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Sequential Configuration Steps for D365 FO Modules configuration module wise

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Posted on by Naresh Dhekonda

I’m currently working on configuring Microsoft Dynamics 365 Finance and Operations (D365 FO) and would like to understand the sequential configuration steps for each module.

Specifically, I’m looking for guidance on:

The recommended order of configuration for core modules like Finance - Organization Admin, System Admin, General Ledger, AP, AR, Cash and Bank mngmt, Fixed Assets, & Supply Chain, and Production.

Key parameters or settings that need to be configured in each module.

Any best practices or resources for ensuring a smooth setup process.

If anyone has a detailed guide, checklist, or documentation that outlines the configuration process module-wise, I’d greatly appreciate it.

Thank you in advance for your help!

Naresh Dhekonda

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Dynamics 365 Finance

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Raj Borad 1,337 on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

Hi Naresh,

The Configuration in FO is bit complex and time taking process and it also depends on the business process and customizations in the existence software.

Here are some basic steps we have used for internal understanding and demo purposes.

1. System Administration
- Purpose: Set up users, roles, security, and global system parameters.
- Points:
- Define users and assign roles/security privileges.
- Configure batch groups and system parameters.
- Set up email parameters and alerts.

2. Organization Administration
- Purpose : Define the organizational structure.
- Points :
- Legal entities
- Operating units: business units, cost centers, departments.
- Number sequences
- Fiscal calendars

3. General Ledger (GL)
- Purpose : Foundation of financial transactions.
- Points :
- Chart of accounts, main accounts, and account structures.
- Ledger setup (currency, fiscal calendar, account structure).
- Journal names and posting definitions.

4. Cash and Bank Management
- Purpose : Manage bank accounts and reconcile cash positions.
- Points :
- Create bank accounts and set currencies.
- Set check formats and reconciliation parameters.

5. Accounts Payable (AP)
- Purpose : Manage vendor invoices and payments.
- Points :
- Vendor groups, vendors, and payment terms.
- Invoice validation and payment setup.
- Procurement categories and workflows.

6. Accounts Receivable (AR)
- Purpose : Manage customer invoicing and collections.
- Points :
- Customer groups, customers, and terms.
- Payment journals and invoice journals.
- Free text invoices and collection letters.

7. Fixed Assets
- Purpose : Track depreciation and asset values.
- Points :
- Set up asset books and value models.
- Create asset groups.
- Configure depreciation profiles.

8. Supply Chain Management (SCM)
- Purpose : Handle inventory, procurement, and sales.
- Points :
- Sites, warehouses, inventory dimensions.
- Item groups, items, and product dimensions.
- Procurement categories and vendor catalogs.

9. Production Control (if used)
- Purpose : Manage manufacturing processes.
- Points :
- Create routes, BOMs (Bill of Materials), and resources.
- Define production control parameters.
- Set up cost groups and overhead.

You can check the above steps and align your business process with it in the FO system.

Thanks,

Raj D Borad

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Abhilash Warrier 5,402 Super User 2025 Season 2 on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

Recommended Order of Configuration

Organization Administration:

Setup Legal Entities: Define legal entities and their relationships.

Configure Number Sequences: Set up number sequences for various transactions.

Define Calendars: Establish fiscal and operational calendars.

System Administration:

User Roles and Permissions: Assign roles and permissions to users.

Security Configuration: Set up security policies and audit trails.

Workflow Management: Configure workflows for approvals and processes.

General Ledger:

Chart of Accounts: Define and configure the chart of accounts.

Ledger Setup: Set up ledgers and fiscal calendars.

Financial Dimensions: Configure financial dimensions for reporting.

Accounts Payable (AP):

Vendor Setup: Define vendor groups and profiles.

Payment Terms: Configure payment terms and methods.

Invoice Matching: Set up invoice matching policies.

Accounts Receivable (AR):

Customer Setup: Define customer groups and profiles.

Credit and Collections: Configure credit limits and collection policies.

Billing and Invoicing: Set up billing schedules and invoicing rules.

Cash and Bank Management:

Bank Accounts: Define bank accounts and their configurations.

Cash Flow Forecasting: Set up cash flow forecasting parameters.

Reconciliation: Configure bank reconciliation processes.

Fixed Assets:

Asset Groups: Define asset groups and profiles.

Depreciation Methods: Configure depreciation methods and schedules.

Asset Management: Set up asset acquisition and disposal processes.

Supply Chain Management:

Inventory Setup: Define inventory items and categories.

Warehouse Management: Configure warehouse locations and processes.

Procurement and Sourcing: Set up procurement categories and policies.

Production:

Production Orders: Define production order types and workflows.

Bill of Materials (BOM): Configure BOMs and routing.

Capacity Planning: Set up capacity planning and scheduling.

Key Parameters and Settings

Organization Administration: Legal entities, number sequences, calendars.

System Administration: User roles, security policies, workflows.

General Ledger: Chart of accounts, ledgers, financial dimensions.

Accounts Payable: Vendor profiles, payment terms, invoice matching.

Accounts Receivable: Customer profiles, credit limits, billing rules.

Cash and Bank Management: Bank accounts, cash flow forecasting, reconciliation.

Fixed Assets: Asset groups, depreciation methods, asset management.

Supply Chain Management: Inventory items, warehouse locations, procurement policies.

Production: Production orders, BOMs, capacity planning.

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André Arnaud de Cal... 299,149 Super User 2025 Season 2 on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

Hi Naresh,

You got some replies below. I would like to point out that the configuration mainly depends on the end-to-end processes you will need in your organization. Have you already described which processes you need to have configured in the environment? Did you perform a fit/gap analysis?

You can configure Dynamics 365 in different ways, depending on all detailed requirements as part of your processes. Also, the configuration can be different as per country requirements. It is impossible to just share the key parameters or best practices.

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Arvind Bharti 590 Super User 2025 Season 2 on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

Hi,

As mentioned by others, It all really depends on your project requirements what processes are in scope and then which capabilities are fit for meeting those processes/requirement and then you find out what modules are required to be configured.

For your help, i have found one link for list of major configurations:

https://exploredynamics365.home.blog/2020/05/16/managing-configuration-check-list-for-effective-implementation-part-1-for-microsoft-dynamics-365-finance-and-operations/

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Ramit Paul 22,797 Most Valuable Professional on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

Hello,

You have got all the required valuable feedback to your question and I must admit, this question is very important.

Right now, Business Process Catalog excel and power bi version is helping me a lot to mitigate this question so thought of sharing with you.

Check this link and get the latest bpc from github - https://github.com/microsoft/dynamics365patternspractices/tree/main/business-process-catalog

Here is the power bi version of bpc - https://app.powerbi.com/view?r=eyJrIjoiN2JmMTM2ODMtZGE2Ni00Yjk4LTkwNGEtZTZiOTBhODQ1NzU3IiwidCI6IjRiMTliODcwLWM4Y2EtNGJmMi05Zjg2LTE1ODZiMDMwMGQyNiIsImMiOjl9&pageName=ReportSectiond88db9bec3682b9cadca

1 people found this reply helpful.

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Vahid Ghafarpour 11,974 Super User 2025 Season 2 on at

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Sequential Configuration Steps for D365 FO Modules configuration module wise

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