Automating Vendor Invoice Posting with Workflow Approval in D365 Finance

AUTOMATING VENDOR INVOICE POSTING WITH WORKFLOW APPROVAL IN D365 FINANCE

CONTENT Introduction Configuration End-to-End demo Conclusion

INTRODUCTION

Managing vendor invoices efficiently is a crucial aspect of the Procure-to-Pay process in Dynamics 365 Finance and Operations (D365FO). Manual posting of vendor invoices after approval can often lead to delays, increased workload, and potential errors. However, with the Automatic Posting Upon Approval feature in D365FO's workflow setup, you can streamline this process, reducing manual intervention and speeding up the overall cycle time.

In this article, we will explore workflow automation capabilities in D365FO and focus on automating vendor invoice posting once the invoice is approved. This feature not only enhances efficiency but also ensures consistency and compliance, as the entire process is executed seamlessly within the system. 

CONFIGURATION

In this article, we will explore two optional workflow configurations designed to enhance your invoice registration process.

First, automated invoice posting. This setup allows you to configure the workflow to automatically post invoices once they are approved, eliminating the need for manual posting. The key benefits of this approach include faster processing times, reduced manual effort, and minimized risk of errors, ultimately contributing to a more streamlined Procure-to-Pay process.

Second, placeholders. Placeholders carry field values on D365FO approval screens or in emails. By using placeholders, you can provide better insights to the approver, helping them understand why the item is awaiting approval. Placeholders are temporary objects or items used to represent specific data or actions in a workflow configuration, ensuring that workflow actions or notifications include specific references to the item being processed.

Let's delve into the workflow configuration details. This article demonstrates above workflow configurations on vendor invoices based on purchase orders.

First, let's create a workflow for vendor invoices.

Accounts payable >> Setup >> Accounts payable workflows. 

There is no Vendor invoice workflow configured in my system.

Click on +New and select Vendor invoice workflow.

Workflow configurator pops-up. Configured workflow is as below.

This workflow starts with a conditional decision. This step allows you to define conditions based on the document that is subject to workflow. In our case, if the invoice total amount is equal or greater than 1000, it goes to an approval process (left side). If the invoice total amount is less than 1000, it goes to final step (right side) and invoice is posted automatically.

Workflow continues with approval steps. Approval steps may contain single or multiple approvers. In our case, there is just one approver and there is only one approval step. Inside of main approval branch is as below.

Finally, we have Automated posting. This is last workflow step that posts approved purchase order invoices automatically. Note: This is not a batch job, this is part of the workflow approval process.

Let's configure placeholders now as well.

First, setting up a message with placeholder for submission instructions. Select the main workflow frame and click on Basic settings.

Click on Insert placeholders under Submission instructions section.

Type your message by including placeholders.

Below example uses invoice number as a placeholder: 

"Invoice %Vendor invoices.Num% is ready for submission."

Next, setting up a message with placeholder for approval instructions. Double click on the approval steps to get into actual approval steps. 

Select the individual approval step and click on Basic settings.

Below screen pops-up.

Click on Insert placeholders under Work item subject section.

Type your message by including placeholders.

Below example uses invoice number as a placeholder: 

"Invoice number %Vendor invoices.Num% is waiting for your approval."

Additionally,

Click on Insert placeholders under Work item instructions section.

Type your message by including placeholders.

Below example uses invoice number as a placeholder: 

Please review and approve vendor invoice %Vendor invoices.Num%."

Save and close the workflow configuration, don't forget to activate the workflow. Active and ready invoice workflow approval should be looking like below.

Let's do the end-to-end demo in order to demonstrate the function of Placeholders and Automated invoice posting.

END-TO-END DEMO

Create a PO, receive it and get ready for invoice registration.

Find your purchase order on the purchase orders list page under

Accounts payable >> Purchase orders >> All purchase orders

or

Procurement and sourcing >> Purchase orders >> All purchase orders

Click on Invoice button.

Enter the invoice information and click on Workflow at the top. 

Note that now system shows you the submission instruction that includes the placeholder(s).

Submit the workflow.

(The expectation is to see similar placeholder usage for approval instructions at the moment of approval.)

