MB-310 Microsoft Dynamics 365 – Creation of Vendor groups and Posting profiles

1. Creation of Vendor groups and Posting profiles

In this video, we will talk about vendor groups and posting profiles. All right? So so far, when you’re creating the vendors, I have always been telling you that vendor group is mandatory for you, right? And we have been selecting the vendor group all the time, right? So this is the time that we will have to know about vendor groups and posting profiles. All right? Before we start creating the posting profiles, I want you to understand the general ledger and subledger, okay? So those of you who are from finance background, I am sure that you must be knowing this, right? So especially for those who are from non finance background, I want to give you a clear picture on what is this general ledger and sub ledger so that we will be able to connect this back to the posting profiles. Okay? So let us just take a simple example here. Any business that you take, you will have many vendor accounts. So you will be purchasing a lot of items from a lot of suppliers, right? So if you take a look at this one here, I have my vendor one, vendor two, vendor three.

So like this, I have many vendor accounts, right? But if you take a look at your general ledger, you will most probably have either one account, one main account representing your accounts payable, or else in some cases perhaps you may have either two or three, but they are certainly limited, less than five, maybe. Okay, so what happens is any transaction that you do with this particular vendor, you want the system to be posting that balance into this account. Because for finance people, what really matters is what is the total amount that we have to pay to all the vendors.

Okay? So they don’t really care, like how much we should pay to the vendor one and how much we should pay to the vendor two, and how much we should pay to the vendor three and so on. What matters to them is how much is the total amount that is payable to all the vendors and represent that as accounts payable in the balance sheet. At the same time, it is important for accounts payable teams, in fact, for the organization that we know how much is payable to individual vendors, right? So we have to have the clear understanding on what is to be paid for vendor one, vendor two, and vendor three. So in this example, if you take a look at this, I need to pay $1,000 to vendor $1,000 to vendor two, and $500 to vendor three. Right? So if we take a look at our accounts payable chart of account, then, yeah, it should show me that $2,500 is what is due to all the vendors.

Okay? So that is the reason in any ERP system, you will have the concept of general ledger and subledger, okay? So everything that you post to your subledger that will get integrated to your general ledger account. Okay? So if you take a vendor account and post an invoice journal, then it should be showing up in your integrated ledger account. And to be able to achieve this, we use posting profiles. Okay, so this is a simple example that I explained where the business has only one Accounts Payable account and everything that we post using the vendor account that should get posted into this particular ledger account, right? But not every business will have this simple configuration. So there will be some businesses where you might need to configure multiple chart of accounts, one representing your domestic vendors and another representing your foreign vendors. Okay, so let us just take a quick look at that setup here. If you take a look at this other example. So look at this one here. I have my vendor one and vendor two, okay? So both of them are my domestic vendors and I have my vendor three, who is my foreign vendor. So this is the requirement from the business. So they wanted to really have that categorization for the vendors, where they want to categorize vendors by domestic suppliers and foreign suppliers. Right? And that is the reason they do have two different accounts representing their Accounts Payable. So one representing their accounts payable domestic and another accounts payable foreign. Okay? So the requirement is that any transactions that they make using these domestic vendors, the transactions should get posted to my Accounts Payable domestic account. Okay? And any transaction that they post using the foreign vendor, they want to see that into separate account. Okay, there is just a mistake that I used the same account number here like 200:15. So you can just read that as 20 double 10. And this one is number five.

Okay, because those are two different accounts. Accounts payable domestic and accounts payable foreign. All right, so there can be certain requirements like this. In such cases, what you do is that is where you configure the vendor groups. So you will be actually creating two vendor groups in this case, one representing your domestic vendors and other representing your foreign vendors. Okay? And then using the posting profiles, you will set up the system that anything that gets posted using domestic vendors that should go to this account and anything that should get posted with foreign vendor that should go to this account. Okay? Now let us get back to the system and see how do you create the vendor groups and what all the information that you can put in the vendor groups. Then how do you create the posting definitions? Okay, I am back to my application and as we always do, let us firstly review this setup in our contoso company, USMF. Right? So I am going to Accounts Payable because that is where my vendor groups will be available. I go to Accounts Payable and you scroll it down. That must be somewhere here.

