Questions to Ask Before Implementing Intercompany in Dynamics 365 Finance

Introduction

Dynamics 365 Finance offers powerful intercompany capabilities that can significantly reduce manual work and errors across legal entities. Features such as automatic journal entries, intercompany purchase orders, invoices, and even payment journals can streamline processes, improve traceability, and ensure better correspondence between entities.

But before enabling intercompany transactions, it’s critical to ask the right questions. The way you design your intercompany model will impact accounting, operations, and governance across the group.

Key Questions to Ask

1. Should intercompany remain an accounting-only task, or extend to full operations?

   • Will you limit intercompany to general ledger journals, or integrate it into the full purchase-to-pay / order-to-cash cycles?
   • The decision impacts effort, traceability, and user adoption.

2. How will approval workflows be impacted?

   • Should intercompany transactions follow the same approval workflows as third-party transactions?
   • Or should simpler, tailored workflows be designed for efficiency?

3. Who needs to be involved in the process?

   • Accounting, Accounts Payable, Procurement, and even Treasury may have a role.
   • Ensure stakeholders are aligned on responsibilities to avoid ownership gaps.

4. What about multi-currency considerations?

   • Which exchange rates will be used for intercompany postings?
   • How will you manage revaluations and ensure consistency across entities?

5. Are legal entities aligned on core parameters?

   • Month-end closing dates, main accounts, product catalogs, and dimension structures need to be harmonized.
   • Without alignment, automated intercompany will quickly break down.

6. What are the security and access implications?

   • Will staff be able to see data across companies?
   • Do new intercompany processes require additional roles or segregation of duties controls?

7. What is the impact on reporting?

   • Will existing reports reflect intercompany transactions correctly?
   • Do you need new reports (e.g., intercompany reconciliations, due-to/due-from balances)?

8. How often should intercompany transactions be processed?

   • Define the periodicity: monthly, quarterly, or annual.
   • Align with operational needs and group reporting timelines.

9. How will consolidation and period-end processes be impacted?

   • Will intercompany eliminations be handled automatically through the consolidation module?
   • What extra steps are needed to ensure smooth period-end close?

Conclusion

Intercompany accounting in D365 Finance can unlock significant efficiency gains, but only if it’s thoughtfully designed. Asking these questions upfront will help you avoid costly redesigns and ensure a smooth, controlled rollout that balances automation, reporting needs, and compliance.