US Payroll in Microsoft Dynamics 365 for Finance and Operations gives you the option to pay workers by check or by electronic (Direct Deposit) payment. To set up the Direct Deposit NACHA feature for US Payroll, you need to make sure the following setups are complete.
- Payroll Bank account
- Payroll electronic payments - Method of Payment
- Direct Deposit & account setup for Employees
- Payroll journal in General ledger
- Payment issuance for Electronic method of payment
Here is a reference for the required setups to get you going with Direct Deposit NACHA payments in US Payroll.
Create a new bank account
Cash & Bank management > Bank Accounts, click New and enter the following:
- Routing Number
- Bank Account Number
- Company Statement Name
- Company ID - in "Additional identification" tab on the Bank account form.
Set up a method of payment for Payroll electronic payments
Accounts Payable > Setup > Payment Setup > Methods of Payment - click New. Enter a Description and the following:
- Payment Status field, select Sent to avoid posting the payroll payment journal without first generating the payment.
- In the Period field, select Invoice.
- In the Grace period field, enter Zero.
- In the Payment type field, select Other.
- On the File Formats tab, click the Export format dropdown menu to select Payroll electronic NACHA PPD from the Export format list.
- Direct Deposit (NACHA) Payments requires the export format Payroll electronic NACHA PPD for US Payroll, however it is the same as the Standard NACHA - PPD format. If your company has customizations on the Standard NACHA - PPD format, the same considerations will need to be made for the Payroll electronic NACHA PPD export format.
Note: If you don't see theÂ Payroll electronic NACHA PPD export format in the list, please see quick steps in my post "How to set up the US Payroll NACHA payments File format in D365 for Finance and Operations"
Set up Employees to receive Direct Deposit payments.
Worker bank accounts and bank account disbursements need to be setup for each worker.
Add Bank accounts for each worker.
- Select a worker and on the Action Pane, click Personal information > Bank accounts. Open the Worker bank account form and click +New to create a new line.
- Complete the Account identification, Routing number, Bank account number, and Bank account type fields.
Setup bank account disbursements for each worker.
- Select a worker and on the Action Pane, click Personal information > Bank account disbursements.
- Select the Remainder field if the remainder of the payment is allocated to this account. Only one account can have this selected.
- Enter the amount currency if a specific amount is allocated to the account.
- Select the Prenote Status field to indicate the status of the Prenote.
- Field must be removed after validation by the bank for the employee to start receiving payments through direct deposit.
Payroll journal must exist in General ledger
If a Payroll journal does not already exist, create a new one in General Ledger > Journal Setup > Journal names with the following:
- Name: Payroll
- Description: Payroll Journal.
- The correct Voucher series for Payroll journals
Electronic method of payment field on the Payment issuance tab of the Payroll parameters page.
In Payroll parameters, select the Payroll - Electronic Method of Payment on the Payment issuance tab
- Payroll > Setup > Parameters > Payroll parameters > Payment issuance tab
- In the Electronic method of payment field, enter or select a value.
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