All right, so, yeah, I’m sorry, I have it here, right? Vendor groups. So go to this vendor groups and this is where you can see different vendor groups. Okay, so see the way that the groups are configured in contoso company, demo company, right? So you have one vendor group representing your parts vendors. This is basically we talked about contosu’s business, right? So they get some raw material or different parts of the home theater systems and car audio systems from different suppliers. And what Condosuit does is they’ll do some sort of assembling and also produce a few more products internally and then come up with the finished product. So because of that reason, they have one separate group to represent their parts vendors. So all the suppliers who supply the parts for them, they are grouped into these parts vendors.

Okay? And another group is for services. And they do also have the inter company vendors and they do have one time vendors. So you have certain functionality for one time vendors. What happens is that certain cases you will just transact with a vendor only once and after that you don’t know if you are really going to buy anything from them. Okay, so inter company vendors, I want to separately track my inter company purchases, right, through my other companies like USRT or any other company. If we purchase something, let us assume that we want to separately post it to a different account or else at least from the vendor grouping standpoint, I want to treat them separately, right? So that is the reason they have different vendor groups here. Okay? So if you look at these terms of payment here, using your vendor groups, you will define what is the terms of payment. So if you create a new vendor and you tag them to this particular group, then automatically they’re going to get this terms of payment configuration. Okay, so we looked at terms of payment configuration in the part one, right? So these are some other fields. We don’t need to talk about them right now.

So let me just duplicate this, right? So what I want to do is I want to take you to the vendors form. Let us go to the accounts payable and all vendors, okay, so look at these vendors here. I have all these vendors and some of them are tagged to group number 40 and some of them are tagged to group number ten. Like this, right? So this is how you tag your vendors to certain groups if in case you want to create a new vendor group, because if you’re working in a fresh implementation, obviously you will see nothing and you create a new and then put your required group number. It is always better that you go ahead with the coding for your group. So that way whenever you’re doing some sort of queries, then it is easy for you to query it. All the vendors ranging from ten to number 30, we want to create a new group for Sanitization vendors.

Okay, so perhaps that is a business requirement that we separate the vendors who provide Sanitization services, right? So I’m creating that as a new group here. And if you have a preferred terms of payment, you can put it here like net 30 days and done. All right, so this is how you create the vendor groups. All right, now let us take a look at the posting profiles. So you go to Accounts Payable and here you take a look at this one here. You have vendor posting profiles, right? Let us open this vendor posting profiles and let us understand this one here. I have this posting profile called Gen General. So what is it telling here? You look at this one here.

So all the vendors who are associated to the group number 40, they will have to use this summary account, okay? Two double zero, double 10. So which is nothing but my Accounts Payable account and all the vendors who are associated to this group, vendor group 50 system should use this account. Okay, then what about the rest, right? So you might get that out because we are talking about only 40 and 50. Then what about the rest? So you have another one here which talks about account code all and you have this summary account here. Okay? So this is something that you’ll have to understand wherever you see the account code. The way that Ax system is designed is the first preference will go to table and then the next preference is group and then all. Okay, so what exactly that means. So for example, if there is a vendor who is associated to group number 40, the system will come to this place and check if there is any summary account defined for the group number 40. Then it takes that account, otherwise it goes and takes the account from this all.

Okay? And similarly, as I was mentioning, firstly table, right? So if I select this as table, I’m going to see the account code here. So for example, any purchases that happen with this particular vendor, I want that to go to a separate account. Then what I can do is I can define a summary account here only for this particular vendor. So it is very rare that you’re going to get that kind of a requirement that you define a summary account for specific vendor. But if in case you get such requirement, you know what you should do, right? So you select the table and select the vendor and give your summary account. Okay? So when it is not a table and when it is not particular group and there is no summary account defined for a selected group for example, I am posting a vendor invoice for a vendor who belongs to group.

Number 30 and system doesn’t find anything here for that particular group, then it automatically goes and picks the summary account that is available for all the vendors. Okay, so anything other than 40 and 50 that should go to this summary account. So that is how it is set up now. So forget about this arrival offset account and all this for now. Okay. So let us focus on this one. This is the summary account that will be used for all your invoices payments and all that. So these accounts, you have a different purpose for these, we will discuss about them later.

