How do I pay vendors using an electronic funds transfer?
A direct payment is a payment made to the account of the payee. For example, Jane rents a backhoe periodically from Acme Equipment Rental to complete general maintenance. She sets up a direct payment to withdraw funds from the organization's bank account and deposits those funds directly into the bank account for Acme Equipment Rental.
Before you get started
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You'll need the name of the vendor's bank and the vendor's bank account number.
Setting up direct payment
1. Open Connect Accounts Payable > Vendors > Modify Existing Vendors.
2. Use the Vendor field to enter a vendor name or number. Press Enter.
3. Click to select the Direct Payment tab.
4. Click Add a New Disbursement.
Add a New Disbursement button
5. Enter the Bank.
This is the bank that will receive the direct payment. If you need to add a new bank, use the Bank menu to select Add New.
6. Enter the Account Number.
This is the account number that is assigned to the vendor's bank account.
7. Select the Transaction Type.
The transaction type defines the transaction that will take place. If the vendor send a payment to you, use a Checking/Savings Payment to transfer funds from the vendor's account to your account. If you will make a payment to a vendor, use Checking/Savings Deposit to transfer funds from your account to the vendor's account.
Transaction type
8. Change the status to Prenotification.
There are three stages in the life of a direct payment: Prenotification, Active, and Inactive.
A prenotice, or prenotification, is a test to ensure bank routing information is accurate. During the prenotification phase the direct deposit is not executed and the employee/vendor will receive a regular paycheck.
Direct payment status is prenotification
9. Select the Type.
A type defines the accounting behavior for the disbursement. Use Amount to send a dollar amount to the bank. Use Percent to send a percentage of the total disbursement amount to the bank.
10. Enter the Amount.
If the Type is Amount, enter a dollar amount. If the Type is Percent, enter the percentage to calculate as the disbursement amount.
11. Click Save (CTRL+S).
The vendor's direct payment is set up. The next step is to test the vendor's direct payment set up by sending a test file to the vendor's bank.
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