Overview of Customer and Vendor Netting in Microsoft Dynamics 365 Finance

In everyday business, it’s common to interact with an organization in dual roles: as a customer and a vendor. Customer and Vendor (CV) netting is a strategic approach to minimize monetary exchanges between such entities. It involves consolidating and offsetting the amounts owed, thereby reducing unnecessary payments or receipts. This function is efficiently managed in Microsoft Dynamics 365 Finance through a feature called customer and vendor netting.

Setting Up the Feature

To start using this feature in Dynamics 365 Finance version 10.0.38, navigate to the Feature Management workspace. Here, you’ll find the option for ‘Customer and Vendor Netting.’ Simply enable it to begin the setup process.

The setup involves creating a journal in the General Ledger module under Journal Setup, with the journal type specified as ‘Customer and Vendor Netting.’

Creating a Netting Agreement

A netting agreement is crucial for establishing the relationship between the customer and the vendor. To set up this agreement:

1. Navigate to either Accounts Payable or Accounts Receivable.
2. Go to Payment > Netting > Netting Agreement.
3. Create a new agreement, specifying details like code, description, the journal name for the netting process, and the bridging account.
4. Add the parties involved (customer and vendor) and define the agreement duration.

Once the agreement is saved and activated, you’re ready to proceed with the netting process.

Executing the Netting Process

You can perform the netting process either through the Netting Agreement form or directly via the CV Balance Agreement. This involves:

1. Selecting the appropriate agreement.
2. Choosing open invoices to include in the netting process.
3. Reviewing the vendor and customer balances before and after netting.
4. Posting the netting, which generates an automatic journal entry.

Netting Advice

Upon posting, the system prints a netting advice. This document provides details on the CV accounts involved, the invoices included, and the netting amount.

Reviewing Netting History and Transactions

To review the netting history and related transactions, navigate to either the Accounts Payable or Receivable module. Here, you can access the Netting Agreement form or the CV Balance Netting to see the history and related vouchers.

If needed, you can reverse a netting accounting entry. This is done through the Accounts Payable module, where you select the netting agreement, the journal batch number, and execute the reversal. This action generates a new journal entry to counter the original one.