Still writing paper checks but want enhanced fraud protection? Set up Positive Pay in Business Central without the help of a developer!

In a previous MSDynamicsWorld.com article “Tear up those paper checks! Dynamics 365 Business Central makes ACH easy”, I showed how easy it is to move from paper checks to ACH with Business Central. However, some of you may be stuck writing paper checks for some, if not all of your payment transactions. If this is you, Positive Pay is an important feature you should consider using.

Here is a good definition of positive pay:

Positive pay is an automated cash-management service employed to deter check fraud. Banks use positive pay to match the checks a company issues with those it presents for payment. Any check considered suspect is sent back to the issuer for examination. The system acts as a form of insurance for a company against fraud, losses, and other liabilities. There is generally a charge incurred for using it, although some banks now offer the service for free.

Problems implementing Positive Pay – a thing of the past?

First introduced with Dynamics NAV 2016, the early functionality was a bit of struggle, to put a positive spin on it (pun intended). Creating the export file for the bank required a developer, simply put. On top of that, even though banks were aggressively selling this service, their support and documentation to get positive pay up and running was not very good. The person that sold the service typically had no idea how to implement it and getting correct information as well as your file tested was difficult. Fortunately, we’ve made great progress in the past few years.

If you use Dynamics NAV 2018 or Business Central, you’re in luck! Not only does your system provide you with the functionality you need, but it is designed for a user to configure, test and implement – no developer needed. Banks are quickly catching up as well, and a simple search on “positive pay [BANK NAME]” may provide you with all the information you need to get started. If you tried and failed in the past, it’s a good time to have another go!

Let’s set up Positive Pay

Setting up Positive Pay with your bank is a three-step process – you’ll need to set up the Data Exchange Definition, define the Bank Export/Import Setup, and assign the Positive Pay definition to your bank account.

Step 1 - Set up the Data Exchange Definition

Before you can transmit any information to the bank, you must set up the export file structure in your NAV/BC system (known as a Data Exchange Definition) to match your bank’s specifications. For this article, I’m going to walk through an example for setting up Positive Pay for Chase Bank. Since I am not a developer, the first thing I do is to review the list of existing Data Exchange Definitions (search using “Tell Me”) to see if one already exists for Chase that meets my requirements. I didn’t find what I needed but I did find one that could be used as a template – BANKOFAMERICA-PP. Here are the steps I took to modify this format to make my CHASEBANK-PP export definition:

1. From Data Exchange Definitions list, select Import/Export > Export Data Exchange Definition.
2. Export BANKOFAMERICA-PP.
3. Open the file saved in WordPad.
4. Replace all BANKOFAMERICA with the name for our new Positive Pay definition. The name of the file will be used as the prefix on each exported file. I replaced BANKOFAMERICA with CHASEBANK in my file, so my positive pay files will be prefixed with CHASEBANK-PP.
5. Save the file.
6. From Data Exchange Definitions list, select Import/Export, Import Data Exchange Definition.
7. Once imported, Select Edit for CHASEBANK-PP from the Data Exchange Definitions list.
   
   
8. Once opened in Edit Mode, you will find sections to complete for the file setup. We will begin by modifying the General settings followed by Line and Column Definitions to match the Chase Bank requirements.
   1. In the General FastTab, set the File Type to Variable Text, and Column Separator to Custom indicating a pipe ‘|’ as Custom Column Delimiter. I prefer this over a comma for its uniqueness.
      
      
   2. In Line Definitions FastTab, delete the Header and Footer, Chase Bank does not require these.
   3. Go to the Column Definitions FastTab for the remaining Detail line, reassign columns and modify to match Chase’s requirements.
      
      
   1. Column No. 2 - Chase wants to see our bank Account No. here. Type in the bank account as a Constant.
      
      
   2. Column No. 7 – define as Filler. We only have one Payee Name line to export. This is optional to Chase and will always be empty from BC.
   4. Go back to Line Definitions, Manage, Field Mapping to adjust the field mapping based on the changes we just made in Column Definitions.
      
      
   5. Next is figuring out how to get the O and V that BC provides as Record Type to the I and C that Chase requires. I found the information here to be invaluable in figuring this out.
   1. Add a Transformation rule to the Field Mapping for Check Type.
   2. This requires 2 transformation rules linked together to translate both the O & V values properly. This is accomplished by assigning a second rule to the first in a sequence using the Next Transformation Rule field of the first Transformation Rule I assigned to the mapping.
      
      
       
      
      
      
      
      
      
      
      
      

With the file structure defined, it’s time to set up the export!

Step 2 - Define the Bank Export/Import Setup

The Bank Export/Import Setup defines how to process your positive pay exports for each bank account.

1. Go to Bank Export/Import Setup and add a definition as shown. Be certain to select Export-Positive Pay as the Direction. I have prefixed my code with our company identifier. You can define this code as you like.
2. Select the Data Exchange Definition we created for Chase Bank.
3. You can set up as many Bank Export/Import Codes as you have Data Exchange Definitions for banks. This allows you to work with more than one bank and varying export formats. NOTE: This is a big improvement over older versions of NAV where bank-related activities such as this were limited to one per database unless a customization was put in place.

Step 3 - Assign the Positive Pay Definition

In the last step you tie everything together on the bank account. Go to the Transfer FastTab on the Bank Account card and select Country Export Format “US”, then assign the Bank Export/Import Format we just created as the Positive Pay Export Format Code.

Exporting to the Positive Pay file

Ready to test your setup? From the Bank Account Card, go to Actions, Positive Pay Export. Change the Cutoff Upload Date to the latest date you want to include in the export file. Then click on Export to export positive pay entries to a file that you can send to the bank.

When you first try to create your file, you may get errors regarding your setup or definitions. No worries - fix the errors and try again. Contrary to what you may think, even users experienced in these setups will make mistakes. In this case, a comma is missing between “Year” and the place definition. This was fixed on the Data Exchange Definition.

When testing, you may not find positive pay entries when you expect there should be. Although this should not happen once day-to-day use is in place, clear the Last Upload Date field and the missing checks and/or voids should come into the list.

You now have a file that you can open in Excel, save in Excel format, and send to Chase Bank.

Make certain you format columns that need to show values with leading zeros properly in Excel. Excel will trim leading zeros by default.

Summary

Positive pay helps detect fraud at the point checks are presented and prevents fraudulent checks from being paid, however it can also cause issues. For example, if you forget to send the file to the bank, any checks in that file presented for payment will be rejected. A check that is cut and taken immediately to the bank, before the positive pay file is sent at the end of the day, would be rejected. And finally, even though positive pay helps to relieve banks from liability, many still charge for this service.

Regardless, if you are stuck printing checks instead of using ACH, positive pay is a great next step toward added security. Business Central allows you to take those steps using features built into the base application – no customization or add-on needed.