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Bridged Accounting in Dynamics 365 Finance

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Many of us would have come across the requirement from the client using Cheque/Check as one of the Methods of Payment for their Customer Payments and Vendor Payments that they want the bank to get a hit in the system only once when the amount is cleared in/from the bank.

So, let us cover this small and simple process today.

In the normal Payment entry process, if we select the bank account, the amount gets debited or credited when we post the entry irrespective of the check/cheque getting cleared after two days or two months, or it is even never presented for real. And in this case, it becomes a reconciliation issue for the accountants. To mitigate or address this scenario, Microsoft Dynamics 365 F&SC has a simple setup called "Bridging Posting" under the Methods of Payment setup.

Setup - Making the system ready

To use bridging posting functionality, you can set up one or more methods of payment that can use the Bridging posting option. You must select a bridging account where the amount should be parked until the check/cheque is cleared.

  • Go to Accounts Payable > Payment setup > Methods of payment. 
Note: This can also be done in the Accounts Receivable module for Customer checks/cheques to get clear before we record it in our bank books.
  • Select an existing method of payment to enable bridging posting by enabling the Bridging posting bullion. Alternatively, create a new method of payment to enable the Bridge payment while not changing the existing setups.
  • Once the Bullion is set to Yes, the Bridging Account field will be enabled. In the Bridging Account field, select the main account that payments should be posted to before they are cleared and recorded in the bank account.
  • In the Posting Option under the General Fast tab, select the Account type as Bank and choose the bank account under the Payment Account field. This account will be debited/credited once we transfer the balance from the bridging account.

Above are the only standard steps the system requires to enable bridged accounting.

There are some other good-to-have setups which would be helpful if done:

  • Having a dedicated General Journal to transfer Bridging transactions to actual bank books. It can help to have different Voucher series if needed.
  • Having multiple Methods of Payments, i.e., bank-wise Method of Payments, in case we have multiple bank accounts from/to which we can make/receive payments.

Process - Time to check the setups and test the system.

The Process for Vendor Payment/Customer Payment remains as usual, which we follow for any regular payment processing.

  • Go to Accounts Payable> Payments > Vendor Payment Journal to create a new Vendor Payment Journal.
  • Add lines to the Vendor payment journal, fill in the required details like Vendor account and other required fields and select the method of payment that is configured for bridging posting, i.e., Bridging in our example.
  • When you select the Bridging account, the offset account type and offset account will automatically change to Ledger, and the main account will be mapped in the setup. (Ledger - 130725)

  • Post the journal. The transactions will be posted to the main account you selected in the Bridging account field in the previous procedure.
Notes: Users can still use Payment Proposals, settle payments, and check the printing function of Vendor Payment in D365 F&O. 
Users can use all the standard customer payment voucher functions in the customer payment journal.

With the above steps, the vendor account is settled, but the bank book account has yet to get hit.

Steps to process payments in the bank book account when it's cleared and the bank sends the confirmation.

When the transactions have cleared the bank, and you want to transfer the payment from the bridging account to the payment account specified for the payment method, follow these steps.

  • Go to General Ledger> Journal entries > General journals and click on New to create a new Journal.
  • Click on the lines and open the Journal Details.
  • Select Functions > Select bridged transactions and mark each payment cleared per the bank records.
  • Click on Accept, and the system will create lines for every transaction selected here.
 
  • Once you click on accept, the lines get created with the Ledger account along with all the dimensions selected in the initial entry, and the offset account is the bank account selected in the Methods of Payment Master.
  • Post the entry after validating the same.

 

 

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