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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Financial dimension as...
Finance | Project Operations, Human Resources, ...
Answered

Financial dimension as a entity-backed dimension from Operating unit

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Posted on by JH-03070737-0 20
What is best practice when creating a financial dimension of type that are in Operating units, like Business unit, Cost center, Department, Retail channel, Value stream?
Today there is no need for the functionality of Operating units, that I understand is for security, organization structures and budget control,
but if we don't create the financial dimensions from Operationg unit today we can't use the functionality in the future and are Microsoft developing more functionality regarding Operating units and Organization hierarchies?
What is best practice setting up financial dimensions, entity-backed dimension from Operating unit or a custom dimension?
Operating unit cost center.png
Categories:
Dynamics 365 Finance
I have the same question (0)
  • Suggested answer
    Adis Profile Picture
    Adis 6,597 Super User 2026 Season 1 on at
    Hello,
     
    Basically, financial dimensions are used for more precise reporting\budgeting.
    I would create financial dimensions based on the following questions.
     
    How would I want to divide my business and\or legal entity in order for:
    • reporting
    • budgeting
    • consolidation
    To give you an example:
     
    You may want to check your sales based on business units, f.e. goods, services, consulting etc. Therefore, you need to make postings with the business units you defined for better reporting.
    You may want to use the budgeting functionalities for budgeting. Therefore, dividing the legal entity to departments might be useful.
    If you are using external consolidation software, you may want to from where the posting is coming, so creating a fin. dimension called "Intercompany" might be an option.
     
    There are probably more thoughts on this, so I am wondering what other ideas may come up.
     

    Kind regards, Adis

     

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  • Suggested answer
    Raj Borad Profile Picture
    Raj Borad 1,560 on at
     
    If the dimension represents an organizational responsibility (people, cost ownership, approval, reporting lines), use Operating-unit–backed financial dimensions.
    If it’s purely analytical or reporting, use a custom financial dimension (as suggested by Adis).
     
    Thank you.
  • Suggested answer
    Alireza Eshaghzadeh Profile Picture
    Alireza Eshaghzadeh 14,839 Super User 2026 Season 1 on at
    Hi @JH-03070737-0,

    This depends on the business requirements and how a company chooses to categorize its financial transactions. Entity-backed dimensions are typically used when dimension values should be derived from a master entity, such as projects, banks, or customers. Operating units are also commonly used to define departments and cost centers and can be implemented as entity-backed dimensions.

    At the same time, custom financial dimensions and financial tags can be evaluated as alternative or complementary options. In short, the choice should be driven by business requirements and how the finance team wants to segregate and prioritize dimensions for balance sheet and P&L reporting.

  • JH-03070737-0 Profile Picture
    JH-03070737-0 20 on at
    Thank you all for your great answers.
     
    What I also want to know is if Microsoft is creating more functionality regarding the Operating units/Organizational hierarchies?
    So best practice is maybe to use for a financial dimension the entity-backed dimensions for Operating units like cost centers and not create a custom dimension although no functionality is needed at the moment, just to be prepared for using it in the future if Microsoft develops more functionality around Operating units, what do you think?
  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 303,716 Super User 2026 Season 1 on at
    Hi,
     
    As far as I'm aware, there are no plans to extend features around operating units or organization hierarchies. It might be the case that Microsoft will introduce a new operating unit type or a new purpose for the hierarchies, but I don't expect huge changes here. 
    PS, I'm aware of some other financial related investments, but these are not in the field of operating units and internal organizations. Some 3rd party solutions also extend the number of operating unit types or hierarchy purposes. For upcoming plans, you can always check the Microsoft Dynamics 365 - Release Plans.
     
    If you have a thought of using cost centers as financial dimension, then yes, you can use the operating units for possible future enhancements. Apart from reporting, you can also use the organization hierarchies as input for data security. Example: Extensible Data Security examples - Secure by retail channel
  • Verified answer
    Syed Haris Shah Profile Picture
    Syed Haris Shah 1,557 Super User 2026 Season 1 on at
     
    “We don’t need it today” is not a good design driver. This is the key architectural mistake.
     
    If a dimension represents organizational responsibility, it should be an Operating-unit-backed financial dimension, even if we don’t use the related functionality today, because changing this later is costly and Microsoft continues to build on this foundation.
     
    If you find this answer helpful, please consider Verifying the answer. 👍
     
    Regards,
    Syed Haris Shah
     
     
  • Suggested answer
    Adis Profile Picture
    Adis 6,597 Super User 2026 Season 1 on at
    Hi,
     
    I came across this fast track video that was released very recently. I havent watched it tbh, however, from the description it looks like it fits to your question.
     
     
     

    Kind regards, Adis

     

    If this helped, please mark it as "Verified" for others facing the same issue

    Keep in mind that it is possible to mark more than one answer as verified

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