Go to Work items assigned to me on the D365FO's dashboard page. Click on the item that is pending. System should take you to pending invoice screen.

Click on Workflow at the top.

Note that now system shows you the approval instruction that includes the placeholder(s).

Click on Approve.

Wait for the completion of workflow approval process. You can see that from the workflow history on the pending invoice.

Let's now go to workflow history details.

Organization administration >> Workflow >> Workflow history

Find the related workflow and click on the instance id.

Automated workflow posting step now can be seen as shown below.

The voucher of this transaction is as below.

CONCLUSION

In conclusion, automating vendor invoice posting through workflow approval in Dynamics 365 Finance significantly streamlines the Procure-to-Pay process. By implementing the automatic posting feature, you can reduce manual intervention, increase processing speed, and minimize errors. Additionally, the use of placeholders enhances the user experience by providing clear and relevant information during the approval process. Overall, these configurations offer a more efficient and consistent approach to managing vendor invoices, ensuring compliance and improving operational efficiency.

Vendor Workflows – PART 2 – Vendor Bank Account Changes

VENDOR WORKFLOWS – PART 2 – VENDOR BANK ACCOUNT CHANGES

This article series explains how to use vendor workflows in Dynamics 365 Finance and Operations within the context of SOX (Sarbanes-Oxley Act) compliance. Specifically, it aims to educate the audience on the SOX requirement for tracking changes in critical vendor master data, including vendor and vendor bank account information, to ensure the integrity and accuracy of financial records.

The series is divided into two parts as follows:

PART 1 - Vendor changes

PART 2 - Vendor’s bank account creation/changes

You can read the PART 1 - Vendor changes here. Let's get started with PART 2 - Vendor bank account changes.

CONTENT Importance of vendor workflows for SOX Compliance Vendor workflow types in D365FO Comprehensive workflow demo for vendor bank account changes Conclusion

IMPORTANCE OF VENDOR WORKFLOWS FOR SOX COMPLIANCE

Ensuring SOX compliance requires strict tracking and approval processes for any changes in critical vendor master data. 

SOX (Sarbanes-Oxley) compliance requires vendor master data change tracking to ensure the integrity, accuracy, and reliability of financial reporting. Here are the key reasons why this is essential:

1. Accuracy of Financial Records: Vendor master data includes critical information such as vendor names, addresses, payment terms, and banking details. Accurate vendor data is crucial for maintaining correct financial records, which directly impact financial statements and reporting.

2. Prevention of Fraud: Change tracking helps in detecting unauthorized or fraudulent changes to vendor data. For example, unauthorized modifications to payment details can lead to fraudulent payments, which can significantly impact the company's financial integrity.

3. Internal Controls and Audits: SOX emphasizes strong internal controls over financial reporting. Tracking changes to vendor master data ensures that any modifications are logged, audited, and reviewed. This enables the identification of irregularities and ensures that only authorized personnel make changes.

4. Compliance with Legal and Regulatory Requirements: SOX compliance requires companies to maintain accurate records and provide evidence of internal controls over financial processes. Change tracking of vendor data provides an audit trail that can be reviewed by internal and external auditors to ensure compliance.

5. Risk Management: By tracking changes to vendor data, companies can identify potential risks early. For instance, if there are frequent or unusual changes to vendor information, it may indicate potential issues that need to be addressed to mitigate risk.

6. Transparency and Accountability: Change tracking promotes transparency and accountability within the organization. Employees are aware that any changes they make to vendor data are recorded and can be traced back to them, which encourages responsible behavior and adherence to policies.

Overall, vendor master data change tracking is a vital component of SOX compliance, helping to ensure that financial data is accurate, secure, and reliable, thereby supporting the overall objective of enhancing corporate governance and protecting investors.

VENDOR WORKFLOW TYPES IN D365FO

When specific form fields are updated, the system generates a change proposal. The user then submits this through the workflow. Upon approval, the changes are automatically applied, requiring no additional action.

Workflows are triggered only when users update certain fields. In other words, workflows are not triggered by any type of update but only when one of the predefined field values is changed. Therefore, the fields subject to the approval process are limited as below.

Vendor’s Bank Account Creation/Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor bank account approval fast tab.

