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Planning advice for Microsoft Accounting Automation software and Dynamics 365 Multi-Company projects
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!
If your legal entities interact with each other it is critical to map out all intercompany relationships in advance. This might include for example:
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.
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.
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:
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.
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:
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.
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.
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:
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.
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:
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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.
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