System Configuration & Setup

Part 3 of 11 in the Business Central Implementation Series

Published: December 2025 | Reading Time: 16 minutes

Introduction

With requirements gathered and processes mapped, you're ready to transform planning into reality through Business Central configuration. This phase is where your implementation truly takes shape—transforming a blank Business Central environment into a tailored system that reflects your organization's unique structure, processes, and requirements.

System configuration is both an art and a science. While Business Central offers tremendous flexibility through its extensive configuration options, making the right choices requires deep understanding of both the system's capabilities and your business needs. Proper configuration establishes the foundation for data quality, process efficiency, and user productivity throughout your Business Central journey.

This comprehensive guide walks you through essential configuration areas, providing practical guidance, best practices, and real-world insights to help you build a solid Business Central foundation.

📋 Business Central Configuration Checklist (10-Step Process)

1. Environment Setup: Create Sandbox (development/testing) and Production environments with proper access controls

2. Company Information: Configure company details, address, tax registration, fiscal year, and localization settings

3. General Ledger Setup: Define chart of accounts, posting groups, dimensions, and account categories

4. Currency & Tax Configuration: Set up currencies, exchange rates, VAT/sales tax, and tax groups

5. Master Data Templates: Configure customer/vendor/item templates, number series, and posting groups

6. Inventory & Warehouse: Set up locations, bins, costing methods (FIFO, Average, Standard), and transfer routes

7. Sales & Purchase Setup: Configure payment terms, shipping methods, price lists, and approval workflows

8. User Security: Create user accounts, assign permission sets, configure role centers, and establish data access policies

9. Power Platform Integration: Enable Power Automate workflows, embed Power BI dashboards, configure API access

10. Testing & Validation: Run end-to-end transaction tests in Sandbox before production deployment

💡 Pricing & Timeline Note
All cost estimates and timelines in this article reflect typical Business Central implementations as of January 2026.

• Geographic Context: Estimates based on Western Europe and North America markets

• Regional Variation: Implementation costs vary significantly by region (typically 30-60% lower in Eastern Europe, Asia-Pacific, and Latin America)

• Microsoft Licensing: Verify current prices at aka.ms/BCPricing as these change periodically

• Effort-Based Budgeting: Use the consulting hours estimates with your local partner's rates for accurate budgeting

These are reference estimates for planning purposes. Request detailed quotes from Microsoft Solutions Partners for your specific requirements.

Environment Setup: Establishing Your Business Central Landscape

Before diving into configuration, establish the appropriate environment structure.

Understanding Business Central Environments

Environment Types:

Sandbox Environments:

• Purpose: Development, testing, training, and experimentation

• Characteristics: Isolated from production, can be reset, can contain copy of production data

• Use cases:

  • Initial configuration and testing

  • User acceptance testing

  • Training environment for new users

  • Testing updates before applying to production

  • Proof-of-concept for new features

Production Environment:

• Purpose: Live business operations

• Characteristics: Protected, backed up, high availability SLA (99.9% for Microsoft Online)

• Use case: Day-to-day business transactions and reporting

Pre-Production Environment (optional but recommended for larger implementations):

• Purpose: Final validation before production deployment

• Characteristics: Mirrors production configuration, restricted access

• Use case: Final testing of updates, integrations, major configuration changes

Environment Strategy Best Practices:

Recommended Approach:

1. Development Sandbox: Initial configuration and customization development

2. Testing/UAT Sandbox: Validation and user acceptance testing with test data

3. Training Sandbox: User training with realistic data (refreshed from production)

4. Pre-Production (optional): Final validation for major changes

5. Production: Live operations

Additional Environment Types:

• Trial Environments: Microsoft provides 30-day Business Central trial environments for evaluation

• Disaster Recovery Environments: Microsoft maintains geo-redundant backups; consider additional DR sandbox for business continuity testing

Environment Management:

• Maintain consistency between sandbox and production configurations

• Regularly refresh sandbox environments with production data (anonymized if needed)

• Test all configuration changes in sandbox before production deployment

• Document differences between environments

• Establish promotion procedures from sandbox to production

Power Platform Integration Configuration

Business Central's tight integration with Microsoft Power Platform unlocks low-code/no-code capabilities:

Power Automate Integration Setup:

1. Enable Power Automate in Business Central Admin Center

2. Configure environment connections for Power Automate cloud flows

3. Grant users appropriate Power Automate licenses (included in some BC plans)

4. Create flows using pre-built Business Central connectors

5. Common scenarios: Approval notifications, document routing, Teams integration

Power BI Embedded Analytics Configuration:

1. Enable Power BI integration in BC Admin Center

2. Configure Azure AD/Entra ID authentication for Power BI service

3. Install Power BI apps from AppSource (Financial Reports, Sales, Inventory)

4. Embed Power BI reports in Business Central role centers

5. Configure automatic data refresh schedules

Power Apps Configuration (for custom mobile/web apps):

1. Enable Dataverse integration if using virtual tables for BC data

2. Configure BC API access for Power Apps connections

3. Build custom apps consuming BC OData APIs

4. Example: Field service app reading BC inventory, creating sales orders

Microsoft Dataverse Integration (optional, for Dynamics 365 cross-app scenarios):

1. Enable virtual tables to expose BC data in Dataverse (for integration with D365 Sales, Customer Service, Field Service, etc.)