• Activate vendor Bank account approval on creation. (Optional)
• Activate vendor Bank account approval on update. (Optional)
• Activate vendor Bank account approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Actual workflow configuration is not part of this article series. 

You can see a fully configured and activated vendor bank account changes workflow below.

Vendor Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor approval fast tab

• Activate vendor approval process.
• Activate vendor approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Note: Vendor won’t be subject to approval process on creation.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Vendor changes workflow has been detailed in PART 1.

COMPREHENSIVE WORKFLOW DEMO FOR VENDOR BANK ACCOUNT CREATION/CHANGES

Prerequisites: Make sure that vendor bank account creation/changes workflow parameters are active, and fields are selected on AP parameters.

Select a vendor and go to selected vendor's Set up field group >> Click on Bank accounts.

Start creating a new bank account for the vendor.

Note that system automatically indicates that workflow approval won’t be a useful feature until a new bank account for the vendor is created.

Note that bank account fields that will trigger the approval process has additional labels as "(requires  approval)".

Submit the workflow.

Note that created bank account will not useable until it's approved.

If you are one of the approvers, go to Home page and review Work items assigned to me. 

Click on Vendor bank accounts: Review.

Review pending approvals.

Click on hyperlink of approval ID in order to see the original document to be approved.

Next action is to approve the workflow. 

Click on Workflow >> Approve.

When the workflow approval process is completed, bank account's review status becomes Approved.

Making a Change On The Existing Bank Account

When vendor parameters indicate that selected fields are subject to the approval process on updates, making a change to at least one of these selected bank account fields triggers a new workflow. 

Let's change account number from 0701244 to 0804123.

System immediately captures this change and notifies the user. Click on Close.

Submit the workflow again.

Note that Review status is now Approved, changes not submitted. That means that 

• bank account was initially approved 
• but then a change was made 
• but workflow hasn't been submitted yet.

Review status becomes Approved, pending changes upon workflow submission.

Next step is to approve workflow. If you are one of the approvers, you will see pending approval task on your Home page as below.

Click on the desired workflow item's ID hyperlink.

System will show you the document that is subject to approval.

Click on Proposed changes to see requested changes. 

Review the changes, approve the workflow.

Vendor bank account's status becomes Approved upon the completion of workflow approval process. 

Updated bank account is now ready to be used again. In other words, vendor's bank account look up now shows updated bank account information.

Conclusion

Implementing vendor workflows in Dynamics 365 Finance and Operations is critical for ensuring SOX (Sarbanes-Oxley Act) compliance, focusing on tracking changes in vendor master data and bank account information. These workflows enhance the accuracy and integrity of financial records, prevent fraudulent activities, and maintain strong internal controls. By automating the approval process for vendor changes and bank account updates, organizations can ensure regulatory compliance, promote transparency, and mitigate risks. This approach strengthens corporate governance and protects the reliability of financial reporting, thereby safeguarding investors' interests.

Vendor Workflows – PART 1 – Vendor Changes

VENDOR WORKFLOWS – PART 1 – VENDOR CHANGES

This article series explains how to use vendor workflows in Dynamics 365 Finance and Operations within the context of SOX (Sarbanes-Oxley Act) compliance. Specifically, it aims to educate the audience on the SOX requirement for tracking changes in critical vendor master data, including vendor and vendor bank account information, to ensure the integrity and accuracy of financial records.

The series is divided into two parts as follows:

PART 1 - Vendor changes

PART 2 - Vendor’s bank account creation/changes

Let's get started with PART 1 - Vendor changes.

CONTENT Importance of vendor workflows for SOX Compliance Vendor workflow types in D365FO Comprehensive workflow demo for vendor changes Conclusion

IMPORTANCE OF VENDOR WORKFLOWS FOR SOX COMPLIANCE

Ensuring SOX compliance requires strict tracking and approval processes for any changes in critical vendor master data. 

SOX (Sarbanes-Oxley) compliance requires vendor master data change tracking to ensure the integrity, accuracy, and reliability of financial reporting. Here are the key reasons why this is essential:

1. Accuracy of Financial Records: Vendor master data includes critical information such as vendor names, addresses, payment terms, and banking details. Accurate vendor data is crucial for maintaining correct financial records, which directly impact financial statements and reporting.

