Microsoft Dynamics AX

SEPA (ISO 20022 XML) credit transfer payments

White Paper Describes the functionality in Microsoft Dynamics AX that supports the standard Single Euro Payments Area (SEPA) credit transfer (ISO 20022 XML) payment format. Additional local formats are available for Austria, Belgium, Finland, France, Germany, Italy, Spain, and The Netherlands.

Date: July 15, 2009

Table of Contents
Executive summary ..................................................................................... 3
SEPA credit transfer overview ................................................................................................. 3 SEPA credit transfers in Microsoft Dynamics AX ........................................................................ 3

Installation ................................................................................................. 4
Install the .xpo and label files ................................................................................................. 4 Verify that the SEPA export file formats are installed ................................................................. 4

Setup .......................................................................................................... 5
Set up SEPA countries/regions as members of the European Economic Area................................. 5 Set up a method of payment for SEPA credit transfers ............................................................... 5 Set up company information .................................................................................................. 6 Set up company bank accounts for SEPA credit transfers ........................................................... 6 Set up vendors and vendor bank accounts for SEPA credit transfers ............................................ 6 Belgium only: Set up Isabel electronic banking parameters ........................................................ 7

Transactions ............................................................................................... 8
Create and post invoices ........................................................................................................ 8 Create and export payments using a SEPA payment format ....................................................... 8 Country/region-specific information........................................................................................10 Send the credit transfer file to the bank ..................................................................................11

References ................................................................................................ 11

SEPA CREDIT TRANSFER PAYMENTS

Executive summary
The Single Euro Payments Area (SEPA) is an area set up by the European Commission in which all electronic payments are considered domestic, regardless of the country/region in which the individual, business or organization, and bank are located. Within this area, there is to be no difference between national and cross-border payments. The SEPA includes the 27 European Union (EU) member states, plus Iceland, Liechtenstein, Norway, and Switzerland. The SEPA helps to form a single market for payment transactions within the European Economic Area (EEA). Ultimately, the SEPA is expected to reduce the number of payment formats that banks, businesses, and individuals must work with. The European Commission established the legal foundation for SEPA payments through the Payment Services Directive (PSD). The European Payments Council (EPC) supports the SEPA by: Setting the standards for SEPA electronic payments using the ISO 20022 Universal financial industry message scheme XML format. Setting rules and guidelines regarding the handling of euro payments.

The EPC, which consists of European banks, develops the commercial and technical frameworks for SEPA payment instruments. Three types of SEPA payments are planned: Credit transfers (supported in Microsoft Dynamics AX 4.0 SP2 and AX 2009 SP1) Direct debits (future) Cards (future)

This white paper describes the SEPA credit transfer payment formats that are available for Microsoft Dynamics AX and how to install, set up, and use them.

SEPA credit transfer overview

A SEPA credit transfer is a payment from one company or individual to another company or individual. Payments must be in euros. Payments must include the International Bank Account Number (IBAN) and the Bank Identifier Code (BIC), also known as SWIFT code, for both parties. Also, transaction costs must be shared between both parties. Credit transfers should be transferred between parties by using XML files that comply with ISO 20022 payment processing standards and the XML format as specified by the EPC.

SEPA credit transfers in Microsoft Dynamics AX

The SEPA credit transfer payment format is implemented by using the payment format functionality in Microsoft Dynamics AX. Nine SEPA export file formats are available. These export formats conform to the SEPA ISO 20022 XML standard that is specified in version 3.2 of the SEPA Credit Transfer Scheme Rulebook that is released by the EPC. Before implementation, contact your bank to obtain the software that is required to upload electronic banking files. You will use that software to transfer the .xml files that contain SEPA payments to your bank.

SEPA CREDIT TRANSFER PAYMENTS

Installation
The SEPA credit transfer payment format is available for the following versions: Microsoft Dynamics AX 4.0 SP2 Microsoft Dynamics AX 2009 SP1

Install the .xpo and label files

To use the SEPA credit transfer payment format, you must download and install a hotfix. 1. Be sure that you have installed Microsoft Dynamics AX 4.0 SP2 or Microsoft Dynamics AX 2009 SP1. 2. Log on to CustomerSource or PartnerSource, and then search for SEPA. 3. Locate the download page for the method of payment to support SEPA Credit Transfer (ISO 20022 XML) format. 4. Download the DAX 4.0 or DAX 2009 .zip file, depending on the version of Microsoft Dynamics AX that you are using. 5. Click the following link and follow the instructions in KB article 893082 to install the .xpo and label files: http://go.microsoft.com/fwlink/?LinkId=157091.

