An automatic payment means that a customer can make a payment by transferring funds directly between its bank account and the vendor’s bank account.
Once the payment order and the payment proposal are created, and depending on the type of payment mode, a bank file is created, transferred to the IFS and sent to the bank thereafter. The information contained in this file is different for domestic and for foreign payments. For the money to be transferred from the customer’s account to the vendor’s account, the bank needs a signature from the customer as well as a file – prepared and sent to the bank – from the vendor’s side having all the details of the transaction or vice-versa. Once the bank receives the file from the vendor and the signature from the customer, the transfer of funds is initiated. The settlement of invoices can be done when the amount has been transferred from the customer’s account to the vendor’s account or on the receipt of a confirmation from the bank that the amount will be transferred.
A/P automatic payments
For A/P automatic payments for the domestic transactions, a separate bank file is created specifically for Germany, that is, when the German application (DE) is active. When a payment transaction is to be made between a customer and a vendor, a bank file is sent to the bank from the customer’s side which holds information regarding the vendor’s account number, bank name and specific branch, amount to be paid, the due date, etc. Based on the details contained in this file, the bank further processes the transaction and proceeds with the payment to the vendor.
A/R automatic payments
For A/R automatic payments for the domestic transactions, a separate bank file is created specifically for Germany, that is, when the German application (DE) is active. When a payment transaction is to be made between a customer and a vendor, a bank file is sent to the bank from the vendor’s side which holds all the details of the transaction along with the vendor’s account number, bank name and specific branch, amount to be paid, the due date, etc. Based on the details contained in this file and a signature from the customer, the bank further processes the transaction and proceeds with the payment to the vendor.
Foreign automatic payments
For processing foreign payments, there are standard guidelines and a bank file format which is provided by the government. These guidelines mandate the businesses to send the bank file in the specific format provided by the government. As a part of these guidelines, other information is supplied by the banks, like instruction keys, classification numbers, chapter of goods, etc. All of these details are included in the flat file generated if overseas payments are processed. The receiving bank verifies if the data sent is in the standard format. If not, the payment request is not accepted. The procedure for making the overseas payments is specific to individual countries.