The Role of ISO 20022 in Accounts Payable
ISO 20022 is a global standard for electronic data interchange between financial institutions. It plays an increasingly important role in Accounts Payable by enabling standardized payment instructions, better remittance data, and improved efficiency.
What Is ISO 20022?
Developed by the International Organization for Standardization, ISO 20022 is an XML-based messaging standard for financial services such as payments and electronic statements. Its structured format is gradually replacing many international payment and cash management formats.
- XML-based messaging standard
- Used across payments, securities, trade, and cards
- Mandatory in many global financial systems, including SWIFT
🎥 ISO 20022 Explained
How ISO 20022 Benefits Accounts Payable
- Standardized Payment Instructions: Messages like
pain.001streamline domestic and international payments. - Enhanced Remittance Data: Helps vendors reconcile payments quickly and accurately.
- Cross-Border Compatibility: One format for all geographies reduces complexity.
- Automation & STP: Minimizes manual work and errors through Straight-Through Processing.
- Fraud & Compliance: Better data helps with AML and regulatory screening.
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Common ISO 20022 Message Types for AP
| Message Type | Use Case |
|---|---|
pain.001 | Payment initiation |
pain.002 | Payment status report |
camt.053 | Bank statement |
camt.054 | Credit/debit notification |
remt.001 | Remittance advice (developing) |
Getting Started with ISO 20022 in AP
- Talk to your bank about ISO 20022 file support.
- Check if your ERP (SAP, Oracle, Workday) is compatible.
- Map out your AP workflows for improvement opportunities.
- Test end-to-end with partners and banks before going live.
The future of AP is digital, structured, and global. ISO 20022 is at the center of it all.
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