9 Things to Know Before Implementing Microsoft Dynamics 365 for Finance and Operations Solution

Planning advice for Microsoft Accounting Automation software and Dynamics 365 Multi-Company projects

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Dan McAllister


When planning a Dynamics 365 for Finance and Operations implementation with many legal entities there are a multitude of decisions to make with long term ramifications. In this blog post, we focus on nine considerations to help save your Microsoft D365 Finance and multi-entity software implementation from costly and painful mistakes.  If you are a Executive Sponsor or Project Manager assisting the implementation of a Microsoft Dynamics accounting multi-company solution, please see these suggestions relevant to your accounting automation software project and implementation!

1. Plan out the direction of all intercompany transactions

If your legal entities interact with each other it is critical to map out all intercompany relationships in advance.  This might include for example:

  • Vendor payments out of one legal entity on behalf of others
  • Sales of inventory between legal entities
  • Drop shipment Sales Orders from one legal entity to another’s customers
  • Franchise fees and other percentage allocations to parent legal entities

We highly recommend charting these transactions out ahead of implementing Microsoft Dynamics 365 for Finance and Operations so your solution architects can help plot out the best path forward to configuration in your system. You should also use these process flows to indicate when documents are necessary, which legal entity would generate them, and who would receive them. In some intercompany scenarios, for example, documentation is required to cross borders. Knowing these details can also help to plan intercompany eliminations and other configurations necessary to support your requirements.

It is important to understand that decisions made during your implementation will have long-lasting impacts to how your organization operates.  Making carefully-planned choices will ensure that the system you are investing in now will serve your multi-entity organization long into the future; the first step in making these decisions is this type of planning exercise.  Working across many legal entities adds several flavors of complexity to design so make sure you have the right team doing these assessments.

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2. Make a plan for how to automate intercompany transactions

Now that you have charted out your intercompany transactions you will want to consider: is there any way I can deliver accounting automation and automate these in Dynamics 365 for Finance and Operations?  The last thing you want to have happen is for one entity to book an intercompany transaction and the other entity to forget to book it – or worse, to double book it because two different people thought it was their responsibility.  There are several out of the box methods to automate this, such as Centralized Payments where a single legal entity can make payments to payables in other legal entities.  Another tool is Intercompany Accounting which allows the booking of due to/from transactions automatically behind the scenes.  Avantiico has also built some custom tools to book many transactions across legal entities simultaneously as a significant time savings/risk mitigation for our clients that we would be excited to share with you.

3. Follow D365 Finance multi-company best practices

Beyond how you transact there are other best practices we recommend when planning out a multi-company Dynamics 365 for Finance and Operations instance.  For example:

  • Where possible use a single global Chart of Accounts and Financial Dimension structure in Dynamics 365 – this will make your data easier to consolidate and manage.  If you operate different types of business across your legal entities you can still use a global chart but filter the list of accounts by legal entity using Main Account Legal Entity Overrides
  • Update your D365 number sequences from the default values to company-specific values.  Your goal should be that you are able to look at a transaction or voucher outside of the context of your ERP and understand where it came from and trace it back to its root in your system
  • Utilize Dynamics 365 Finance cross-company data sharing for shared configurations and be consistent across companies wherever possible
  • Create and maintain global documentation for configurations
  • Harmonize processes across businesses

4. Identify consolidation structure and understand Foreign Exchange Revaluation

If your business operates legal entities across international borders then it is critical to take care in defining your currency and consolidation structure.  Consider where you get exchange rates from and when, your ledger and subledger revaluation approach, and how you deal with exchange differences upon consolidation.  If there are multiple layers of ownership across different currencies then care should be taken to define the consolidation process so you can accurately explain your approach to your auditors.

5. Integrate your closing schedule across all companies

The Financial Period Close Workspace is an optional tool in Dynamics 365 for Finance and Operations that is used to manage the month end and year end close process.  If you choose to utilize this tool we recommend the following:

  • Standardize the close process as much as possible across your various legal entities in terms of tasks and timings
  • Make sure roles are meaningful; when people change positions in your company it should be simple to update resource assignments to closing roles
  • Match Task Areas to categories of your close so they can be used as a filter
  • Utilize dependencies and dates in the close
  • Assign Task Links and attach SOPs in your closing template to make training easier when people take on new roles and tasks

We believe the D365 Financial Period Close Workspace is a very powerful accounting automation tool when used effectively but be sure to follow best practice to avoid a rat’s nest of responsibilities that are challenging to manage.

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6. Match Legal Entities to Companies

One suggestion that often comes up in multi-entity accounting implementations is the suggestion to manage multiple legal entities under a single legal entity in Dynamics 365 for Finance and Operations.  While there are some reasons why this could seem like an easier approach we strongly encourage our clients to avoid this path and keep a 1:1 relationship between Tax ID Numbers and ERP Legal Entities.  Merging legal entities in D365FO causes many issues that require customization in order to manage which we have found to be problematic.  For example, think of taxes and other reports that must be submitted to government agencies; how will you provide those if you have multiple legal entities in a single D365FO company?  Custom reports and many modifications to how data is stored to support those reports are the only way to achieve this.

7. Exercise care in use of financial dimensions

As discussed above, we recommend creating a financial dimension and account structure that can be shared across your organization.  There are some specifics that we recommend to make this work as a long term solution:

  • Limit the use of financial dimensions where possible; generally our recommendation is to create financial dimensions at the level in which you A) submit financial reports and B) budget.  If you use financial dimensions for other reporting purposes we would challenge you to find other ways to build your reports using subledger data and BI
  • Each financial dimension (including main accounts) should either be a different length or use a prefix that helps you identify its purpose; users should be able to visually ID a dimension by looking at it without needing the context of your account string
  • We recommend including all financial dimensions across all main accounts, even if they are not in use.  You may want to use legal entity overrides on your main accounts to ensure some dimension values are blank on certain accounts, but if you maintain the same string across all main accounts it makes importing, exporting, and parsing your financial data much simpler.

8. Have a reporting strategy in place

Reporting is a challenge in any Dynamics 365 for Finance and Operations implementation; unless you have a robust BI reporting system in place in your current ERP it can be very challenging to transition from excel-based reporting to BI-based reporting at the same time as your implementation.  The paradigm shift is significant and should not be underestimated.  Even if a BI implementation is not part of your initial go-live we recommend having a plan in place to pick this up as soon as possible after go-live, especially in multi-company scenarios.  Microsoft tools exist to create amazing reports but you need dedicated resources to plan and design your BI solution when you are ready.  In the meantime be thinking about where you will need to carry your excel reporting forward temporarily and make sure you can surface that data for go-live.

9. Have a deliberate data maintenance/master data management strategy

When operating many legal entities it is especially important to think ahead to how you are going to manage your master data.  Some questions you will want to ask during the implementation might be:


  • Do I want to share Vendors and Customers across legal entities?
  • How do I manage updates of shared data?
  • Should users have access to the same or different data when they switch companies?
  • Who is responsible for master data maintenance?
  • What master data approvals do I need to put in place?

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If you are implementing accounting automation software and Dynamics 365 Finance covering many business units and legal entities there are many decisions to consider that will stay with your Microsoft D365 accounting solution forever.  Working with a team of accounting automation experts in this discipline will help set your organization up for long term success and system satisfaction.  Most important is to make a deliberate plan of attack so you can ensure adherence to best practice.  We hope this article helps avoid some common pitfalls.


Learn about the Advanced Multi-Company Solution automates and streamlines multi-company financial management in D365 Finance

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