JD Edwards Accounts Payable Payment Automation (with ISO20022 Mixed Payables Payment Format)

Have you heard about the ISO20022 protocol for Vendor Payments?

Imagine a world where your vendor payments are processed faster, more accurately, and with fewer errors. Welcome to the future with ISO 20022!

Many financial stakeholders are still not aware of this protocol, the expected changes to how vendor payments will need to be submitted to banks, and the benefits the protocol offers. A quick internet search will show articles about the protocol and the changes expected for automated payments later this year. As a key financial stakeholder, AP manager, or ERP manager, it’s important to keep up to date with this protocol and what is expected for 2025 and beyond.

What is it???…In a Nutshell

The ISO20022 payment protocol is an XML payment format for submitting vendor payments. It is intended to replace the current Nacha text/csv format for submitting vendor payments. It is also a framework for submitting mixed payable types in a single file, such as outsourced checks, ACH, international ACH, wires, and virtual card transactions, all within the same file. The expectation is that the format will be a global standard for payments and accepted by all banking institutions. The format has already been adopted in Canada and the EU. The format is expected to be accepted by all banks in the US in 2025.

Wow, now that’s a change!

1. Enhanced Data Quality:

ISO 20022 allows for better-structured, and more granular data in payment messages. This improves the accuracy and transparency of transactions, reducing errors and the need for manual intervention.

What our clients noticed:

Reduced Payment Inquiries for AP Staff – Vendors are getting more complete data. There are fewer questions about payments to address from vendors.

Improved Vendor Relationships:

Vendors are getting more complete data. Their AR teams are getting data that allows them to improve their AR Receipt automation processes.

2. Improved Processing Efficiency:

The structured data fields in ISO 20022 enable faster and more accurate processing of payments.

What our clients have noticed:

Quicker Payment Processing, More Payment Reliability – Payments are being processed more efficiently with fewer payment issues in reliable timeframes.

Multi Payment & Multi Pay From Bank Account Processing:

Clients are not only realizing the benefits of sending multiple payment methods in the same file but multiple pay-from bank accounts as well!

3. Better Reconciliation and Reporting:

With more detailed remittance information, businesses can achieve better reconciliation of payments and improved visibility into cash flows.

What our clients have noticed:

Reduced Reconciliation Effort – The format improves the ability to return processed (cleared) payment information from banks, making reconciliation automation much more efficient.

4. Increased Straight-Through Processing (STP):

The standard supports higher levels of automation, reducing the need for manual processing and intervention.

What our clients have noticed:

Reduced Failed Transactions – Fewer issues require intervention from the bank, specifically noted with wire transactions nationally and internationally.

5. Enhanced Interoperability:

ISO 20022 is an international standard, which means it can be used across different payment systems and regions.

What our clients noticed:

Flexibility across banking institutions. Changing banks or having a multi-bank model is SO EASY. No need to build a format catered to each bank. Changing banking institutions or adding banking institutions can be done in days as opposed to months. With most major banks already adopting the protocol, it’s never been easier.

6. Future-Proofing:

As more financial institutions and payment systems adopt ISO 20022, businesses that use this standard will be better positioned to integrate with new technologies and payment innovations.

What our clients noticed:

Peace of Mind. As the standard not going away anytime soon, AP stakeholders don’t have to worry about changing formats. As the standard, as payment methods change or evolve, the standard will be able to adopt these changes without significant changes to the file format.

7. Better Compliance and Risk Management:

The detailed data structure helps in better compliance with regulatory requirements and enhances the ability to detect and prevent financial crimes.

What our clients noticed:

Reduced False Positives. Reduction in transactions that are flagged by compliance systems reducing effort on AP staff.

Centrilogic has been helping our clients realize the benefits of this format since 2021.  Centrilogic has developed a JD Edwards Add-On solution that helps maximize the benefits of the format,  greatly reducing the time to implement without impacting the current payment process.

Ready to transform your payment processes? Stay tuned for an upcoming Centrilogic webinar on the protocol, Centrilogic’s approach to implementing the format, and how to realize the benefits of using the format as these changes are implemented