Automatic Priority settlement for customer payment in D365 F&O

To start with Automatic settlement for customer payment, we have to do initial setup as per our requirement.

Setup:

• AR Parameter -> Settlement

To use priority settlement

*** If there is no user-defined settlement priority, transactions are automatically selected for settlement based on the due date. The transactions that are settled must have the same currency as the transaction that they are settled with.

Turn on Prioritize settlement.

Click Manage priority.

Turn on Automatic settlement with priority.

Create customer payment journal.

Click to Settle transactions, then mark by priority. System will check the priority criteria in setup and auto-mark the transaction.

Set payment amount and post.

Check payment settle history. The payment has been auto-settled for the invoices that meet priority criteria.

• If there is payment with remaining credit, the newly created invoice will be auto-settled with the remaining credit of previous payment.

Payment with remaining credit:

Create new invoice and post to check if remaining amount is getting settle automatically or not.

Payment with remaining credit has been auto-settled with newly created invoice:

Article for your reference: Automatic settlement and prioritization – Finance | Dynamics 365 | Microsoft Learn.