Ensuring a business's financial viability is a highly complex task, requiring a precise understanding and control of cash inflows and outflows, proactive and precise financial planning, and timely identification and mitigation of financial risks. Dynamics 365 Finance (also known as D365 Finance), financial management software provided by Microsoft, is designed to help companies streamline and optimize this task.

Dynamics 365 Finance can facilitate a wide range of financial management functions, from accounts receivable management and fixed asset management to budgeting and cost accounting, as well as automate and optimize these workflows. With its help, companies can gain end-to-end visibility into their financial health and ensure more efficient financial control, which is critical for maintaining their financial viability.

In this article, experts from Itransition, a Dynamics 365 Finance partner that helps businesses from the financial sector and across various industries implement D365 Finance, outline the ways that this financial management solution helps companies maintain their financial health.

Enhancing accounts receivable management

Even a well-established and profitable business can experience severe cash flow shortfalls if it cannot ensure timely payment for delivered services or goods. This makes proactive accounts receivable management vital for companies’ financial stability. In this context, implementing Dynamics 365 Finance can be useful, as it offers comprehensive capabilities for data-driven and efficient accounts receivable management.

In particular, D365 Finance allows accounts receivable managers to easily generate customer invoices based on sales orders or shipping documents, as well as invoices not linked to any orders or logistical documents, and then send them through email, customer portals, or other interaction channels. D365 Finance can also automatically create customer invoices based on a pre-defined schedule, enabling timely invoicing of services, subscriptions, or recurring contracts.

Since D365 Finance natively integrates with many popular payment service providers and gateways, accounts receivable managers also can use it to record and track payments received from customers (including credit card payments, electronic funds transfer payments, and payments by bill of exchange), match these payments to invoices, and settle the invoices based on payment information. D365 Finance can also be configured to automatically process customer payment data and settle invoices based on pre-defined settlement rules to enable faster and error-free closing of accounts receivable.

Facilitating budget management

Companies’ financial health also largely relies on the efficiency of their budgeting, which can be challenging to maintain. On the one hand, it requires careful and well-thought-out budget planning to ensure that departments have all the necessary funds required for their operation. On the other hand, it demands strict monitoring to keep departments within their allocated financial limits and to timely identify and prevent overspending.

With the help of Microsoft’s financial management software, companies can streamline these aspects of budget management. Specifically, in addition to creating budget plans manually, financial planning and analysis teams can leverage D365 Finance to automatically generate accurate budget plans based on historical financial data or data-driven forecasts. Teams can also easily export budget plan documents to Excel for review and approval by non-D365 users (department heads, cost center owners, etc.) and automatically upload the updated plans back into D365 Finance without manual data entry.

Financial controllers, in their turn, can utilize D365 Finance to track operational expenses across departments and monitor their adherence to budget limits. Dynamics 365 Finance can also be configured to automatically monitor budget adherence across departments and take immediate actions when their spending exceeds pre-defined thresholds, such as notifying financial controllers, issuing a warning message to a department, or stopping a department’s purchasing activities.

Streamlining cost accounting

To maintain financial viability, companies need to track, analyze, and control all their operating and non-operating expenses. D365 Finance can help cost accounting managers efficiently manage these tasks by tracking expenses in detail across various cost objects (a company’s products, departments, projects, etc.), even in real-time, and comparing actual spendings against planned ones.

If some discrepancies are detected, D365 Finance can also be used to investigate their root causes. Beyond manually investigating discrepancies by looking through actual and budgeted costs, cost accounting managers can leverage built-in Copilot functionality to automatically compare actual expenses against prior periods or budgets, accurately identify the causes of cost overruns, and present findings and explanations to human specialists in natural language.

Improving fixed asset management

When companies lack accurate visibility into their fixed assets (buildings, vehicles, equipment, etc.), they can experience financial losses due to unnecessary repeat purchases or high maintenance costs. Additionally, this lack of visibility can lead to incorrect tax filings and cause regulatory fines or non-compliance penalties.

Microsoft Dynamics 365 Finance can help businesses improve visibility of their fixed assets and efficiency in managing them, reducing the risk of financial losses. Tax managers can use D365 Finance to monitor assets throughout their entire lifecycle, from acquisition and depreciation to disposal, to gain real-time visibility into their financial status and ensure that no assets are missed for tax reporting.

D365 Finance can also provide procurement and purchasing departments with a detailed, up-to-date register of fixed assets, which can reduce duplicate purchases and optimize a company’s capital expenditures. Maintenance teams, in turn, can use a central repository of fixed assets in D365 Finance to easily track the operating condition, status, and location of various assets, which can help them schedule and execute maintenance tasks in a timely and proactive manner.

Final thoughts

Ensuring the financial health of a business requires careful management of its cash flows, alignment of available financial resources with strategic and operational goals, and proactive mitigation of potential financial risks. By providing real-time visibility into financial data and streamlining critical financial management tasks, Microsoft Dynamics 365 Finance can help companies overcome these challenges.

If you need specialized expertise to fully leverage the capabilities of D365 Finance, consider turning to an experienced Dynamics 365 Finance partner. These experts can analyze your business requirements and financial needs to help you conceptualize a D365 Finance solution and develop an actionable implementation roadmap. If needed, experts can also execute a D365 Finance implementation while performing necessary configurations, customizations, and integrations to help you avoid common pitfalls of such projects and maximize the solution’s ROI.