It’s a wonderful life…with multiple entities in Business Central

Key Points

• Out-of-the-box management of multiple companies in Microsoft Dynamics 365 Business Central can be challenging for users.
• Multi-entity management apps, such as DimensionPath, provide a way to define multiple legal entities in a single Business Central company, making life far easier.
• With the multi-entity approach, users can handle cross-entity transactions quicker and easier, with data and consolidated reporting across entities readily available.

I hope you enjoyed the seasonal title.  Welcome to our first blog post of many to come. I’m Rob Hansen, Managing Partner at CentralPath Solutions, and today I will regale you with some exciting commentary around a better way to handle multiple companies in Microsoft Dynamics 365 Business Central.

Business Central can capably handle scenarios with multiple companies / legal entities. The application and its database structure are well architected to accommodate an unlimited number of separate companies (we’ll refer to these as entities going forward) in a single environment. The big challenge though is exactly that: they are very much separate.  If users only work within their own entity, and those entities have very segregated operations (minimal transactions between them, no inventory sharing), then the structure can work well. In cases where the entities do transact between each other, or where users handle functions across multiple entities, life is challenging.

• Users can only work in a single entity at a time. To process transactions for different entities, the user has to switch to each respective company to do the work.  It is a challenging structure for users that work across entity lines.
• No broad cross-company visibility for data.  While working in a given company, there is no easy way to see data for other companies.  If information is needed from another company, the user needs to start a new session in that company…then jump back to the original company.  There is also no easy reporting or querying of consolidated data across all companies.
• Centralized A/R and A/P is not feasible. When a cash receipt or outgoing payment needs to be applied to open documents for other entities in the organization, it is a cumbersome process to execute the transaction across company lines.
• Limited intercompany scope. Business Central intercompany flows are triggered from designated places, without universal support across all transactions.

Multi-Entity Management Apps – A Better Way

An app such as DimensionPath Multi-Entity Management (MEM), available through AppSource, enables multiple entities within a single Business Central company.  Each entity is defined as a Global Dimension 1 value (Entity). The diagram below illustrates the difference between the standard approach and the multi-entity approach.

MEM apps make this structure possible through added logic and functionality:

• General ledger balancing by Global Dimension 1.  Logic is added to enforce that all general ledger postings are in balance (debits/credits) by global dimension 1 value, ensuring a balanced overall general ledger for each entity at all times.
• Automatic due-to / due-from postings. When transactions are allowed to cross entity lines (based on configuration), an app such as DimensionPath will automatically post the balancing entries to recognize the receivable and payable between the respective entities.
• Entity (Dimension) based security.  Functionality is provided to limit visible data for users based on dimension values, so that user views
• Additional supporting functionality.  A range of other new functionality increases capabilities and simplifies processes.  Examples here would be automatic matching sales/purchase orders between entities, and transfer pricing for unique pricing arrangements between entities.

With MEM in place, users no longer need to switch companies to perform tasks. Data is visible across entities (subject to permissions), and cross-entity transactions are handled seamlessly.  Shared master data (customers, vendors, items) eliminates duplication and simplifies daily operations.  Real-time consolidated reporting is available without running consolidations or external reporting tools.

The multi-entity approach, as opposed to the classic multiple company approach, makes day to day life a completely different experience for users.  To work in an analogy here, it’s like switching from working on one continent at a time, to having the whole world at your fingertips.

Upcoming blog posts will explore more details on DimensionPath, focusing on functionality, FAQs and special scenarios.  This post was just intended as an introduction to the multi-entity concept and the DimensionPath MEM solution.