2. Prevention of Fraud: Change tracking helps in detecting unauthorized or fraudulent changes to vendor data. For example, unauthorized modifications to payment details can lead to fraudulent payments, which can significantly impact the company's financial integrity.

3. Internal Controls and Audits: SOX emphasizes strong internal controls over financial reporting. Tracking changes to vendor master data ensures that any modifications are logged, audited, and reviewed. This enables the identification of irregularities and ensures that only authorized personnel make changes.

4. Compliance with Legal and Regulatory Requirements: SOX compliance requires companies to maintain accurate records and provide evidence of internal controls over financial processes. Change tracking of vendor data provides an audit trail that can be reviewed by internal and external auditors to ensure compliance.

5. Risk Management: By tracking changes to vendor data, companies can identify potential risks early. For instance, if there are frequent or unusual changes to vendor information, it may indicate potential issues that need to be addressed to mitigate risk.

6. Transparency and Accountability: Change tracking promotes transparency and accountability within the organization. Employees are aware that any changes they make to vendor data are recorded and can be traced back to them, which encourages responsible behavior and adherence to policies.

Overall, vendor master data change tracking is a vital component of SOX compliance, helping to ensure that financial data is accurate, secure, and reliable, thereby supporting the overall objective of enhancing corporate governance and protecting investors.

VENDOR WORKFLOW TYPES IN D365FO

When specific form fields are updated, the system generates a change proposal. The user then submits this through the workflow. Upon approval, the changes are automatically applied, requiring no additional action.

Workflows are triggered only when users update certain fields. In other words, workflows are not triggered by any type of update but only when one of the predefined field values is changed. Therefore, the fields subject to the approval process are limited as below.

Vendor’s Bank Account Creation/Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor bank account approval fast tab.

• Activate vendor Bank account approval on creation. (Optional)
• Activate vendor Bank account approval on update. (Optional)
• Activate vendor Bank account approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Vendor bank account workflow will be detailed in the PART 2.

Vendor Changes Workflow

Go to Accounts payable >> Setup >> Accounts payable parameters >> Vendor approval fast tab

• Activate vendor approval process.
• Activate vendor approval on update via data entity. (Optional)

Select the fields that are subject to approval.

Note: Vendor won’t be subject to approval process on creation.

Next is actual workflow configuration.

Go to Accounts payable >> Setup >> Accounts payable workflows

Configure an approval workflow.

Note: Actual workflow configuration is not part of this article series. 

You can see a fully configured and activated vendor changes workflow below.

COMPREHENSIVE WORKFLOW DEMO FOR VENDOR CHANGES

Prerequisites: Make sure that vendor changes workflow parameter is active, and fields are selected on AP parameters.

Create a new vendor.

Note that system automatically indicates that workflow approval won’t be a useful feature until a new vendor is created.

Note that vendor is created without approval requirement. There is no Proposed changes button at the top of the screen.

Let’s update Method of payment. This field is subject to approval based on the AP parameters setup.

Note that system triggers a proposed change.

You have 2 options:

Option 1: Discard the changes one by one or discard all of them.

Option 2: Close the screen and submit the workflow.

We'll go with Option 2.

Click on Workflow and Submit.

System notifies you that workflow has been submitted.

Another alternative submission way is to use “Submit proposed vendor changes” form.

Click OK.

This method submits all pending proposed vendor changes to workflow.

The next step is to approve vendor’s method of payment change.

Go to Work items assigned to me form via home page as shown below.

Select the record and click on Open.

Click on Proposed changes and review the requested changes.

Close the Proposed changes form.

Click on Workflow >> Approve.

Note that final approval automatically updates the field value(s).

Conclusion

In conclusion, the implementation of vendor workflows in Dynamics 365 Finance and Operations is crucial for ensuring SOX compliance. By automating and tracking changes to critical vendor master data, organizations can enhance the accuracy of financial records, prevent fraud, and maintain robust internal controls. This process not only supports regulatory compliance but also promotes transparency, accountability, and effective risk management. Adopting these workflows is an essential step in strengthening corporate governance and protecting the integrity of financial reporting. 

We will continue with the approval workflow for Vendor’s bank account creation/changes in PART 2.