Payment Advice Creation - Depending on Format

Hi @GayanD,

If payment advice is printed depending on format, the option has to consider the number of payment items in payment file per payee against the maximum number of possible payment items placed in the reference fields of the payment file.

Best Regards,
Thanushi

HI Thanushi,

Thanks for the information.

Do you have an example where this maximum number of possible payment items defined in the application? 

Hi Gayan,

Thought to add few words for the benefits of all.

The purpose of generating a payment advice is to inform the supplier on the payment order you are going to execute or the payment you are going to credit. Because, it helps supplier to reconcile their AP open invoices against the bank statement. Based on your business practices and the arrangement with the supplier, you can decide whether you always want send the payment advice or not.

If we consider SEPA CT payment, there is a technical limitation in the bank clearing cycle to handle more than 140 characters in a single payment block. This situation mainly occurs when you execute the payment as an unstructured payment. In this case, multiple invoices will be grouped under a single payment block and it might creates more than 140 characters in remittance info section of Unstrd tag. In this case, the system will fetch the hard coded text “See Payment Advice”.

That means, you don’t transfer your invoice details to the bank via SEPA credit transfer file. If the bank cannot get the invoice details from the Payer, they cannot deliver the remittance details to supplier in supplier’s bank statement (MT940, CAMT.05X or printed statement). Then supplier’s will be in trouble to reconcile the received payment against the invoice. In this case having a payment advice from Payer is important for the Payee. But, if you use structured payment in SEPA file, you always provide a unique payment reference to the bank (Keep in mind you get an invoice from supplier with a unique payment reference and you enter it in supplier invoice with the unique reference. Once you make the payment to that invoice, the reference will be passed to the both banks). Since supplier’s bank get the payment reference together with their credit entry, same reference can be included in the bank statement. So, supplier can easily automate the AP reconciliation (from IFS terms External Payment) without referring to a manual advice. 

So, if you are dealing with a smart supplier, you can use the Depending on Format option. But, if your supplier is not willing to provide a unique payment reference, they might ask you to send a payment advice always.

Note: the logic of the Depending on Format option is depend on the payment format. The 140 characters logic is only applied for SEPA and ISO 20022 based credit transfer payment).

Best Regards

Eranda

Hi Eranda,

Thanks for the detailed information. Now it is much clear when to use “Depending on Format”

Regards