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Microsoft Dynamics 365 Finance Introduces New Financial Tagging Feature
Posted on: April 10, 2023 | By: Guy Logan | Microsoft Dynamics AX/365, Microsoft Dynamics Manufacturing
It can often be very overwhelming to keep track of financial data, from budgets and expenses to revenue and profits. Microsoft Dynamics 365 Finance has long been a powerful tool for financial planning and analysis (FP&A) teams, providing real-time insights into financial performance and helping businesses make informed decisions. However, until recently, there has been a missing piece of the puzzle: financial tagging. This highly anticipated feature has finally arrived, and it promises to be a game-changer for businesses of all sizes. In this blog post, we’ll explore what financial tags are, why they are so important, and examples of how it can be used.
Why Financial Tags are Important
Although traditional financial dimensions in D365 have been a useful tool for reporting and posting by department, cost center, and other categories, they do have some limitations. For example, when dealing with a large list of values, using financial dimensions can become cumbersome and lead to performance issues. Additionally, once a financial dimension value is posted, it cannot be easily modified, which can be problematic. This is where financial tags come in. With the new financial tags feature, users can easily modify tag values after posting, and also use tags to manage lists with a high volume of values. This makes financial tagging a powerful addition to Dynamics 365 Finance, providing more flexibility and control over financial data.
Examples
- Stock Number – Manufacturing companies that produce products with different stock numbers can use financial tags to track the expenses related to each product. For example, a company that produces different types of solar panels can use a financial tag for each stock number to track expenses related to production, marketing, and sales for each type of panel.
- Vendor Accruals – Companies that accrue expenses by vendor can use financial tags to track these expenses in the general ledger. Instead of maintaining Excel files outside the system, they can use financial tags to track vendor ID for expenses coming through accrual entries, making it easier to manage expenses and reduce errors.
- Lot – For companies that deal with products or materials that are tracked by lot number, such as food or pharmaceuticals, financial tags can be used to track expenses related to specific lots. This can include value add costs, such as testing or inspection, going directly through AP/GL.
- Marketing campaigns – Companies often run various marketing campaigns to promote their products or services. Tracking these campaigns can be challenging, as they may involve multiple vendors, expenses, and activities. Financial tags can be used to track expenses by marketing campaign without adding too many financial dimensions.
Financial tag values in D365 are not critical for external financial reporting, but they can be important for internal reporting by FP&A teams. These teams need the ability to modify transactions after posting without having to rely on reclass journal entries. Financial tags allow them to do this quickly and easily, improving efficiency and accuracy in reporting.
Here are some key points about financial tags:
- Financial tags can be easily created and used in general journals, the web interface, or through the upload function.
- These tags can be updated after posting, without requiring journal entries for reclassification.
- Financial tags can be derived from other values such as vendors or customers, reducing the need for standalone lists or custom creation. While similar to financial dimensions, the main difference is that financial tags do not require pre-definition or validation against a specific list before use in a transaction.
- Financial tags can be viewed on the voucher screen and standard reports for easy tracking and reporting.
Microsoft has taken a step forward with the introduction of Financial tags, but there is still room for improvement. We can expect more enhancements in the future. For now, financial tags are step towards greater efficiency and accuracy in reporting.