With Payment Registration we can efficiently post incoming documents from customers. However, in that case, still the customer is the one who initiates the payments.
The Direct Debit Collections, provides a way in which we can initiate the payment. Based on the mandate and agreement that we have with the customers, we can send a file to the bank with a list of customer invoices that should be paid. This is based on SEPA (Single Euro Payment Area) format.
Bank Account Card
It is important that you use the bank accounts and customers in euro, since it is based on SEPA. The following example uses World Wide Bank Euro (WWB-EUR).
Enter the Country/Region Code to specify in which country you are using the bank. In this example we are using GB (Great Britain). Although Great Britain has a different local currency, but it belongs to the SEPA area and is one of the SEPA countries.
Notice the currency in Euro.
We need to have IBAN number and also a SEPA Direct Debit Exp. Format. In this example we will use SEPA format, but you can also use other formats. We will also enter Direct Debit Msg. Nos., so that the system can use the number series to number the SEPA direct debit messages.
That’s basically the setup we need to do on the bank account card, where most important is specifying the format that you can use. A format is all about defining the processing code units and xml ports that the system can use to create xml files based on a specific format.
In this example we will choose a Euro customer (34010100 Libros S.A.).
If we need to use direct debit for this customer, we need to specify certain fields in the Payments fast tab on the customer card.
So, the first thing that we need to do is to specify Payment Terms Code where we have to distinguish between a company and a person. In this case it is a Company.
Next we need to setup Payment Method. Based on the payment method, the system knows whether it is a direct debit customer or not. Here we have created a new direct debit payment method code.
Last but not the least, we will also specify Direct Debit Mandate. On the Direct Debit Mandates window:
Specify the ID, which is auto generated.
Then specify Customer Bank Account, which is used by the customer to pay the invoices. Let’s have a look at the bank account card of the bank account UTR (Utrecht) being used here and note the important fields. First of all, the Currency Code is Euro (EUR). The Country/ Region Code is one of the SEPA countries The Netherlands (NL). The bank account also has a valid IBAN number (NL91ABNA0417164300) and SWIFT Code (KREDBEBB). So basically, these fields have to be placed in the bank account to be able to use it in direct debit.
In real life the Valid From, Valid To and Date of Signature field values are provided by the bank.
We will choose the Type of Payment as Recurrent and let us say we expect 12 payments (for example 1 payment per month). You will see that there is a Debit Counter, which will increment based on the direct debit collection.
Furthermore, you can Block a mandate and also see if the mandate is Closed or not.
After we have done this setup, we are ready to use this customer for direct debit collection.
Create a simple sales invoice for the customer Libros S.A based on a G/L account. Let us say we have sold some consulting fees to this customer.
Now go to the Invoicing tab, and check the direct debit information is filled in automatically. Therefore, the system knows that this invoice can be paid by direct debit. However, you can also change this information.
Post the sales invoice. Once the sales invoice is posted, it means that now I have an invoice which can be paid using direct debit collection and that’s the next thing that I will do.
Direct Debit Collections
Click Departments/Financial Management/Receivables/Direct Debit Collections
Click Direct Debit Collection
You can specify due dates, filter on partner type.
You can let system check the customers having valid mandate.
You can also let the system check the invoices that have a valid mandate. If you do not select the field, in that case all the invoices that were previously posted without mandate will also be included in the collection, in this way you can specify mandate for those invoices.
Specify the Bank Account and If you want you can filter on customers, and so on.
Click Ok. This will create an entry.
On Direct Debit Collections window, select the record and click on Direct Debit Collect. Entries.
This will show you Direct Debit Entries.
So here you can check the customer, the document, transaction, mandate and so on as suggested by the system.
After you have checked that everything is Ok, you can Export Direct Debit File from the collection.
Open the xml file which is based on what SEPA direct Debit files.
Post Payment Receipt
The file is created, but the transactions are not posted yet. You can do this by clicking on Post Payment Receipts.
Specify the fields on the Post Direct Debit Collection window and click OK.
Now, check the result in the Cash Receipt Journal and post the journal.
Click on Close Collection action.
This is something you would only like to do once you are sure that everything has been processed correctly.