Franchise Accounting for Microsoft Dynamics 365

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Finance & Operations, Microsoft Dynamics 365, Reporting

Franchise Accounting for Microsoft Dynamics 365

Get better Franchise Accounting Management and Multi-Company Accounting using Microsoft Dynamics 365 Finance: Learn how to implement many similar companies and manage them as a group of companies to reduce costs, deliver better reporting and increase implementation speed.

Dan McAllister

Practice Lead - Strategic Reporting Services

February 8, 2021

When implementing a new franchise accounting and multi-company solution within Microsoft Dynamics 365 Finance one of the key areas we focus on is the number and variety of companies being implemented.

We see many scenarios; operations in many countries, multiple companies as a result of various acquisitions, companies split by purpose, and franchises. Each scenario is a bit different which requires an assessment to make decisions like:

Should we implement everything together or in a phased approach?
In what areas can we harmonize our data or at least our processes?
What happens if we create a new company that follows the same processes – or different processes?

The answers to these questions are important as you make foundational decisions around your Microsoft franchise accounting solution that you will need to live with going forward. With the correct approach, Dynamics 365 for Finance and Operations has many tools to help manage similar companies together as a single unit to reduce overhead cost, time to implementation, and management headaches.

There are many standard Microsoft D365 Finance features that can be leveraged to manage franchises or a multi-company accounting scenarios. Avantiico has developed a set of franchise management tools for Microsoft D365 to extend standard features that we believe adds significant ease in multi-company management.

Standard Features in Dynamics 365 Finance & Operations

Leverage Key Multi-company Financial Management Tools including the Chart of Accounts, Financial Dimensions, and Account Structures in Microsoft D365

The backbone for any multi-company system is a global Chart of Accounts, which includes Main Accounts, Financial Dimensions, and the Account Structures that tie them all together. For companies with similar structures and purposes across legal entities it is best practice to implement a single Chart of Accounts where possible and then manage deviations by exception.

Chart of Accounts and Account Structures are combined in the Ledger form in Dynamics 365 for Finance and Operations.

Here we identify the Chart of Accounts and any Account Structures. You may have different Account Structures for different companies, but you may also share Account Structures across different companies. Best practice is to at least group companies by type; if you are running a franchise business then each company representing a franchisee might have one set of Account Structures while corporate has a different Account Structure. In doing so many types of companies can use the same Chart of Accounts while limiting access to only the accounts relevant for the company in question.

Another lever is using Account Structures to adjust the use of Financial Dimensions by company. While this can be useful keep in mind several key points:

When you consolidate you will need to dictate an order of financial dimensions to be used in the consolidation company
The order of financial dimensions must be set for financial integrations including imports, Financial Reports, data entity imports and exports including Journal imports), and others
There is also a downstream impact to the Budgeting module where you must dictate the order of financial dimensions

Finally, when you run the consolidation process keep in mind that you may add or replace financial dimension values as transactions are lifted into the consolidation. A common use case for this is to stamp source company transactions with a legal entity ID for the dual purpose of building consolidating reporting and reducing the challenge you might face when researching balances in the consolidation company.

2. Use Legal Entity Overrides with your Chart of Accounts and Financial Dimensions

In Main Account and Financial Dimension setup there is a section for Legal entity overrides which allow you to dictate, among other things, when an account or dimension is forbidden from use in a company or to hard-code financial dimensions to be used on the main account. This is a very powerful tool but it is best to use this to manage by exception to avoid its use getting out of hand. If you use this to determine financial dimensions to be used on all GL accounts then every time you configure a new main account you will also need to configure these legal entity overrides. While this can be updated en masse using the Data Management tool in Dynamics 365 for Finance and Operations, it increases the overhead to managing the Chart of Accounts.

The best use case for Legal entity overrides is to suspend accounts or dimensions that belong in the global chart but not in a specific company; for example, if an account was relevant to franchise locations but not to the company that represents the home office. Where possible we recommend using Account Structures to manage this behavior instead.

3. Implement Cross-company Data Sharing to Synchronize Configurations

Cross-company data sharing is a newer feature in Dynamics 365 for Finance and Operations that allows configuration data to be copied across companies. You may define in each group or “Policy”:

Which tables are included
Which fields from those tables will be copied
Which companies share these tables

Any time the configurations are changed in one included company that configuration will change in all others in that group. You may have many tables in one group, or many groups with different assortments of companies and tables.

The data limitations have recently been expanded to allow 300 companies and up to 2 million records per policy.

4. Copy Configurations to New Legal Entities using Data Management

The Data Management framework has a type of data copy called “Copy into Legal Entity” which allows you to copy multiple data entities into one or multiple companies. Say you wanted to set up a new Franchise company, all you would need to do is create the company and then copy configurations using a preconfigured template that defines which data entities are relevant.

One or many templates can then be used to define which data entities are relevant without having to select them manually each time you configure a new company; and if new features start being used it is easy to update the template going forward.

At a minimum if you used this without cross-company data sharing this would give each company a set of baseline configurations that could then be updated as needed. You may have many different types of templates that represent different “flavors” of companies within your organization.

System Extensions

5. Extend Cross-Company Data Sharing to include Master Data and More Records

By default, Master Data is not allowed to be shared across companies in the standard Cross-Company Data Sharing function. For Vendor and Customers there is, at the time of this writing, an option in Feature Management to allow the sharing of these two tables using standard functionality. If there are other Master Data tables you would like to share then this functionality will have gaps out of the box.

At Avantiico we have developed solutions to allow the sharing of additional tables. Extending this functionality requires careful use by users but can be a very powerful tool to maintain many legal entities as one. Our solutions are also being used to extend the number of records and companies possible to be used to support large, franchise operations.

6. Financially Post in Many Companies using our Multi-Company Journal Import

A request that we often see in large deployments is to import journals into many companies simultaneously. The standard tools available in Dynamics 365 for Finance and Operations only allow upload into a single company at a time. Avantiico’s Multi-Company Journal Import extends this functionality to so users can import journals of any type into many companies simultaneously from Excel. This saves our customers many hours of time and risk of error by pushing everything all together rather than running independent jobs to do these imports.

7. Improve on Data Migration Approach using Multi-Company Imports

With Data Management Framework limitations around importing to multiple companies at the same time, executing data migration in a multi-company or Franchise solution can be a daunting task. For this reason Avantiico has built a Multi-Company Data Migration tool that imports data across companies. If we can implement a standard export in your existing ERP tool then this becomes a very quick iterative process, improving the data used in your implementation testing and ultimately a smoother go-live.

Conclusion

There are many tools in Dynamics 365 for Finance and Operations that can turn it into a solid Franchise Management or Multi-Company Management system. This can include both managing many companies together as one, but also separately for the purpose of items that must remain unique like Fixed Assets. Dynamics 365 for Finance and Operations can be used to quickly implement new companies, reduce overall overhead to manage many companies together as one where appropriate, and quickly provide information to users to make important business decisions.