Guide to Microsoft Dynamics for Finance Teams

Jul 31, 2023 by Kelsey Banerjee

Out of the abundance of enterprise resource planning (ERP) systems, Microsoft Dynamics continues to hold its share of market dominance (that's 26.78% of the market, specifically). This is partly because of customer familiarity with Microsoft Office but mainly because Microsoft is a trusted and innovative solution. The Dynamics platform is a powerhouse that breaks down silos and empowers AR professionals to drive business growth for financial operations.

Microsoft Dynamics 365 Finance software and its powerful app integrations deliver a secure and easily automated solution for thousands of overworked accounting professionals in an era of increasing regulatory risk and remote global finance operations.

This guide covers how this ERP can genuinely revolutionize your financial operations, including how to distinguish Dynamics 365 from its predecessors and the significant features this ERP offers.


The Basics of Microsoft Dynamics for Finance Teams

The Microsoft Dynamics suite is an all-inclusive software that offers a robust ERP system. Users can connect marketing, sales, finance, and other critical departments within this business software powerhouse to break down silos and deliver a better customer experience. For Finance teams, this can be a game-changer.

More than three-fourths of CFOs believe that unifying data is crucial to business success, and investing in an ERP system that seamlessly links with other business processes will make this far more manageable.

Dynamics 365 allows the finance department to collaborate across an organization. Other areas Dynamics supports are:

  • Business intelligence and reporting
  • Human resource management
  • Procurement and sourcing
  • Production
  • Project management
  • Sales and marketing
  • Service management
  • Supply chain management
  • Microsoft teams integration

This simplifies collaboration across finance teams and other departments, taking the pain out of accounting processes between overlapping departments. For example, you can generate quotes for the sales team based on customer and project data sourced from Dynamics, or the additional modules related to procurement can help with vendor sourcing and payments.

While this guide primarily focuses on Microsoft Dynamics 365 for finance teams, this robust platform goes far beyond the core financial reporting and management features. There are many other benefits, including streamlining and automating financial operations. But before we dive into the core of this expansive financial management software, let's look at the difference between Dynamics 365 and its earlier iterations.


Dynamics vs. Dynamics 365

In 2016, Microsoft decided to replace Dynamics with the newer Microsoft Dynamics 365. But that doesn't mean everyone migrated from Dynamics CRM, GP, AX, or NAV. For the full breakdown of users per Microsoft software:

  • Microsoft Dynamics 365 - 36,150
  • Microsoft Dynamics - 47, 263
  • Microsoft Dynamics GP - 21, 367
  • Microsoft Dynamics AX - 20, 248
  • Microsoft Dynamics NAV - 32, 527

Each independent edition takes a slightly different approach to financial management. But the introduction of 365 as an update to the Microsoft Dynamics ERP essentially makes integration with other Microsoft products and add-ons easier and provides more user-friendly payment options. For example, Dynamics 365 is hosted entirely in the cloud, compared to NAV and AX, which were on-premises. Cloud-based technology over on-premise licensing significantly reduces long-term costs for companies that would spend thousands updating infrastructure.

Microsoft Dynamics, usually called Microsoft Dynamics CRM, was initially more geared toward sales. However, within Dynamics 365 Business Central, users can leverage CRM and financial operations from the same software.

Ultimately, Dynamics 365 provides more flexibility in payment and infrastructure, making it easier to sync products.

With that said, many integrations still work with earlier Microsoft products. But it may be worth migrating to the new model if you plan to scale.


An In-Depth Breakdown of Microsoft Dynamics for Finance Teams

Microsoft Dynamics provides everything financial professionals need for nuanced reporting, financial visibility across departments, and managing cash flow. The financial data captured within the ERP system provides detailed information for more accurate forecasting, pricing, and budgeting. But the thousands of integrations available also make it a cinch to refine and automate financial operations within the ERP.

One thing to consider is that Dynamics comprises numerous modules that help finance teams with financial management. Let's take a look at the core financial accounting features:


General Ledger

As the essential, top-level module, General Ledger has multiple functions. From this single feature, users can manage accounting processes like:

  • Converting currencies
  • Processing closing transactions
  • Creating electronic documents for pre-closing reports
  • Consolidating transactions
  • Monitoring cash flow
  • Closing the books

Cash and Bank Management

From this module, users can complete several different tasks, such as:

  • Managing letters of credit
  • Reviewing cross-border sales
  • Reconciling bank and credit statements
  • Depositing and transferring bank funds
  • Canceling wrong deposits
  • Maintaining bank balances
  • Defining check formats
  • Forecasting cash flow.

Taxes and VAT

Users can set their tax requirements from Sales Tax to VAT and GST, auto-calculate estimated taxes, and generate reports for the relevant tax authorities.


Fixed Assets

Equipment, software, buildings, and other company-owned assets can be added to the platform for a comprehensive view of the organization's net worth. This can be used to calculate depreciation and transfer, lend, and dispose of these fixed assets.


Accounts Receivable

As the backbone of maintaining a positive cash flow, a streamlined AR process is critical to business success. Some of the features Microsoft Dynamics 365 provides for this financial process are:

  • Generating invoices from sales orders or packing slips.
  • Receiving various payments, including cash, checks, credit cards, and electronic payments, such as ACH.
  • Save payment credit card data securely and capture payments
  • Manage recurring invoices and subscriptions
  • Set up a Single Euro Payments Area (SEPA) mandate
  • Settle multiple invoices
  • Reimburse customers
  • Setup, waive or reverse interest fees
  • Accept partial payments
  • Schedule invoices
  • Prioritize specific payments from a customer

Electronic Invoicing

If you can invoice more conveniently, you can get paid faster. Electronic invoicing, sometimes abbreviated as e-invoicing, makes tracking and receiving payments easier. Some of the features Dynamics 365 has built around electronic invoicing include:

  • Country/region-specific requirements
  • Auditability
  • Easily adjustable configurations that don't require code changes
  • Customization
  • Export and import processing of e-invoice documents
  • Automate invoicing through integrations

Credit and Collections

Dynamics makes it easy to visualize and track delinquent payments and even bring in collection agents to support the AR team further. The right Microsoft Power App can also help you automate the collection process.