Verify that the SEPA export file formats are installed

Nine SEPA export file formats are available. The SEPA ISO20022 CredTrans export format is used for most countries/regions within the Single Euro Payments Area. Eight countries/regions have special requirements, in addition to the ISO 20022 XML standard. A separate export format is provided for each country/region that has special requirements. 1. Start Microsoft Dynamics AX. 2. Click Accounts payable> Setup > Payment > Methods of payment. 3. On the File formats tab, click Setup. 4. On the Export tab, scroll down in the Available list to view the SEPA export formats.

SEPA CREDIT TRANSFER PAYMENTS

5. Select the nine SEPA ISO20022 CredTrans file formats, and then click the < button. 6. Close the File formats for methods of payment and the Methods of payment forms.

Setup
Before you can create SEPA export files, you must specify information in Microsoft Dynamics AX.

Set up SEPA countries/regions as members of the European Economic Area

SEPA credit transfer payments can be used only in the countries/regions that are members of the European Economic Area (EEA). For each country/region that is part of the EEA, you must select the European economic area check box in the Country/region form. 1. Click Basic > Setup > Addresses > Country/region. 2. On the Overview tab, select the line for Austria. 3. On the General tab, select the European economic area check box.

4. Repeat steps 2 and 3 for the following countries/regions. European Union, Euro zone countries/regions Austria, Belgium, Cyprus, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovenia, and Spain European Union, non-Euro zone countries/regions Bulgaria, Czech Republic, Denmark, Estonia, Great Britain, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Sweden European Economic Area zone countries/regions Iceland, Liechtenstein, Norway, Switzerland 5. Close the form.

Set up a method of payment for SEPA credit transfers

You must set up a method of payment to use for SEPA credit transfers for your vendors.

SEPA CREDIT TRANSFER PAYMENTS

1. Click Accounts payable > Setup > Payment > Methods of payment. 2. On the Overview tab, press CTRL+N to create a new line. Enter an appropriate identifier, such as SEPA credit transfer, in the Method of payment field. 3. Enter other information, as needed, for the method of payment. 4. Click the File formats tab. In the Export format field, select SEPA ISO20022 CredTrans. If the country/region where your bank is located has special requirements, select the export format for your country/region. Note: If the field list is empty, click Setup and select from the available formats. 5. Repeat steps 2 through 4 for additional banks, if necessary. For example, suppose that you do business with vendors in all EU countries and have one bank account in Germany and another in Finland. You will pay some vendors from the account in Germany and others from the account in Finland. You must set up two methods of payment: One that uses the SEPA ISO20022 CredTrans DE export format and another that uses the SEPA ISO20022 CredTrans FI export format. 6. Close the form.

Set up company information

Some information from the Company information form is required for SEPA payments. 1. Click Basic > Setup > Company information. 2. On the General tab, enter address information, including the street name, ZIP/Postal Code, and country/region. 3. For Belgium only: Click the Contact information tab and enter information in the Enterprise number field. 4. For Italy only: On the Other tab, enter information in the SIA code field. 5. Close the form.

Set up company bank accounts for SEPA credit transfers

SEPA payments require that IBAN and BIC (SWIFT) codes are provided for both the vendor bank account and the bank account for the organization that is requesting the transfer. Enter the bank account information for your company. 1. Click Bank > Common Forms > Bank Account Details. 2. On the Overview tab, select a bank account that you will use for SEPA payments. 3. On the General tab, enter information in the SWIFT code and IBAN fields. 4. For bank accounts in Austria, Finland, Germany and The Netherlands only: Enter the company identifier that you received from the bank in the Company ID field. 5. On the Address tab, enter address information, including the street name, ZIP/Postal Code, and country/region. It is important to specify the country/region where the bank is located. 6. Repeat steps 2 through 6 for all bank accounts that you will use for SEPA payments. 7. Close the form.

