount arrow, and then click 4%D10.
11. Close the form.

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Summary
Payment options in Microsoft Dynamics AX are flexible to accommodate
different business processes. You can do the following with payment options:

Define terms based on the number of months and/or days, based on a

current period (for example, current month or current quarter), and
with or without additional months or days.
Set up terms of payment for cash payment so that the payment posts
automatically when you issue the invoice.
Set up advanced payment schedules and use them as terms of
payment based on many factors, including the following:
o Percentage allocation of the actual invoice amount
o Allocation based on a fixed number of installments
o Combined amounts and percentages of the invoice amount

Set up cash discounts similar to the terms of payment, based on the

following:
o The current period
o The number of net days

Set up the cash discounts as multiple (for example, ten days three
percent and 30 days one percent). You can decide whether you want
special ledger accounts to post.
Set up Microsoft Dynamics AX to manage the cash discount with or
without sales tax to comply with the tax legislation in various
countries.

You also can group vendors to categorize information so that it is meaningful. By

grouping vendors you can do the following:

Set up automatic posting rules for vendor transactions to ensure that

the transactions affect the correct accounts.
Become aware of situations and trends more quickly by grouping
vendors with a common identifier to view and analyze financial
causes in more detail. For example, you can group vendors by the
kinds of products you purchase from them or by the dollar volume of
purchases.

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Test Your Knowledge

Test your knowledge with the following questions.

1. A payment schedule consists of which of the following?

( ) Payments
( ) Consecutive time intervals
( ) Consecutive payments
( ) Consecutive payments in set time intervals

2. What elements must be defined to create a payment schedule? (Select all that
apply)
( ) Vendor account
( ) Due date of each installment
( ) Amount of each installment
( ) Number of installments

3. What interval can the payment day can be specified? (Select all that apply)
( ) Specific day in a week
( ) Specific date in a month
( ) Specific day in a year
( ) Specific day in a quarter

4. Cash discounts are linked to what tables?

( ) Sales and Purchase Order
( ) Payment Days and Payment Fees
( ) Terms of Payment and Payment Days
( ) Customer and Vendor

5. What are some methods of payment a company might use? (Select all that
apply)
( ) Credit
( ) Cash in advance
( ) Check and electronic payments
( ) Bill of exchange

6. How many vendor groups must be set up?

( ) None
( ) One
( ) Two
( ) Ten

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this
chapter

1.

2.

3.

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Solutions
Test Your Knowledge
1. A payment schedule consists of which of the following?
( ) Payments
( ) Consecutive time intervals
( ) Consecutive payments
() Consecutive payments in set time intervals

2. What elements must be defined to create a payment schedule? (Select all that
apply)
( ) Vendor account
() Due date of each installment
() Amount of each installment
() Number of installments

3. Outline the steps to setting up a term of payment. Place the following steps in
order.

Step:

1 : Access the Terms of payment form in Accounts Payable.

6 : Specify the days (or other time unit).

4 : Enter a description.

3 : Enter a terms of payment identifier.

2 : Create a new record.

5 : Select the payment method.

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4. What interval can the payment day can be specified? (Select all that apply)
() Specific day in a week
() Specific date in a month
( ) Specific day in a year
( ) Specific day in a quarter

5. Cash discounts are linked to what tables?

( ) Sales and Purchase Order
( ) Payment Days and Payment Fees
( ) Terms of Payment and Payment Days
() Customer and Vendor

6. What are some methods of payment a company might use? (Select all that
apply)
() Credit
() Cash in advance
() Check and electronic payments
() Bill of exchange

7. How many vendor groups must be set up?

( ) None
() One
( ) Two
( ) Ten

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