In this blog, we highlight a lesson learned when we used a Dynamics 365 Customer Engagement online data source connector, called Instance Web API, for Power BI reports.
The terms Legal Entity and Company are often used interchangeably within the Dynamics 365 Finance and Operations (F&O) vernacular, but when considering whether to make a company a legal entity or not, there is often a challenge presented with respect to which direction to choose. Rather than have multiple lengthy discussions, there are several key decision points that can be considered in order to make the distinction and decision a little clearer for users who are less familiar with F&O. In today’s post, we’ll review each of those decision points.
Below are 13 items and descriptions that detail the many considerations one should review when trying to make the best selection for an implementation.
Legal Entity (LE) – If the organization you are considering will be modeled as a Legal Entity, the Master Data – such as Customers, payment terms, tax authorities, site-specific stock ordering defaults, etc. – has the ability to be different for each LE. There are options to share the data across LEs as well, but the value of having uniqueness among LEs may be required.
Operating Unit (OU) – If organization is set up as an OU, all master data is shared.
LE – Parameters within modules like AR/AP/Cash and Bank must be set up for each LE, allowing differences among configurations.
OU – Parameters are shared.
LE – Out-of-the-box security can be assigned by LE.
OU – Customized data security policies are required.
LE – Each LE requires ledger, chart of accounts, currency, etc., and these can be different per LE.
OU – An OU can’t have separate ledgers.
LE – Each LE can have its own fiscal calendar.
OU – The organization must share a fiscal calendar.
LE – If separate Legal Entities are used, a consolidating entity must be used as the consolidated company for financial statements.
OU – Organization consolidation is not required as data is already shared.
LE – Organization hierarchies must be set up for child legal entities to allow centralized payments.
OU – Centralized payments are not required because invoices are recorded in single entity.
LE – The LE can belong to only one country, so in order to do tax reporting on various countries/currencies, multiple LEs are required.
OU – An OU can only report based on the one country designation.
LE – At the LE level, this is supported by F&O.
OU – If required at the OU level, the organization must create reports using another application.
LE – The organization and its functional currencies can be set up per legal entity.
OU – The organization must use single currency across the OU.
LE – The organization can have its own unique year-end requirements per LE.
OU – The organization must use the same year-end requirements.
LE – The organization product definitions are shared but must be released to each LE. Not all products have to be released to each LE. If requiring different products, must be different LE.
OU – The organization shares all the same products.
LE – The organization must manually change the LE to run reporting and consolidated reporting.
OU – The organization and its use of reporting requires no need to change OU.
As you can see, there are a lot of items to consider. However, when reviewing the list, you can decide which options are must haves and which might be more adaptable, hopefully making your decision easier.
For more blogs on Dynamics 365 Finance and Operations, please go here.