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Dynamics 365 in Accounts Payable Automation: In-Depth Review

Figure 1: ERP Market share in 2023

Dynamics 365 finance stands out as a significant vendor in the ERP market with the set of tools it offers in the realm of finance automation. The most prominent of these areas are the following:

Among these processes, accounts payable automation is crucial for the continuity of financial processes. In Ardent Partners’ report dated 2023, we see that deploying AP automation constitutes 41% of the incoming agenda of businesses. The same report finds that 71% of AP leaders see it as one of the most important factors affecting AP performance.1 In this article, we will take an in-depth look at Dynamics 365 as one of these smart systems.

Overview of Dynamic 365

Dynamics 365 is a key module for Microsoft, andit has contributed $5.4 billion to the company’s revenue as of 2023, which makes it grow faster than other product categories. 2 The finance module of Dynamics 365 is designed to improve the efficiency and accuracy of financial operations. Here, we will have a particular focus on Dynamics AP automation.

Features & key capabilities in AP automation

Dynamics 365 Finance improves accounts payable processes by accommodating invoice capture in various formats, both digital and manual. As with some of the other AP automation software, its main focus is invoice processing & automation. Features such as coding, and error resolution are also involved in their catalog. Some of the key capabilities regarding Dynamics AP automation are:

Invoice automation

 Dynamics 365 Finance can automatically process vendor invoices received in various formats, including email and electronic invoicing networks. In the cases where Azure AI & integrated platform environments are not involved, Dynamics 365 offers embedded invoice capture solutions with OCR, contrary to APAI solutions. For the options available in the current version of Dynamics 365 finance, see Figure 2:

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Figure 2: Options available in Dynamics 365 finance for invoice capturing. 

Vendor management

Dynamics’ system allows for management of vendor information such as payment terms, agreements, and historical data. Users can also benefit from features such as creating vendor groups (Figure 3).

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Figure 3. A sample action of creating a vendor group through Dynamics 365 finance.

Three-way matching

 Dynamics in finance supports a three-way match system. Purchase orders (POs), receipts, and incoming invoices are basic components of the process.

Payment automation

 Dynamics 365 finance automates payment processing by scheduling payments, electronic fund transfers (Figure 4). It also allows the management of multiple payment methods and currencies.

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Figure 4: An example of scheduling payment processes through Dynamics 365 finance. 

Workflow approvals

 Dynamics mostly offer customizable workflow capabilities. This way, invoice data and payments go through the proper approval processes.

Expense management

The module includes tools for managing and reimbursing employee expenses.

Financial insights

Dynamics 365 Finance provides real-time insights and analytics on financial data. Businesses can track their & vendor actions through business central. (See Figure 5)

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Figure 5: Dynamics 365 Business Central 

For overall services provided by Dynamics 365 finance, see:

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Figure 6. Microsoft Dynamics 365 Finance overall features.

Dynamics 365 pricing structure

Although Dynamics 365 offers different payment plans in some processes, the overall payment plan is as follows:

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Figure 7: Microsoft Dynamics 365 Finance. 

The AP automation process can sometimes result with the use of other services in Microsoft environments. The pricing of related products are given in the figure below:

Figure 8: Dynamics 365 Pricing in related products.

Dynamics 365 case studies:

Columbia Sportswear Company:

Columbia Sportswear, dedicated to equipping people for the outdoors with its range of apparel, footwear, and accessories has adopted Microsoft Azure along with Dynamics 365 Finance, and Dynamics 365 Supply Chain Management to streamline its operations. Columbia utilized tools such as IT data centers, warehouse inventory and point-of-sale systems. This move proved beneficial during record-breaking holiday sales in 2019 and provided corporate resilience during the COVID-19 pandemic. The investment in cloud technology has enhanced Columbia’s business performance overall.9

Bel Fuse

Bel Power Solutions switched from a relatively costly ERP system to Microsoft Dynamics 365. This move automated their financial operations and improved supply chain visibility, saving them nearly $2 million annually in IT services. Dynamics 365 also allowed Bel Fuse to handle more finance tasks in-house, like managing an Italian site’s finances from Slovakia, leading to further cost reductions. This new system is less customized, ensuring future flexibility.10

Alterra Mountain Company

Alterra Mountain Company, which initially merged four companies with seven different ERP systems, adopted Dynamics 365 to unify its financial and operational management. This transition allowed them to have a single financial system and a consistent view of customer interactions across various locations. 

They standardized on a single chart of accounts, and thus achieved consistent financial reporting throughout the company. Alterra further streamlined their procure-to-pay process using Dynamics 365 with the aim to improve buying efficiency and implement centralized procurement, which increased POs and reduced supplier numbers significantly. This system provided a comprehensive view of procurement across all units. Additionally, the use of Dynamics 365’s expense management features has simplified expense submissions for about 900 users.11

Kinara Capital

Before implementing Dynamics 365 finance, Kinara was uploading 100,000 transactions that took nearly two hours each day. After the implementation, the company was able to handle four times as many transactions in the same duration without needing additional resources. Tasks such as managing prepaid loans, fixed assets, and fixed deposits were also automated. Rojinn Anto, VP-Accounts at Kinara Capital, highlights another feature of Dynamics 365 as a crucial tool: transition to remote work in the pandemic. The platform ensured cloud integration, maintaining timely deliverables and quality standards.12

Hampton Products

Hampton Products utilized Dynamics 365 Finance in the accounting procedures such as:

  • quicken the financial transactions
  • precision and security in transactions
  • access to real-time financial and operational data

This way, the company eliminated the need to wait for offline business cycles. Dynamics also helped Hampton in accurate forecasting and detailed inventory cost models with a clear view of the total inventory value, including items in warehouses or in transit. Further benefits of Dynamics 365 Finance were the management of fixed assets, revenue deferment, and year-end closing processes.13

Dynamics 365 Pros

Integration with other modules:Dynamics 365 is integrated with other modules and third-party applications. As pointed out in customer stories, this can improve the overall functionality and data coherence.

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Figure 9: Integration capabilities of Dynamics 365. 

Apart from its comprehensive tools, users also liked features that are given in the figure below.

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Figure 10: Dynamics 365 Business Central pros.

Dynamics 365 Cons

Users stated that some processes still include manual tasks such as PO data entry and removing completed POs. Other than this, the most complained features of Dynamics 365 are given below:

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Figure 11: Dynamics Business Central cons.

Further Reading

Access Cem's 2 decades of B2B tech experience as a tech consultant, enterprise leader, startup entrepreneur & industry analyst. Leverage insights informing top Fortune 500 every month.
Cem Dilmegani
Principal Analyst
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Burak Ceylan
Burak is an Industry Analyst in AIMultiple. He received his Masters' degree in Political Science from Middle East Technical University. He has background in researching location-based platforms.

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