Flow of Funds

This article describes the flow of funds when using the R365 Payments Service. From the moment a user creates a payment run to when it reaches the vendor's account, R365 ensures a secure transfer of funds.

To check the current status of a payment, look for the R365 Payment Status column on the AP Transactions table. For an explanation of each status, see R365 Payment Statuses.

Step 1 - Payment Run

The first step to paying vendors with R365 Payments is creating a payment run. For a detailed explanation of this process, see Paying Vendors with R365 Payments, Creating a Payment Run, and the Payment Run Record reference article.

If necessary, await approval from a member of your organization who approves payment runs.

Step 2 - Withdrawal

Funds are withdrawn from the selected bank account on the date for which the payment is scheduled.

Removing funds from the account on the scheduled payment date prevents the potential overdraft of funds that have already been designated for these payments.

Regardless of the number of payments included in a payment run or how many payment runs, R365 pulls money from the selected bank account as one lump sum that includes all payments for the day. Because one withdrawal is made, all transactions have the same batch code.

To prevent any delays with R365 ACH payments, if you have positive pay ACH enabled with your bank, ensure that R365’s company ID (1452758311) has been added to your approved list.

Step 3 - Payment Hold

There is a small waiting period of 2 business days as the banks do their due diligence in ensuring the security of your funds.

During this time, the funds are transferred from your organization’s bank account to R365’s FBO bank account and then on to the vendor’s bank account. An FBO (For the Benefit Of) bank account is a type of account used to hold funds on behalf of third parties. In the context of R365 Payments, the FBO bank account acts as an intermediary, facilitating secure and efficient money transfers from restaurants to their vendors. Funds are held temporarily in the FBO account before being transferred to the vendor’s bank account, which also reduces the risk of errors and helps maintain compliance with financial regulations.

Step 4 - Paying Vendors

After funds clear, R365 creates individual payments according to how they were created in the payment run and sends them out to the vendors. For detailed information about payment methods and the time to process each type of payment, see Payment Methods.

To prevent any delays with R365 ACH payments, if you have positive pay or ACH enabled with your bank, ensure that R365’s company ID (1452758311) has been added to your approved list.

Step 5 - Reconciliation

When a transaction appears in Back Activity that matches the sum of all payments in the batch, R365 matches the bank activity to the transaction. For more information, see Bank Activity and Bank Reconciliation.

Because all funds are pulled from the bank account as a single transaction, there are two bank rules designed specifically for use with R365 Payments transactions. These two rules match multiple payments in R365 to a single transaction in Bank Activity to properly reconcile all transactions:

• Cash Out - Match Payment Run (Rule #14) matches a single transaction from the bank activity to multiple payments in R365 based on the payment run. This rule is applied when:

  • The transaction type is Cash Out.

  • The amount of the bank transaction is equal to sum of all payments in the payment run.

  • The date on the bank transaction is equal to or greater than the Payment Date on the payment run.

• Cash Out - Match Batch Code (Rule #15) matches a single transaction from the bank activity to multiple payments in R365 based on the batch code. This rule is applied when:

  • The transaction type is Cash Out.

  • The amount of the bank transaction is equal to sum of all payments with the same batch code.

  • The date on the bank transaction is equal to or greater than the Payment Date on all payments with the same batch code.

For more information, see Bank Activity, Bank Reconciliation, and Rule Vault.