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Posting Layers in Dynamics 365 F&O

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In ERP systems, Microsoft Dynamics 365 Finance and Supply Chain Management/Operations stand out as a powerful tool for businesses aiming to streamline their financial processes. Among its features, the concept of posting layers emerges as a pivotal aspect, often under-utilised but with immense potential to enhance efficiency and accuracy.

What are Posting Layers?

Posting layers in Dynamics 365 Finance and Operations control the posting of financial transactions. They enable organisations to segregate transactions based on predefined criteria, facilitating better control over the financial reporting and auditing processes.

To simplify it, a posting layer is nothing but multiple 'levels' of entry in the general ledger to report the amounts. With this, you have several views on examining the amounts presented to satisfy the business's financial reporting requirements. For example, we can maintain different books for IFRS and GAAP in the same instance.


Types of Posting Layers

In Dynamics 365 F&SCM, there are 10 different types of Posting Layers, and there are 2 others that are selectively available in the list but need to be understood:

 

  1. Current—This is the Default option/layer for all the Journals. It is used as part of the periodic financial reporting. This can be used for both external and internal reporting.
  2. Operations—This is just another layer for standard accounting entries, typically used to record day-to-day operational transactions. It is generally used for transactions other than the default that must be presented for periodic financial reporting.
  3. Tax—This layer is explicitly used for tax-related entries, which are not part of external or internal reporting but for specific tax transactions, such as depreciation entries, ensuring compliance with tax regulations.
  4. Custom Layers 1 to 7—Additional layers can be used for internal, parallel, or tax reporting.
  5. None—The None Layer is used only for the Fixed Asset module. In D365 F&SCM, you can add multiple books to a fixed asset.

 

You can also disable posting to the general ledger for the book by setting the Post to general ledger field to No. The Posting layer field is then automatically set to None.

With this option, you can calculate several different depreciation amounts for each fixed asset. However, for all books where the posting layer 'None' is used, the amounts can only be presented in the Fixed Asset module and will not be posted in the General Ledger.

To be able to make the postings, you can create a 'Post fixed assets' journal name with this posting layer 'None'.

Still wondering to know how this helps?

You will see the difference when you check the Valuation of a particular FA where we have assigned multiple books. The depreciation figures will differ based on the books, but only one figure will be present in the 'Current' financials.

Need to delete the Depreciation entry posted?

Usually, transactions cannot be deleted because they are posted in the general ledger. Still, for all fixed assets transactions in the posting layer 'None', you can use the periodic task 'Delete transactions not posted to general ledger' to delete the posted transactions.

          6. Dual warehouse—This is not in the Journal Name setup form or any other form, but it is present while running the Trial Balance.

After researching, I found that this is only useful for Russian localisation. In Russia, a specific functionality for inventory closing is created to allow inventory postings in the reporting currency. The ledger transactions made here are posted in the posting layer 'Dual warehouse' if the field 'Post-secondary financial' is enabled on the Item model group from the related Released Items.


Use of Posting Layers

Posting layers in Dynamics 365, F&SCM are typically used in various financial management scenarios where you need to control and organise the posting of transactions. Here are some common places where posting layers are utilised:

  1. Journal Entries: When entering journal entries for various transactions such as revenue, expenses, accruals, or adjustments, you can specify the posting layer. This allows you to categorise transactions based on your organisation's requirements.
  2. Accounts Payable (not commonly used): Posting layers can be applied when recording vendor invoices, payments, and other accounts payable transactions. This helps segregate different expenses or liabilities based on the posting layer rules.
  3. Accounts Receivable (not commonly used): Similarly, when processing customer invoices, receipts, and other accounts receivable transactions, posting layers can effectively organise revenue streams or customer payments.
  4. Fixed Assets: Posting layers are also relevant in fixed asset management. To ensure accurate financial reporting and compliance, you can assign appropriate posting layers when posting depreciation, acquisitions, disposals, or other fixed asset transactions.
  5. Inventory Management (not commonly used): In scenarios involving inventory transactions such as purchases, sales, transfers, or adjustments, posting layers can be used to categorise inventory-related activities based on their nature or business unit.
  6. Budgeting and Forecasting: Posting layers may also play a role in budgeting and forecasting processes. By assigning posting layers to budget entries or forecast adjustments, you can align them with your financial reporting structure for better analysis and decision-making.
  7. Consolidation and Intercompany Transactions: For organisations with multiple legal entities or subsidiaries, posting layers help manage intercompany transactions and consolidation processes more efficiently.
 

Reporting based on Posting Layers

In the Finance language, when we need to follow two different accounting rules, i.e. IFRS and GAAP, the only thing that needs to be posted is Delta.

The delta report can be extracted based on out-of-the-box trial balance reports and the management reporter.

Trial Balance

(General Ledger>Inquiries & Reports>Trial Balance)

Under the parameters of Trial Balance, we have the option to choose one or more than one posting layer while extracting the report. This helps add the delta figures whenever needed and also reports the figures individually. We can also take the examples of Consolidated company reports and standalone reports.

Management Reporter (Financial Reports)

(General Ledger>Inquiries & Reports>Financial Reports)

In Financial Reports, you can select and generate a report with multiple layers; this can be achieved by using the 'Attributes'. With this, you can add or filter posting layers to the report.


Note - This list will only have the posting layers are used/configued in the D365FO environment. If only one layer is used i.e. Current (default) then only Current will be avaible as a option.
 

This is all for this Post; I tried to cover up all the important pointers pertaining to the topic.

I hope this will help you at some phase of your consulting journey.

Or this can help you at least crack some difficult interview questions.

Do repost/share with your connections.

Happy Learning..!!

Nandish Kothari 🇮🇳

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