NetSuite Electronic Bank Payments

Introduction to Electronic Bank Payments

The purpose of this blog is to describe the functionality of electronic bank payments. In this blog, we will go through the complete process of how payments are made through electronic bank payments in NetSuite.

 

The Electronic Bank Payments functionality is used to process bank payments for your vendor bills, employee expenses, partner transactions and receive bank payments from customers.

Through this process, you can generate payment files that consist of the bank details of the payment originator and the payment receiver. These files usually contain the necessary information needed for a successful transaction. This information includes transaction codes, transaction amounts, transaction types, bank routing numbers, bank account numbers, and bank account names.

The format of payment files used in electronic bank payments is typically determined by international or national standards bodies, financial institutions, and relevant regulatory authorities.

Prerequisites:

To use the electronic payment functionality, install the following bundles in your NetSuite account.

• NetSuite SuiteApps License Client SuiteApp.
• Electronic Bank Payment SuiteApp.
• Payment file template.

 

What is Payment file template?

A payment file template is used to determine the structure of the payment file. Payment files are generated from a specified template. Every template has a different format based on different banks and countries. There will be several standard templates available once you install the electronic payment bundles.

Payment file format record

Record Information:

• Name: Provide the name of the template here.
• Payment File Type: Specify the type of template. Options include EFT (Electronic Fund Transfer), DD (Direct Debit), and PP (Positive Pay).
• Country: Select the countries where you intend to use this payment file template.
• Reference Fields: Enter custom field IDs to make them visible on the Company Bank Details record.
• Entity Reference Fields: Enter custom field IDs here that you want to be visible on the Entity Bank Details record.
• Field Validator: Specify the validation rules for the Company Bank Details fields and Entity Bank Detail fields here.
• Maximum Lines: Specify the maximum number of transactions allowed in a single payment file. The maximum limit of transactions in a payment file is 5000.
• Bank File Template: Enter the payment file template using free marker syntax in this field.
• Output File Extension: Specify the desired output file extension here, such as txt, CSV, or XML.
• Currency: Select the currencies that you want to include in a single payment file.

 

Types of Payment file format

1. EFT (Electronic Fund Transfer): In NetSuite, EFT (Electronic Funds Transfer) payments refer to the process of electronically transferring funds from one bank account to another.
2. PP (Positive Pay): Positive Pay is a fraud prevention service offered by banks to help detect and prevent check fraud.
3. DD (Direct Debit): Direct Debit is a financial transaction in which one party authorizes another party (such as a vendor or service provider) to withdraw funds directly from their bank account to settle payments.

 

Process your first electronic payment file

In the following example, we are creating an EFT payment file.

 

Step 1: Create the following record.

A) Create company bank detail record

To create this record, navigate to the Payment tab then click on Setup and then click on Bank Details.

Record Information:

• Name: Enter the name of this company bank detail record.
• GL Bank Account: Select the GL account here. After selecting the GL bank account, the subsidiary and currency fields will be auto-populated.
• Legal Name: Enter your company's legal name. This name will be used in the electronic payment files.
• Print Company Name: Enter the company name that should appear on email notifications of payment transactions sent to vendors, employees, partners, and customers.
• File Cabinet Location: Enter the internal ID of the folder that you created in the file cabinet for storing payment files once generated. When the payment file is generated, it will automatically get stored in the specified folder.
• EFT Template: Select the payment file format template to use for this bank account when processing bills, expenses, or customer refunds.
• DD Template: Select the payment file format template to use for this bank account when processing payments from customers.
• Positive Pay Template: Select the Positive Pay file format template to use for generating a list of issued checks from this bank account.

 

Note: Since we are creating an EFT payment file, select the “ACH-CCD/PPD” template in the EFT Template field, as shown in the snippet above.

 

After selecting the template, save the record. Once this record is saved, the EFT Template Detail subtab will become visible on the company bank record. Enter the correct values in those fields and save the record again.

 

B) Create entity bank detail record

An Entity Bank Detail record refers to the specific banking details associated with a particular entity. This entity can be customers, vendors, partners, or employees.

