At the beginning of the new year, most companies perform year-end closing activities that close the fiscal year and bring out the profitability, losses, strengths, and weaknesses of the past year. Usually, all of this can be seen through financial reports, but the depths of these reports can lead to inaccurate decisions due to the lack of information in the financial transactions.
Financial dimensions are standard feature in D365 that are based on strategic decisions and are used to get meaningful information from the transactions posted. This means that the transaction without the financial dimension will consist of the main account, amount, and date, but when the financial dimensions are added, then from the same transaction can be seen the business unit, division, and department. This can provide the profitability of each location in the business. If the profit and cost center is added, then it can be easily concluded each expense or revenue from which stream comes from. Another scenario is to add the fixed asset number, bank, customer, or vendor, that connects to the master data, and it is connected automatically (the main account from accounts receivable can now provide the information on which customer has ordered the most).
All these examples are standard in D365. However, based on the needs of the business, custom dimensions can be added and used in the same principle as the standard ones.
The Setup of the financial dimensions consists of several steps:
1.Create a financial dimension
Go to General ledger > Chart of accounts > Dimensions > Financial dimensions
Updates to a dimension will not take effect until dimension activation is run. The activation of dimensions is only allowed when the system is in maintenance mode. Maintenance mode can be enabled in this environment by running a maintenance job from LCS, or using Deployment Setup tool locally.
Ones the dimension has been created, the values of the dimension can be added through
2. Financial dimensions in the Account structures
Go to General Ledger → Chart of accounts → Structures → Configure account structures
One legal entity can have several account structures and the segments in the accounts are the financial dimension. The account structures create rules for which financial dimensions can be used in which accounts. The account structures can be quite simple or very complex depending on the business’s strategic decisions.
Once the account structure has been activated, the financial dimensions can be seen on the master data such as main accounts, customers, vendors, items, and other. For example, look at the customer bellow
One important step is to include the account structure in the ledger of the company. With this step, the setup of the account structure is complete.
3. Financial dimension configuration
Go to General ledger > Chart of accounts > Dimensions > Financial dimensions for integrating applications
This is often neglected, but it is a very important step in D365, especially if using the excel add in which is an excellent tool. The usual formats are:
- Default dimensions format: used for importing default dimensions using Data management and excel for master data and transactional data
- Ledger dimensions format: used for importing ledger dimensions using data management and excel for general ledger journals.
- Budget register dimension format – to determine the required dimensions when importing budget register entries using excel or Data management.
- Budget planning dimension format – to determine the required dimensions when importing budget planning entries using excel or Data management.
The order of the financial dimension in all of these entities is crucial and it should be the same as the order of the financial dimensions in the account structure.
4. Financial dimension sets
Go to General ledger > Chart of accounts > Dimensions > Financial dimension sets
The sets are a powerful tool and can be used to generate the trial balance and to get the reports needed for statistical purposes.
5. Dimension templates
Go to General ledger > Chart of accounts > Dimensions > Financial dimension default templates
Templates can be created and then applied as needed to aid in the distribution of the posting to multiple combinations of dimensions.
6. How financial transactions are filled with financial dimensions
There is a pyramid of how the financial dimensions are going to the last part of their journey and to the financial reports
The master data is connected to different financial dimensions that are transferred to the transactional data. While the transactional data is being processed, different vouchers are posted from it. The default financial dimensions from this customer will be copied on each sales order created for it. The vouchers posted from the sales order will contain the same financial dimensions as the sales order. For example: The default financial dimensions from the customer and item will be copied on each sales order created with them. The vouchers posted from the sales order will contain the same financial dimensions as the sales order. At the year-end closing, these vouchers are then used in reports.