Payment file and payment proposal – what is the difference and how are they used in a transaction analysis?

What is a payment file?

A payment file is a digital file, usually in XML or TXT format, that contains structured information about one or more payments that a company or organization wants to make. The file is exported from the business's financial system and then sent to the bank and/or bank giro for execution. The exact content may vary, but a payment file normally contains information about the sender, recipient, amount, currency, payment date, payment method, and a reference. The payment file enables efficient and automated handling of payments, such as supplier invoices, and is a central part of modern financial systems. It is also the payment file that we at Betalkontroll normally use for our transaction analysis, where we perform a large number of checks on each individual transaction. However, there are alternatives to the payment file that can provide additional opportunities and form the basis for an even more comprehensive transaction analysis – namely, a payment proposal.

What is a payment proposal?

All businesses that make a large number of payments use a payment file to make bulk payments. However, not all of them use payment proposals. A payment proposal is a preliminary summary of payments that are planned to be made. The proposal is generated in the financial system and may vary depending on the financial system and setup. The purpose of generating a payment proposal is to provide the business with a basis for review and approval before the "live" payment file is created and sent to the bank. Unlike payment files, a payment proposal offers great flexibility in terms of the data that is included. Usually, similar information to that in a payment file is included, but you can also choose to include additional data points. These could be, for example, the recipient's organization number or the payment due date. With these data points, a more in-depth transaction analysis can be performed, which can detect more types of errors but also be used as a basis for statutory reporting.

Why should the possibilities for analyzing payment proposals be reviewed?

Below is a summary of some of the advantages of performing transaction analysis on a payment proposal.

Perform the transaction analysis at an early stage

By analyzing a payment proposal, you can address any errors before the payment file is created. In many cases, this can simplify processing and save time, as you avoid having to make adjustments to the final payment file. Depending on the financial system and bank, it can sometimes be difficult to make individual adjustments to a payment file without having to cancel it entirely, which creates unnecessary administration.

Analyze underlying payees when using factoring

By including the organization number in the payment proposal, it is possible to analyze the final recipient of a payment – even if the recipient uses factoring.

Check bank and postal account numbers

By including an organization number in addition to the account number in the payment proposal, you can verify that the payment is made to the correct bank or postal account. This is done by ensuring that the organization number is registered to the account number specified in the payment proposal.

Analysis of payment terms

By including information on both the actual payment date and the due date, it is possible to analyze actual payment times. With this information, we at Betalkontroll can then generate the documentation that larger companies are required to report annually to the Swedish Companies Registration Office, in accordance with the Swedish Payment Periods Reporting Act (2022:70). Learn more about reporting payment times here.

Increased flexibility and improved internal analysis

Since the payment proposal is an internal document intended to enable internal control and analysis, there is considerable flexibility in its design. Payment proposals are also not affected by regulatory changes and standards in the same way as payment files, so businesses can feel confident that they will be able to continue performing the same analysis in the future. An example of this type of change is the transition to ISO 20022, which you can read more about here. Over time, you can then add information to your payment proposal and thus expand your transaction analysis as the needs of your business change.

What questions should businesses ask themselves in relation to transaction analysis?

The first step, which some businesses have still not taken, is to implement automated transaction analysis. It is not uncommon for finance departments to continue to spend a lot of time on manual checks that could be done faster and better with system support. Making bulk payments without performing an appropriate transaction analysis is an unnecessary risk to take, regardless of the business you are in.

Below are a few questions that all businesses should ask themselves regarding transaction analysis and the use of payment proposals and payment files:

1. What type of transaction analysis are we conducting today?
2. What checks do we carry out, and do we carry out all checks that are relevant to our business?
3. Have we investigated the possibility of conducting the analysis on payment proposals?

An automated process that saves time, increases security, and reduces the risk of errors

When businesses consider automating internal processes, they often weigh up the risk of losing control and oversight of the work. When it comes to automated transaction analysis, however, the opposite is true. When a business has sufficiently large payment volumes, it is impossible to maintain a good overview of the process through manual handling alone. With the help of system support such as Betalkontroll, you can maintain control while ensuring that incorrect payments are caught. Other aspects of automation, such as logbooks, checklists, secure file management, etc., also drastically reduce the risk of internal handling errors and potential fraud attempts.