 

Record Information:

• Payment File Template: Select the EFT template to associate with the payment files to be created for this bank account. This EFT template must be the same as the Company bank’s EFT template.
• Bank Account Number: Enter the account number.
• Bank Number: Enter the vendor’s bank routing number to identify the financial institution.
• Bank Account Type: Select the account type here.

 

Note: The EFT Bill Payment checkbox must be checked on the vendor record to use the electronic bank payment functionality.

 

 C) Create Bills record

Create bill records against the vendor to generate the payment files. The subsidiary on the bill record must be the same as the company bank detail record. The bill status should be open. Then all the open bills will be visible on the bill payment processing record to generate the payment file.

 

Step 2: Bill Payment processing

To process the Vendor bills, open the “Bill Payment Processing” record by navigating to

Payments tab then click on Payment Processing and then click Bill Payment Processing.

• Once you select the bank account, the subsidiary & currency will be auto-populated.
• Next, select the A/P Account associated with the company bank or vendor bills record. Once you select the A/P account, all the vendor bills and expense reports associated with the A/P account will be visible on the sublist.
• Select the vendor bills and submit the record.

 

After submitting this record, you will be redirected to the payment file administration record. As shown in the snippet below, payment file is generated and attached to the “File Reference” Field.

Step 3: Transfer payment files to the bank.

After generating the payment file, we require a means to transmit it to the bank. This is where the SFTP Connector SuiteApp becomes relevant.

 

What is SFTP Connector SuiteApp?

SFTP Connector SuiteApp helps to connect your NetSuite application with another application securely. You can send your payment files to the bank through the SFTP Connector.

 

Follow the below steps to transmit the files: 

Step 1: Install the SFTP Connector SuiteApp.

Navigate to Customization > SuiteCloud Development > SuiteApp Marketplace then, Search for the SFTP Connector and Install it.

 

Step 2: Generate SSH keys

Create the public key and private key on your system. This key will be further utilized to configure the SFTP connection with the bank.

To create the key, you can use any key generator tool. Once both the keys are generated, we need to upload the private key in our NetSuite application and send our public key to the bank to establish a connection with the bank server.

To upload the Private key, navigate to 

Setup > Company > Keys  

You can upload the generated private key file here.

 

Step 3: Create an outbound configuration record.

Outbound Configuration: Outbound configuration record includes bank server configuration to send the files to the bank from NetSuite. You can manually transmit the files or schedule the transfer of the file.

 

Outbound Configuration Record Information:

• Name: Provide the name of the configuration.  
• Remote URL: Enter a URL provided by your bank to connect to the bank server.
• Host Key Type: Enter a valid host key type.
• Host Key: Enter the host key provided by the bank.
• Port Number: Enter the port number provided by your bank.
• Authentication Method: Select the authentication type to connect with the bank server.

The following three methods are available for authentication.

• Username/Password
• Certificate/SSH key
• Multi-factor authentication

Note: In this process, we are using Certificate/SSH key authentication to connect with the bank server.

• Username: Enter the username given by your bank to authenticate the SFTP connection.
• Certificate/SSH key: Select the SSH private key from the dropdown that we have uploaded to the NetSuite account.
• Outbound Mapping: Under this tab, we must map the file cabinet folder from where we want our file to be transmitted to the bank server. Here we also specify the destination folder path of the bank server where our file will be stored on the bank server.

Once this record is configured, now we can transmit the payment files manually or by scheduling them with the help of this record. 

To transmit the files, click on the Outbound-manual button to transmit the files to the bank.

Once you click the button, the transmit payment file record will open. You must check the folder mapping from which you want to transmit the files and then click on “Transmit files” to initiate the file transfer.  When the file count becomes zero, it means files are successfully transferred to the bank server.

 

Conclusion

Electronic bank payment functionality can generate international payment files, which is particularly valuable. Overall, leveraging electronic bank payments and generating compliant payment files can streamline financial operations, enhance accuracy, reduce processing time, and improve overall financial management for businesses of all sizes.