Set up vendors and vendor bank accounts for SEPA credit transfers
SEPA payments require that IBAN and BIC (SWIFT) codes are provided for the vendor bank account. Also, SEPA payments must be in euros. Enter the bank account information and currency information for your vendors.

SEPA CREDIT TRANSFER PAYMENTS

1. Click Accounts payable > Common Forms > Vendor Details. 2. On the Overview tab, select a vendor that you will submit SEPA credit transfers for. 3. Verify that the currency code for the vendor is EUR. 4. Click Setup > Bank accounts. 5. In the Vendor bank accounts form, on the Overview tab, select a bank account. 6. On the General tab, enter information in the SWIFT code and IBAN fields. 7. Click the Address tab. 8. Enter the address information, including the street name, ZIP/Postal Code, and country/region. It is important to specify the country/region where the bank is located. 9. Close the Vendor bank accounts form to save your changes. 10. In the Vendors form, click the Payment tab. 11. Optional: Select a method of payment that uses one of the SEPA ISO20022 CredTrans export formats. This method of payment is used as the default entry when creating transactions for the vendor. 12. Select the vendor bank account in the Bank account field. 13. Repeat steps 2 through 12 for all vendors for which you will submit SEPA credit transfers. 14. Close the Vendors form.

Belgium only: Set up Isabel electronic banking parameters

If you are using Microsoft Dynamics AX 2009 and you are using Isabel electronic banking software, you can specify the upload location for Isabel electronic banking files. When you create SEPA payments by using the SEPA ISO20022 CredTrans BE export format, you will save the export file to this location. Note: Isabel electronic payment integration is not available for Microsoft Dynamics AX 4.0. 1. Click Bank > Setup > IBS parameters. 2. On the ISABEL tab, in the Upload folder field, browse to the location where you will save exported payments and click OK. 3. In the Upload mode field, select Attended mode to activate the upload integration mode for the Isabel electronic banking software. 4. If necessary, set up additional parameters. For more information, search for (BEL) Set up the integration with Isabel electronic banking software in the Applications and Business Processes Help.

SEPA CREDIT TRANSFER PAYMENTS

Transactions
You use the SEPA credit transfer payment format the same way that you use any other payment format in Microsoft Dynamics AX.

Create and post invoices

If you create invoices, you can settle them with payments when the payments are entered. This procedure shows one way to create invoices, but you can use other methods, as well. 1. Click Accounts payable > Journals > Invoices > Invoice journal. 2. Create a journal, and then click Lines to open the Journal voucher form for vendor invoice lines. 3. By default, the Date field contains the system date. If required, you can enter another date. The date appears on the posted invoice. 4. In the Account field, select a vendor account whose method of payment uses one of the SEPA ISO200022 CredTrans export formats. 5. In the Invoice field, enter the number of the invoice that you received from the vendor. 6. In the Credit field, enter the invoice amount. 7. In the Offset account field, enter the offset account. The offset account must have the same currency as the Currency field. 8. On the Invoice tab, select a method of payment that uses one of the SEPA ISO20022 CredTrans export formats. 9. Optional: Press CTRL+N to create a new line and repeat steps 3 through 7 to enter information for more invoices. 10. Click Post > Post to post the invoices.

Create and export payments using a SEPA payment format

This procedure provides information about the fields that must be entered when creating an export file. 1. Click Accounts payable > Journals > Payments > Payment journal. 2. Create a journal, and then click Lines to open the Journal voucher form for payment journal lines. 3. Click Payment proposal > Create payment proposal. 4. In the Vendor payment proposal form, click Select. 5. In the VendPaymProposal form, select the line for the Method of payment field. 6. In the Criteria field, enter the name of a method of payment that uses one of the SEPA ISO20022 CredTrans export file formats, and then click OK. 7. In the Vendor payment proposal form, click OK. 8. In the second Vendor payment proposal form, click Transfer. 9. In the Transfer payment proposal to journal form, click OK. 10. In the Journal voucher form, on the Overview tab, select a line. 11. On the Payment tab, if required, enter information in the Payment ID and Central Bank Purpose Code fields. 12. Click Functions > Generate payments.

SEPA CREDIT TRANSFER PAYMENTS

13. Select a method of payment that uses one of the SEPA ISO20022 CredTrans export file formats, and then select the bank account from which the payment is drawn. 14. Click Dialog.

