1. Explain the purpose of the payment advice functionality.
Payment advice notes are early notices containing detailed information about incoming payments.
Payment advice notes can be used for automatically finding and allocating open items for clearing. Instead of enterig selection criteria and processing the open items, all you have to do with this method is specify the payment advice number.
2. List the payment advice types delivered by the system.
• Lockbox advice
• Advice from an account statement
• Advice created during manual clearing
• Manually entered advice
• Bank advice
• EDI advice
3. Can other payment advice types be created? If yes, how?
Yes, other payment advice types can be created through configuration.
4. For what is a reason code used?
The reason code determines how the payment difference is handled:
If the difference is going to be charged to a different G/L account
If a new item will be generated
Also, the reason code determines which correspondence type is sent to the customer to notify them of the discrepancy.
5. Explain the flow between customer and vendor involving payment advice.
The customer receives goods and sends payment.
The vendor sends goods and receives payment.
The customer executes his payment program, which generates payment advice notes. These payment advice notes are sent to the vendor, who processes them, clears the open items, generates clearing documents.
6. Explain the lockbox processing flow.
The bank collects all of the checks and creates a Lockbox File following the BAI (Bank Administration Institute) standard format. This file is imported into the system and a payment advice is created for each check in the imported file. These payment advice notes are stored in a Payment Advice Database from where they are processed and posted. The postings clear open items and generate cleared documents.