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Minimizing risk with the aid of credit management in Dynamics 365 Finance

The left hand (sales) does not always know what the right one (accounting, receivables management) is doing. This is a common situation at many companies and it is often the reason why orders continue to be taken from customers who are in arrears.

The greater degree of transparency offered by an integrated ERP system that provides a good overview of the current and future demands can make it easier to pull the plug, so to speak, at an earlier stage. This automatically minimizes risk.

Enhanced standard functions since 2020 in Dynamics 365 Finance

Microsoft has expanded the range of standard functions available in Dynamics 365 Finance’s credit management feature (or D365 Finance for short) from version 10.0.10 and been able improve how they are integrated into the sales and logistics process.

The primary function now goes beyond merely monitoring the extent to which credit limits have been used. It is now possible to identify and block customers posing a potential risk along the entire value chain, as well as to automatically trigger approvals.

You can’t have fairness without transparency.

Prof. Dr. Thomas Jüstel

If you are unable to have a professional credit management system set up in a dedicated department at the company, credit limits unfortunately depend on many subjective assessments of the employees involved. D365 Finance enables you to set automatically generated initial limits based on the debtor’s key fundamentals and documents any changes using custom “booking logs” and workflows.

Several layers for the credit limit

A special feature here is the fact that the credit limit in place can be built on several layers. Starting with the basic credit limit (1), these can also include temporary limits (2) and credit insurance, bank guarantees, etc. (3). What is always relevant for the check is the total credit limit (4).

It is also possible to combine related debtors in a credit management group to create one total credit limit (e.g. holding company A with B subsidiaries, which are separate debtors). The credit management group’s limit is then checked before that of the respective customer.

However, having transparent and up-to-date credit limits do not afford you any protection from non-payment if limits are not checked along the entire value chain à your ICS and risk management colleagues have no doubt had the pleasure of handling a situation like this before.

The left hand still might not know what the right is doing, but Dynamics 365 Finance has the whole process under control

The seamless integration of all modules means that every business case automatically triggers corresponding transactions in the relevant sub-ledgers, as well as in the general ledger in specified cases. The result is that the credit management function “knows” when a warehouse employee is working through a picking list or a sales employee wants to confirm a new order.

It is here that the advantage of integration comes into play. You are able to check a credit limit when you confirm an order, when you enter a picking list, when you book delivery notes, and when you create invoices – all as part of the standard package.

Several opportunities to take action BEFORE non-payment

Conducting regular checks to determine if the credit limit has been exceeded is just one of the many ways D365 Finance helps mitigate the risk of non-payment.

Microsoft Dynamics 365 Finance offers up to nine different rules for blocking orders to determine the point from which a new order should no longer be confirmed. Each rule is independent, regardless of the credit limit.

For example, if a receivable is more than X days overdue, D365 Finance is able to prevent a new order from being placed even though the credit limit has not yet been exceeded. The rules on blocking orders also give you the option of requiring orders of a certain size to be approved by means of workflow or, alternatively, of exempting micro-orders from the need to be checked at all.


In short, the new credit management features of Microsoft Dynamics 365 Finance result in the following improvements with only a modest amount of effort being required during the set-up process:

  • There is greater transparency in respect of the credit limits granted
  • Customers with a gradually deteriorating payment record are identified and dealt with at an early stage
  • Accounts are blocked and orders approved automatically within the sales process

What this all means is that D365 Finance can provide you with active and highly effective support in substantially reducing the risk of non-payment.

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