Supplier-Initiated Draft Process

You always create Bill of Exchange (BOE) or supplier-initiated draft payments manually. After you record the draft information, PeopleSoft Payables creates the draft payment and generates the accounting entries. To create drafts manually, first create a draft identification number (draft ID) on the Create Manual Draft page and select the supplier. The system builds a worksheet that identifies scheduled payments that can be included on the draft. You select the scheduled payment to include for the draft.

Note:

The Pay Cycle Application Engine process (AP_APY2015) does not process supplier-initiated drafts.

Supplier-initiated drafts differ from the check payment method because the supplier initiates payment and the draft is drawn against your bank account with a future due date—typically payable in 90 days. Upon the settlement date of the draft (at 90 days), you can assume that the whole amount of the draft has been withdrawn from your account.

Two types of supplier-initiated drafts are available: unapproved and preapproved. When a draft is unapproved, the supplier must send you the draft; however, when a draft is approved, no action is required on your part. You assume that your supplier will still send you a nonnegotiable draft as information.

A draft is not always sent with the invoice that it pays. In fact, a draft might be issued for several hundred individual invoices. The invoices might have been entered before the draft is received. In this case, upon receiving the draft, you must associate the draft payment with the appropriate invoices. You assume that your supplier always informs you about which invoices are being paid by the draft.

When supplier-initiated drafts are processed, the supplier might not send a voucher, because a draft notice can suffice for a voucher. If you receive a voucher, you enter it and select Supplier Draft as the payment method. The system computes the scheduled due date, the maturity date, or the scheduled maturity date based on the usual terms and the sight code (if used). The date might not be the actual date of the draft when it is issued, but it gives an estimate for forecasting. When you manually create draft payments, you enter the actual draft issue date and the draft settlement date.

Note:

If you haven't prearranged with your bank to receive a bank information file, you do not need to run the Draft Reconciliation and Approval process (PYMNT_APPR_RECON). Depending on whether the Draft Issue Approval Required check box is selected in the Payables options, however, you may need to run the Draft Reconciliation and Approval process to promote the draft status from C (created) to A (approved) before you can run the Payment Posting Application Engine process (AP_PSTPYMNT).