Summary of "Purchase Process in Microsoft Dynamics 365- Business Central"

Summary: Purchase Process in Microsoft Dynamics 365 Business Central

This video by Dhan Raj Bansal, Microsoft MVP and certified trainer, provides a comprehensive walkthrough of the purchase process in Microsoft Dynamics 365 Business Central. It focuses on setup, transaction flow, and key functionalities relevant to procurement, inventory, and payable management.

Key Business-Specific Content

1. Item Setup and Management

Item Types:
- Inventory (tracked stock)
- Service (non-stock services)
- Non-inventory (non-stock items like utilities)
Units of Measure: Base unit defined (e.g., pieces), with relationships to other units (e.g., boxes = 10 pieces).
Costing Methods: FIFO, LIFO, Specific, Average, Standard; FIFO used in demo.
Replenishment: Options include production order, assembly, or purchase.
Attributes: Custom attributes like color, model year can be assigned to items.
Blocking: Items can be blocked for transactions or sales/purchase separately.

2. Vendor Setup

Created via templates.
Payment Terms: Define due date calculation formulas, e.g.:
- “60D” = 60 days
- “CM” = end of current month
- “CM+7” = 7 days after start of next month
Payment Methods: Define how payments are made (cash, card, bank), with a key field “balancing account number” that enables simultaneous invoice posting and payment.
Priority: Vendor payment priority can be set to manage limited funds.

3. Purchase and Payable Setup

Discount posting options: no discount, line discount, invoice discount, or all discounts.
Number series for vendor and purchase documents.
External document number mandatory flag for invoice posting.
Receipt on invoice option controls when receipts are created.

4. Purchase Process Flow

Purchase Code: Used to record vendor quotations/prices before ordering.
Blanket Purchase Order: Long-term commitment with scheduled quantities and dates; allows partial orders against blanket.
Purchase Order: Created directly or converted from purchase code or blanket order.
Receiving:
- Posting purchase receipt updates inventory and creates item ledger entries.
- Supports partial, full, and over-receiving scenarios.
- Undo receipt possible if invoice not posted.
Invoicing:
- Posting purchase invoice creates vendor ledger entries and GL entries.
- Invoice posting can be combined with payment if payment method has balancing account.
- Early payment discounts automatically applied and reflected in GL.
Payment: Updates vendor balance and GL.
Returns and Credit Memos:
- Purchase return orders can be created and posted.
- Credit memos reverse posted invoices and shipments.
- Correction options include cancel, correct, and corrective credit memo.

5. Over-Receiving Setup and Process

Over-Receipt Codes: Define tolerance percentage for receiving more than ordered quantity.
Codes can require approval beyond certain thresholds.
Over-receipt codes assigned at item and vendor level; item-level code takes precedence.
System enforces maximum allowable over-receipt quantity based on configured tolerance.

6. Key Functionalities and Features

FactBox: Displays vendor statistics including balance, outstanding orders, payments, refunds, and document counts.
Find Entries: Tool to trace ledger entries created by transactions.
Posting Dates: Document date affects due date calculation based on payment terms.
Multiple Receipt Lines Invoicing: Ability to consolidate multiple receipts into a single purchase invoice.
Correcting Posted Invoices: Options to reverse or create credit memos for posted invoices, depending on payment status.

Frameworks, Processes, and Playbooks Highlighted

Purchase Process Flow: Quote → Blanket Purchase Order → Purchase Code → Purchase Order → Receive → Invoice → Payment → Return/Credit Memo
Payment Terms Formula Framework: Use of date calculation formulas (e.g., CM, CM+7, 60D) to automate due date calculation.
Over-Receiving Control Framework: Setup of over-receipt codes with tolerance percentages and approval requirements.
Discount Management: Line and invoice discounts with GL impact.
Document Numbering & Control: Number series and mandatory external document numbers for audit and compliance.

Key Metrics and KPIs

Vendor Balance: Monitored and updated through purchase, invoice, and payment postings.
Quantity on Hand: Updated real-time via item ledger entries upon receiving.
Payment Discounts: Example given where a 60 discount applied on a 3000 invoice due to early payment.
Over-Receipt Tolerance: Percentage limits (e.g., 10%, 20%) enforced to control inventory and cost overruns.

Concrete Examples and Case Studies

Creation of an item “Athens Desk” with FIFO costing and multiple units of measure.
Vendor payment term example: “CM+7” meaning payment due 7 days after start of next month.
Blanket purchase order with staggered monthly quantities.
Partial receiving example where order of 10 units received as 6 units and invoiced simultaneously.
Over-receiving example where order of 100 units allowed receipt of up to 120 units based on 20% tolerance.
Posting purchase invoice with simultaneous payment using cash payment method with balancing account.
Correction of posted invoice blocked if payment done, requiring credit memo instead.

Actionable Recommendations

Define clear payment terms using Business Central’s date formula to automate due dates.
Use payment methods with balancing accounts to streamline invoice posting and payment in one step.
Implement over-receipt codes to control inventory variances and require approvals for large deviations.
Utilize blanket purchase orders for long-term vendor agreements with scheduled deliveries.
Leverage fact boxes and find entries for real-time vendor and inventory analytics.
Use credit memos and corrective actions to maintain accurate vendor balances and financial records.
Block items or vendors when needed to control transactions effectively.

Presenters / Source

Presenter: Dhan Raj Bansal, Microsoft MVP (Dynamics), Microsoft Certified Trainer
Platform: YouTube Channel focused on MB-800 Microsoft Dynamics 365 Business Central Functional Consultant exam preparation.

This summary captures the detailed purchase process, setup, and transactional flow in Dynamics 365 Business Central with emphasis on business operations, procurement management, and financial integration.