All right, so what I will do now is I will quickly take you to one of the vendors. Let us just review the postings here. I am not going to create a new vendor invoice to show you that. Now, what we can do is we can just take any vendor like this and go to the transactions. Hopefully we have some transactions for this vendor. All right, you see here, I have some transactions, fortunately. And this is my first transaction, right, which is posted back in 2016 because this is demo data. So what I do is I’m selecting this transaction and I am clicking on this Voucher. So when I see the Voucher, that is where I will be able to see like, what is the summary account that is used. Okay, so look at this one here. So this is actually a purchase invoice and there is a reason we have too many accounts involved here. Okay, but let us look at our vendor related account.

So you see here, by looking at the posting type, you will be able to tell the system or you will be able to understand for yourself like which is the account that is your summary account. Okay, so here the posting type is vendor balance, right? Scroll to the left and you look at this. This is my accounts payable domestic account. So this is the name of account and this is my account number, right? Two double zero, one double zero. So let us go back to our posting profile and try to understand that now. So I’m into this posting profile and you see here, for my all vendors, this is the summary account, right? So why is it picking up this one? Let us try to understand that. I close this. I close this as well. And you look at this vendor and what is the group? Group number ten. So because of the reason, this is group number ten, which is for parts vendors, and there is no specific account defined for that particular group system is automatically taking this one.

Okay, so any transaction that you perform, that is the general ledger account that will be used for that particular vendor. Okay, let us take another one here, group number 40. And I go to the same thing, vendor and transactions. So unfortunately we have nothing there. I am taking another vendor here, right? I am taking this one who belongs to 40. Let us go to the transactions and I have many transactions here, okay? And if you remember, I was also talking about this Voucher number, right? So by looking at this Voucher number, I can say that this is an invoice. So that is the reason when you are configuring your journal names, it is important that you set up the Voucher sequence in such a way that you can easily understand what is that transaction origin is, right? By looking at this, I know this is an AP invoice. And by looking at this one, AP P-M-I know that this is AP payment. So that is how you differentiate the transactions by the Voucher number.

Okay? So that is not so relevant for this topic, but I just wanted to let you know and I take this transaction here and look at this Voucher and you see here what is my account that is being used to triple zero, double 10, which is accounts payable other. So go to this and look at your 40 and you see here, this is the account. All right? So that is how you work with your posting profiles. So that is how you configure your posting profiles. Right? Now we understood how the posting profiles work. And as we do, let us set up our SGPC company because we want the company to be up and running with everything. So if I go to my SGPC company, I certainly have nothing here. So that is where I create a new posting profile. And in fact, before that, why don’t we create a group here? So I’m searching for vendor groups. Create a new group and here, let’s go with our example here. So what is our example? I want group number ten, which is for domestic vendors.

And this terms of payment and all this is not really mandatory. If you have such requirements, you will be able to add those there. Okay, so I have these two groups. Now what I will do is let us go to the posting profiles. I’m sorry, I should have searched for vendor posting profiles, right? So I have nothing here. Obviously, what we do is let us create a new one and call this as gen, right? So here, what do we select here? Select group and domestic vendors. And what is the summary account? So let us see what all the different accounts that we have here. So we have one for domestic, right? So let us take that. And here, this is for foreign vendors. So let us post other vendors transactions to this 1210. Okay, so this is how you set up your posting definitions, right? Now let us see if we will be able to create a new vendor invoice journal in SGPC company now.

Okay, accounts payable then go to your invoice journals, right? So click new and so you don’t have your journal name, right? So let us go to the journal names and create one. So this is something that we already learned and I’m quickly creating one for you right now. Right, when we are creating the journal name, make sure that you are choosing the journal type as vendor invoice recording. Okay? So this is the one that you will have to take and scroll it down because it is telling you that Voucher series must be filled in, right? So I created a new number sequence, scroll it down and I think this is the one that I created. Okay, so I created a new number sequence and this is done. Let us save and close this. Okay, so I have my new journal name that is available. Save this, go to lines. Well, I can anticipate another problem here.

