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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / What is the recommende...
Finance | Project Operations, Human Resources, ...
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What is the recommended payroll approach for Dynamics 365 in 2026?

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Posted on by CU22041105-0 92

With the recent changes to payroll functionality in Dynamics 365 Finance and Human Resources, what is the recommended approach for companies that need a complete payroll solution?

Should payroll processing be handled through a third-party payroll system integrated with D365 HR, or are there situations where an ISV payroll solution built around the Dynamics 365 platform is a better approach?

I'm especially interested in how this works for companies operating across multiple countries.

Categories:
Dynamics 365 Finance
Dynamics 365 Human Resources
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    SajeedMullaji Profile Picture
    SajeedMullaji 380 on at

    @CU22041105-0 microsoft's official position is clear — they have exited native payroll development and recommend third-party or ISV solutions via AppSource for gross-to-net calculation and statutory compliance. D365 Finance and HR remain the system of record for worker data, compensation, org structures, and GL posting.

    For your two options:

    ISV payroll solutions built on D365 are generally preferred because they preserve a single data model and unified security framework. Worker data, position changes, and benefit elections stay within the D365 architecture — no middleware sync risk, and financial journals post directly back to the GL.

    External third-party payroll (ADP, Ceridian Dayforce, Workday Payroll) makes sense for large multinationals that need localized HCM suites or country-specific payroll bureaus with highly complex statutory requirements.

    For multi-country operations the standard pattern is hub-and-spoke — D365 Finance and HR as the global master for org management, compensation, and GL consolidation, with regional payroll engines handling local compliance (ZATCA/WPS for GCC, HMRC/RTI for UK). Gross-to-net summaries post back to D365 Finance via structured journal integrations.

    The choice between ISV and third-party ultimately depends on your integration complexity tolerance and how many countries you are operating in.

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