What is an IBAN?

A wholesaler takes on a new customer in Germany and a new supplier in the Netherlands. One pays and the other is paid through an account, and both use the same international number format. That makes paying within Europe much simpler than juggling separate national numbers.

In the administration the account number sits on the relation record: on the customer, so you know where a payment comes from or where a direct debit goes to, and on the supplier, so the payment lands in the right place. If it is wrong or missing, someone has to work out later what a payment belongs to.

What goes wrong? A number is retyped with a slip, and the payment goes to the wrong account or is refused. Or a supplier announces new bank details by email and nobody checks that the message really came from them. That is a well-known kind of fraud, so always confirm changes through a second channel, such as a phone call.

A well-filled relation record also helps with matching payments. When a payment comes in through the bank connection, the software can recognise the sender from the account number and match the payment to the right invoice faster.

So make sure the number is held in one place, that changes are checked by a second person, and that the customer supplies the details themselves. Which checks suit your business is something to agree with your bookkeeper. An account number entered years ago may be out of date by now. So check the details as soon as you add a new relation, and when a customer stops paying from the old account, ask them once to confirm where their payments now come from.