Because of the reason we are in this company, we did not create any vendors, right? So let us do one thing. I came to my all vendors form and since I have no vendors here, I’m creating a new vendor, create a new guy. And here, let us just say ABC suppliers and group is mandatory, right? So this is where we created our new groups. So select the group that you created and close this. Okay, so we are good. So let us go back to the invoice journals. And here I’m choosing my supplier. This is a non pivot invoice, right? So without purchase order, we are getting an invoice for, for example, sanitization or something, right? So enter the invoice number. Then this is going to be for SGD currency and offset account. So let us see if we have one for cleaning. Yeah, let us just book it to cleaning expenses for now. So these are the dimensions that we enabled. I’m crediting my vendor with $1,000 Singapore dollars, right? And let us go ahead and try posting this, right? I tried posting this journal and you see here, I’m getting some problem here.

So what is that? So it is telling me that posting profile has not been set up in Accounts Payable parameters. So certain things I don’t want to go ahead and do it in advance because I want you to understand how do you do that? How do you understand the errors? So it is clearly telling me that posting profile has not been set up. And you might think that we have already created the posting profiles, right? Then why is it telling me that I did not set it up? Correct. So go back to your Accounts Payable and I told you at the beginning that every module has its parameters form. So click on your parameters. And here, this is where you will have to do a lot of settings, right? You will have to understand many of these settings and out of them, one is your posting profile set up. So here you will have to tell the system that which posting profile should be used.

This is because of the reason that you can create multiple posting profiles and especially the businesses will at least use two posting profiles, one for normal transactions and another one for prepayments. So that is the reason you will have another one here, posting profile with prepayment vendor invoice. Okay? So that is the reason you have to tell the system that which one should be used. So that is what we did now. And close this. Go back to your vendor invoice. Try to post this now. All right, so this time I got some different problems. So, which means I’m done with my posting profile. System is not talking about the posting profiles anymore. So what is it telling me? I clicked on this message details. It is telling me that you must select a value in the department field, right? And which account that it is talking about? You see here, it is clearly telling you that this is the account that it needs the department. Okay. Because it is validating it with this particular account structure, correct? And you might think like I have set up the business unit here or a department here, then why is it still telling me so? That is because of the reason that you have your vendor here, right? So using this vendor system is posting the transaction into this ledger account based on our posting profile, right? So then how do I specify the dimension for this vendor account? Right?

So because that is something that I did not show you so far. So if you select a sub ledger account like vendors or customers or anything, so you will have the Financial dimensions button here. So click on this Financial Dimensions and you see here. Because of the reason my offset account is a main account, that is ledger account. There is a reason this is not enabled because you already have the provision to enter your dimensions right there. Okay, but if you are selecting a summary account, sorry, a sub ledger account like vendors or customers or projects, fixed assets. So anything that is not your ledger, then you have an option to enter your dimensions here. Financial dimensions and account. Click this, then select your business unit, department and sorry, cost center and Department. Okay. I don’t really know what did we set up in our account structure.

I just hope that this will work. Because if in case we define the valid combinations and stuff, perhaps we might get an error, right? So let us try to post this. Hopefully this will get posted. Otherwise we will go ahead and review our accounting structure. That is wonderful. You see here, it got posted right now. You can also take a look at the Voucher right from here. Click on this here and take a look at voucher. So, what is the account that is being used? This one? This is what we have set up in our posting profile. And this is the one that we have provided as an offset account in the journal, right? So that is how you create the posting profiles and vendor groups.

Okay? So with that, we are done with the posting profiles. And remember this general ledger and sub ledger. So always you hear from people about my general ledger and subledger is not matching sometimes, okay? So you shouldn’t be in a question like what is sub ledger? Right? So anything that is not your general ledger, you will call that as a sub ledger. Like your vendors and your customers and your fixed assets, bank accounts. So all of these, you can call them as sub ledger because you are maintaining the balance and you are maintaining the transactions for the individual account. So that is what is your sub ledger, right? So that’s all for this session and thank you so much. See you in the next video.