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Fundamentals

How automatic application works

This page describes the order in which 365 business Banking matches bank transactions to entries, how the match confidence is rated and how you check the result.

If you know why a line was applied or why not, you can set up reconciliation rules and settings in a targeted way.

Standard functionality in Business Central

Automatic application in the payment reconciliation journal is a standard Business Central function. It compares every bank transaction with open entries and rates each candidate according to the Payment Application Rules: whether the related party matches, whether the document number is in the payment reference and whether the amount matches (within tolerance). The combination results in a match confidence (High, Medium or Low), and each line gets its best candidate.

For more information from Microsoft, see Reconcile payments using automatic application and Set up rules for automatic application of payments.

What 365 business Banking adds

365 business Banking retains this logic, refines every criterion and adds matching of its own:

Criterion or matching	Function in 365 business Banking	Setting	More information
Related party	recognizes the payer by IBAN, account holder and similar names, including members of a payment group via the central account	Enable Advanced Related Party Matching	Related-party matching
Document number	finds document numbers even partially, via context words and in reference fields	payment application fields, context words	Document no. matching
Date	also allows entries posted after the payment date	Date Application Policy	Date tolerance
Direct matching	finds the customer ledger entry directly via the transaction ID (payment service providers and Universal) or via a document reference in the payment reference that identifies exactly one open entry (all accounts)	Enable Transaction ID Matching, Enable Direct Purpose Matching	Direct matching
Own payments	recognizes your transfers via the end-to-end reference	none	Recognize own payments
Reconciliation rules	assigns recurring transactions to an account, with posting text and dimensions	reconciliation rules	Reconciliation rules
Payment groups	applies a collective payment to the entries of all members	payment groups	Payment groups
Sales documents	assigns payments to sales orders and invoices not yet posted	Enable Sales Document Matching	Application with open sales documents
Remittance advices	assigns a payment to an open remittance advice (REMADV file or camt structured data) and records the deductions	Enable Remittance Advice Matching	Application in payment reconciliation
G/L entries	applies to G/L entries under review (requires Review Entries, from BC 27)	Enable General Ledger Entries Matching	G/L entry matching
On account	posts to the customer or vendor when no entry fits but the payer is unique	Enable On-Account Matching	Customer/vendor matching
Returned direct debits	links the return to the original direct debit	Banking Setup	Process returned direct debits

All switches are on the Payment Application Settings page: Payment application settings.

Bank accounts and payment service providers

How a line is matched depends on where the bank account gets its transactions from:

Account	Type of matching
Regular bank account: every account at a bank, regardless of how its statements arrive (PSD2/XS2A via finAPI, EBICS, camt file, SWIFT or not connected)	by the payer's IBAN, name and account holder, and with partial document numbers
Payment service providers (PayPal, Stripe, Adyen, Mollie, Klarna, Shopify, Unzer, Amazon Pay) and Universal	by the transaction ID that the provider returns

Universal accounts are treated like payment service providers here, because their transactions also contain the provider's ID.

Order of matching

When you choose Apply Automatically, the following steps are carried out for each line:

1. Special cases first. A line that is still pending (not yet posted by the bank) is left unchanged by automatic application and by quick apply. A returned direct debit is not matched like a payment; it is linked to its direct debit later. Direct matching narrows the choice to exactly one customer ledger entry if the transaction ID (payment service providers and Universal accounts only) or a document reference in the payment reference (all accounts) is unique.
2. Rate open entries. Every candidate entry is rated by related party, document number, amount and date, including the additions from the table above.
3. Add rules. Reconciliation rules, payment code mappings and G/L entries are added as further candidates in this fixed order, plus the standard text-to-account mapping. On-account matching always runs last and only applies when there is no other candidate for the line.
4. Own payments, payment groups, remittance advices, sales documents. An own transfer that is unique via its end-to-end reference is ranked first. Candidates of payment group members are merged into one collective line on the central account. If an open remittance advice uniquely fits a line that is not applied yet, it is applied directly and therefore takes priority over the other candidates. If there is no fitting entry for an incoming payment, it is assigned to open sales documents, provided this function is turned on.
5. Selection of the best candidate. Each line gets the candidate with the highest match confidence; each entry is used only once.
6. Returned direct debits last. They are linked to the original direct debit, and depending on the setup the fee is charged to the payer.

Match confidence and what it means

The Match Confidence field shows how a line was applied:

Match Confidence	Source
High, Medium, Low	standard rating of an open entry (also for direct matching, own payments, payment groups, G/L entries)
High - Reconciliation Rule	a reconciliation rule; posting type, posting groups, posting text, dimensions and additional fields come from the rule
High - Payment Code-to-Account Mapping	a payment code mapping (obsolete)
High - On-Account Matching	on-account matching
High - Sales Document	an open sales order or sales invoice
High - Remittance Advice	an open remittance advice
High - Quick Match	Quick Apply

Other ways to apply

Action	Difference from Apply Automatically
Apply Selected Automatically	same process, only for the selected lines
Quick Apply	only unambiguous matches (transaction ID, payment reference, reconciliation rules, payment codes, text-to-account, on account); no rating by related party, amount and date. Suitable for many lines; lines without a hit remain open
Retrieval with Apply Automatically in the job queue	the same process as when run manually, for the whole journal
Apply Manually	you choose the entries yourself on the Payment Application page

Lines whose application you accepted or set manually are only overwritten if you explicitly confirm Business Central's prompt. For details, see Apply bank transactions.

Check the result

Choose Check Application for a line. Business Central runs automatic application for this line without making changes and shows in the Application Log every candidate checked, with Result, Reason and the way it was found. For example, you see that an invoice was discarded because the amount was outside the tolerance. Check Quick Apply shows the same for Quick Apply.

For details, see Check application.

See also

• Apply bank transactions
• Payment application settings
• Reconciliation rules
• Payment discount, tolerance and partial payments