Accounts Payable

Like the AR team, AP professionals are essential for growth and accurate financial planning. A company can maintain good vendor relationships through timely payments, capture early payment discounts, and pinpoint growth opportunities.

With Microsoft Dynamics, users can:

  • Enter and approve invoices
  • Ensure invoices meet company policies through invoice matching
  • Define vendor payment terms and fees
  • Pay vendors
  • Credit vendors with a partial amount
  • Prepare prepayments for invoices
  • Review financial data related to spending (and compare it with receivables)


5 tips for using Microsoft Dynamics Finance

Microsoft Dynamics 365 is so robust it can feel overwhelming to sift through all the tools and optimize your workflow. Whether you are just getting started with Dynamics or you're just trying to improve your financial process, here are five tips you can use:


1. Minimize Administrator Roles

One way to secure your Dynamics account against intentional and unintentional fraud is to limit the system administrator to one person. Likewise, it's a standard best practice to monitor users carefully and restrict their access to sensitive data whenever possible. This prevents the platform from becoming cluttered with information from various accounts and ensures higher security.


2. Use Quick Access

Instead of manually navigating the many modules in Microsoft Dynamics, you can quickly pull up any action using the shortcut 'ALT' + 'Q.'


3. Create a Default for everything

Rather than start from scratch for every task, fine-tuning the defaults to meet your everyday use cases can significantly reduce time on manual tasks. Outside of using defaults, you can use Microsoft Power Apps to automate various processes further.


4. Limit Account and Dimension Combinations

It's not uncommon for finance professionals to go back and reconcile journals due to mismatching accounts with financial dimensions. Setting up limitations early can eliminate this mindlessly tedious task from your docket.


5. Create visual report dashboards

One way to convince other shareholders of your proposed financial strategy or highlight current trends is to create an exciting visual report. With Dynamics, creating an interactive dashboard from a report is possible, which you can then share with the team.

To create a dashboard from a report:

  1. Copy the report URL
  2. Edit a custom dashboard
  3. Add an iframe and paste the report URL
  4. Save and enjoy your custom report dashboard


3 Ways to Optimize Microsoft Dynamics 365

As powerful as Microsoft Dynamics 365 is, the show's real star is the thousands of integrations that can further streamline and automate financial operations. From gathering financial data to custom payment portals and unique fee structures, the right payment integration can transform your financial management software into a powerhouse for business growth.


1. End-to-End Process Automation

A repetitive, manual task should be automated — end of the story. The margin of human error is high, with over 118 mistakes per person per year on average, and the total cost of data error in 2016 hit $3.1 trillion in damages. Manual processes are also an easy entryway for fraud. Whether it's a local company with a small finance department or a multinational conglomerate with global financial operations, it's difficult to scale when the cost of invoice processing is high and the resources to do so are higher.

Automation significantly reduces the cost and time required to process payments manually. In fact, 88% of companies implementing financial automation have experienced shorter DSO cycles. It translates to combining electronic-only payments and automation integration for AR teams. An automation integration solution for your financial management software should include the following:

  • "Pay Now" functionality for lower DSO and a better customer experience
  • Automated, verified receipts for transactions
  • Tap into real-time analytics with rich financial data

There are two primary concerns regarding automation: security and customer service. Any solution that saves customer payment data should securely store that information to mitigate the risk of fraud or data leaks. Furthermore, the chosen automation software should be easy to use by both the finance team and your customers. If the workflow isn't streamlined, faster payments are less likely to materialize.

2. Strategic Fees

Another consideration is payment fees. One of the most popular methods of B2B payments is credit cards. For AR, this means seeing a chunk of every payment disappear in hefty credit card processing fees.

The right payment integration can help businesses offset this by providing the option to shift this burden to the customer as a convenience fee. This strategy hits two birds with one stone. Not only can you de-incentivize the use of credit cards, but if a customer prefers this payment method, the company no longer has to shoulder the processing costs.

It is also possible to encourage alternate forms of payment, such as bank-to-bank transfer, ACH, and eChecks, by absorbing the smaller fee. As a result, these payment methods appear to have a "Zero-Fee" on the client side, making them far more appealing than paying a convenience fee.

In other words, strategic fees are another way to reduce costs and get paid faster while maintaining compliance.


3. Enhanced Financial Data

The Microsoft Dynamics ERP collects a considerable amount of data. But integrations that interact with consumers beyond the ERP system can enhance reporting and provide 100% financial visibility. Additionally, high-quality financial data lends itself to improved decisions about the overall business process and how to power business growth in the long term.

With enhanced data garnered from automation integrations, it's possible to sway stakeholders towards preferential budgets and highlight realistic objectives. In other words, it brings out the vital capabilities of the finance team and turns AR into a significant influencer in the company's future.

Regarding functionality, the best payment integrations provide more than a flashy dashboard. You should also be able to port and use data in any other program. But data should also be handled compliantly. This includes compliance with PCI-DSS standards, AML Laws, MTL Rules, Fraud Monitoring, Bank KYC Underwriting requirements, and 1099 K's, among others.

Are you interested in learning more about how to optimize your finance team? Check out this article on the current landscape of B2B payments.