15. In the Dialog form, enter information for the export file. Refer to the following table for information about each field. Field
Processing date Remittance information

Description
Enter the date when the bank should process the payments. Select the format for remittance information, depending on the requirements of your country/region or bank. Structured Select this option if one payment line is settled with one invoice. This option is not available for the country/region-specific export formats for Austria, France, Germany, or The Netherlands. Unstructured Select this option if payment is settled with multiple invoices. The invoice numbers for the settled invoices are concatenated and used as the remittance information. In compliance with SEPA guidelines, unstructured remittance information is limited to 140 characters.

Amount limit

Enter the SEPA payment amount limit for your country/region, if required. If you enter an amount, each payment in the journal is below this limit is verified. Note: If a payment exceeds the amount limit, additional information must be submitted to the central bank. Payment amounts that exceed the payment amount limit are not supported in this release.

File name Control report

Enter or select the file name for the SEPA XML file. Use the file extension .XML. Select this check box to print a report that contains the payment information. You can specify report options by clicking the Control report button.

16. Click OK. 17. In the Generate payments form, click OK to create the payment file. 18. Close the Journal voucher and Journal forms.

SEPA CREDIT TRANSFER PAYMENTS

Country/region-specific information
Refer to the following table for information about the country/region-specific formats. Country/region
Austria Belgium

Export format
SEPA ISO20022 CredTrans AT SEPA ISO20022 CredTrans BE

Table Heading
Only unstructured remittance information is supported. Structured remittance information is based on the Invoice field for the settled invoice. The first 10 numeric characters are used, plus a check sum based on MODULO 97. For example, if the invoice is A1234B567C89012, the first 10 numeric characters are 12345567890. ROUND(1234567890/97) = 12727504 12727504 * 97 = 1234567888 1234567890 - 1234567888 = 02 Structured message: 1234567890 + 02 = 123456789002 Microsoft Dynamics AX 2009 only: If you are using Isabel electronic banking software, the File name location in the Dialog form must be the same as the location specified in the Upload folder in the IBS parameters form. When the payment generation process is complete, a record is created in the IBS transactions form.

Finland

SEPA ISO20022 CredTrans FI

For structured remittance information: For Finnish vendors, the Finnish reference number information is used (Payment ID field on the Payment tab in the Journal voucher form for the payment journal). For foreign vendors, the vendors invoice number is used (Invoice field in the Journal voucher form for the invoice).

For the Message and Payment identification fields in the payment file, the journal number of the vendor payment journal is used. France SEPA ISO20022 CredTrans FR Only unstructured remittance information is supported. A SEPA payment cannot be processed in either of the following situations: The payment amount is greater than the Amount limit field in the payment format dialog and the destination bank is not located in France. The payment amount is greater than the Amount limit field in the payment format dialog, the destination bank is not located in France, and the payment beneficiary is nonresident in France.

Germany Italy Spain The Netherlands

SEPA ISO20022 CredTrans DE SEPA ISO20022 CredTrans IT SEPA ISO20022 CredTrans ES SEPA ISO20022 CredTrans NL

Only unstructured remittance information is supported. No additional information is required. No additional information is required. Only unstructured remittance information is supported.

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Send the credit transfer file to the bank

When you generate payments, the payments are saved to the location that you specify in the Dialog form. The next step is to send the .xml file to your bank. This process varies from bank to bank. Follow the instructions from your bank to submit the files to the bank for processing. If you are using Microsoft Dynamics AX 2009 and Isabel electronic banking software, you can click Bank > IBS transactions and select the record to upload to the bank.

References
European Payments Council (EPC) http://www.europeanpaymentscouncil.eu/ EPC SEPA Credit Transfer Scheme Customer-to-Bank Implementation Guidelines http://www.europeanpaymentscouncil.eu/documents/EPC13208%20C2B%20CTIG%20V3.2%20Approved.pdf Directive on Payment Services (PSD) http://ec.europa.eu/internal_market/payments/framework/index_en.htm European Central Bank http://www.ecb.int/paym/sepa/html/index.en.html European Commission http://ec.europa.eu/internal_market/payments/sepa/index_en.htm

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