2. Configure synchronization for bidirectional scenarios

3. Use when building Power Apps that need unified data from BC + other D365 apps

4. Not required for standalone BC implementations

Best Practice: Start with Power Automate for workflow automation and Power BI for analytics—both provide immediate value with minimal configuration. Reserve Dataverse for complex multi-app scenarios involving multiple Dynamics 365 products.

API and Web Services Configuration

Business Central provides robust API capabilities for external integrations:

API Configuration Setup:

1. OData Web Services (standard approach):

   • Business Central automatically exposes standard API pages as OData endpoints

   • Navigate to Web Services page to publish pages/queries as APIs

   • API v2.0 is current standard (supports customers, vendors, items, sales documents, etc.)

   • Use OAuth 2.0 for authentication (Azure AD/Entra ID)

2. SOAP Web Services (legacy, use OData for new integrations):

   • Available for backward compatibility

   • Page, codeunit, or query exposure

3. API Page Development (for custom APIs):

   • Create custom API pages using AL extensions

   • Follow Microsoft API design guidelines

   • Version APIs appropriately (v1.0, v2.0)

Security Configuration for APIs:

• Create dedicated service accounts for API access (avoid using personal user accounts)

• Configure Azure AD App Registrations for OAuth 2.0 authentication

• Assign minimum required permissions (specific permission sets for API users)

• Enable API request logging for security auditing

• Configure rate limits if needed

Common Integration Scenarios:

• E-commerce platforms reading BC inventory, creating sales orders

• Third-party CRM systems syncing customer data

• Warehouse management systems (WMS) exchanging inventory movements

• Business intelligence tools extracting data for analytics

• Payment processors updating payment records

Testing APIs:

• Use Postman or similar tools for API testing

• Test authentication (OAuth 2.0 token acquisition)

• Validate data formatting (JSON payloads)

• Test error handling scenarios

• Document API endpoints for integration partners Reserve Dataverse for complex multi-app scenarios.

Initial Company Setup

Business Central operates with one or more companies within an environment.

Company Information Setup:

Navigate to Company Information page to configure:

Basic Information:

• Company name and legal entity details

• Address and contact information

• Tax registration numbers (VAT, GST, EIN)

• Industry classification

• Fiscal year structure

Country/Region Settings:

• Primary operating country/region

• Localization features enabled

• Currency and language defaults

• Date and number formats

Communication Settings:

• Email configuration

• Phone and fax numbers

• Website and social media links

Bank Information:

• Primary bank account details

• SWIFT/BIC codes

• IBAN information

• Payment file format preferences

General Ledger Setup: The Financial Core

The general ledger is Business Central's financial heart—configuration here impacts all financial transactions.

Chart of Accounts Configuration

Your chart of accounts provides the structure for all financial recording and reporting.

Chart of Accounts Design Principles:

Structure and Numbering:

• Use logical, hierarchical numbering schemes

• Leave gaps for future account additions

• Group similar accounts together

• Align with statutory reporting requirements

Example Numbering Structure:

Account Configuration Fields:

For each G/L account, configure:

Basic Information:

• Account number and name

• Account category (Assets, Liabilities, Equity, Income, COGS, Expense)

• Account subcategory (for financial statement mapping)

• Income/Balance sheet indicator

Posting Configuration:

• Direct posting allowed (Yes/No)

• Account type (Posting, Heading, Total, Begin-Total, End-Total)

• Totaling range (for summary accounts)

Default Settings:

• Gen. posting type (blank, Purchase, Sale)

• Gen. business posting group

• Gen. product posting group

• VAT business posting group

• VAT product posting group

Reporting and Analysis:

• Default dimensions

• Cost type number (for cost accounting)

• Consolidation account (for multi-company reporting)

Best Practices:

• Start with standard chart of accounts for your country/region

• Customize thoughtfully based on reporting needs

• Limit direct-posting accounts to necessary detail level

• Use account categories correctly for financial statement mapping

• Document account purpose and usage guidelines

Dimensions and Analysis Views

Dimensions enable multidimensional financial analysis beyond the chart of accounts.

