Centralized payment

Solution

D365FO allows centralizing payments in a dedicated legal entity. Invoices are recorded in the respective operational legal entities, while payments are made and managed from the centralized egal entity.
This feature is especially useful when operational entities are responsible only for sales/purchases, but payments are handled by a separate central entity.

Configuration

Organization hierarchy

Go to: Organization administration> Organizations> Organization hierarchies.

Create the hierarchies and assign as purpose “Centralized payments”:

Design the parent/child relationship between legal entities as a hierarchy, then activate it. Use only legal entities as hierarchy units to design it.

Intercompany accounting

Go to: General ledger> Posting setup> Intercompany accounting.

Configure the main account used when D365FO automatically posts intercompany general ledger transactions.
Note: For “centralized payment, you can indicate which legal entity is competent for absorbing the corresponding payment element (cash discount, realized exchange gain or loss, etc…):

Process

Client/Vendor master data

It is important that the vendor/customer is shared across both the invoicing legal entity and the payment legal entity. By shared we means they should have the same party id. We can click on “change party association” to see the party id and eventually change it.

Client Brembo in ITCO

Client Brembo in USMF

Post invoice

Regularly post invoices in the operational legal entity. In our example: Post a free text invoice for the Brembo customer in ITCO.

Centralize payment

Create a payment journal in the central payment legal entity.
Run the payment proposal and select “Include invoices from other legal entities” to capture invoices issued by the child/operational legal entities.