Understanding Dimensions:

Dimensions provide additional categorization for transactions:

Common Dimension Uses:

• Department: Finance, Sales, Operations, IT

• Cost Center: Functional areas within departments

• Project: Tracking costs and revenues by project

• Location: Physical locations or branches

• Product Line: Grouping by product categories

• Customer Segment: Retail, wholesale, enterprise

Dimension Configuration:

Creating Dimensions:

1. Define dimension codes (e.g., DEPT, PROJECT, LOCATION)

2. Create dimension values within each dimension

3. Establish value hierarchies for rollup reporting

4. Set up dimension combinations (allowed/blocked)

Default Dimensions:

Configure defaults to automatically assign dimensions:

• By G/L account: Certain accounts default to specific dimensions

• By customer: Sales transactions inherit customer dimensions

• By vendor: Purchase transactions inherit vendor dimensions

• By item: Inventory transactions inherit item dimensions

• By resource: Service transactions inherit resource dimensions

Dimension Value Posting:

• Code Mandatory: Transaction must have a dimension value

• Same Code: All lines must use the same dimension value

• No Code: Dimension cannot be used

• Blank: Dimension is optional

Analysis Views:

Create customized analysis views for reporting:

• Select up to 4 dimensions per analysis view

• Define update frequency (real-time vs. scheduled)

• Filter by date range or other criteria

• Use for ad-hoc analysis and reporting

Best Practice Recommendations:

• Limit to 2-4 global dimensions (more makes posting cumbersome)

• Use shortcut dimensions for frequently used dimensions

• Establish naming conventions for dimension values

• Train users on dimension importance and proper usage

• Review dimension usage regularly for data quality

Posting Groups Configuration

Posting groups determine which G/L accounts are used for various transaction types.

Posting Group Types:

General Posting Groups:

Link business transactions to G/L accounts:

General Business Posting Groups:

• Categorize customers, vendors, and business entities

• Examples: DOMESTIC, EU, EXPORT, INTERCOMPANY

General Product Posting Groups:

• Categorize items, resources, and G/L accounts

• Examples: GOODS, SERVICES, RAW-MAT, FINISHED-GOODS

General Posting Setup Matrix:

For each combination of business + product posting group, define:

• Sales account

• Sales credit memo account

• Sales line discount account

• Sales invoice discount account

• Purchase account

• Purchase credit memo account

• Purchase line discount account

• Purchase invoice discount account

• COGS account

• Inventory adjustment account

Customer Posting Groups:

• Receivables account

• Service charge account

• Payment discount debit account

• Payment discount credit account

• Invoice rounding account

• Additional fee account

• Interest account

• Payment tolerance debit account

• Payment tolerance credit account

Vendor Posting Groups:

• Payables account

• Service charge account

• Payment discount debit account

• Payment discount credit account

• Invoice rounding account

• Application rounding account

• Payment tolerance debit account

• Payment tolerance credit account

Inventory Posting Groups:

• Inventory account

• Inventory account (interim)

• Invt. accrual account (interim)

• COGS account

• Material variance account

• Capacity variance account

• Subcontracted variance account

• Cap. overhead variance account

• Mfg. overhead variance account

VAT/Tax Posting Groups:

Configure tax calculation and posting:

VAT Business Posting Groups:

• Customer/vendor tax status

• Examples: DOMESTIC, EU, EXPORT, TAXEXEMPT

VAT Product Posting Groups:

• Item/service tax treatment

• Examples: STANDARD, REDUCED, ZERO, EXEMPT

VAT Posting Setup:

• VAT calculation type (Normal, Reverse Charge, Full VAT, Sales Tax)

• VAT rate percentage

• Sales VAT account

• Purchase VAT account

• Reverse charge VAT account

• VAT identifier for reporting

Configuration Best Practices:

• Start simple with minimal posting groups

• Expand as business complexity requires

• Document each posting group's purpose

• Test posting group configurations thoroughly

• Create a posting group reference guide for users

Number Series Setup

Number series control automatic numbering for transactions and master records.

Number Series Configuration:

Common Number Series:

• Customers, Vendors, Items, Fixed Assets (master data)

• Sales Quotes, Orders, Invoices, Credit Memos

• Purchase Quotes, Orders, Invoices, Credit Memos

• General Journal batches and vouchers

• Bank payments and receipts

• Transfer orders

• Production orders

Number Series Design:

Elements:

• Starting Number: First number in the sequence

• Ending Number: Last number in the sequence (optional)

• Increment-by No.: Typically 1, can be larger for spacing

• Warning No.: System warns when approaching end

• Default Nos.: Automatically assign next number

• Manual Nos.: Allow manual number entry

• Date Order: Enforce chronological numbering

Example Design:

Number Series Relationships:

• Link related documents (quote → order → invoice)

• Define document number inheritance

• Enable conversion tracking

Best Practices:

• Use descriptive prefixes for easy document identification

• Plan for sufficient capacity (avoid running out of numbers)

• Consider year-based series for easier archiving

• Test number assignment in sandbox first

• Establish conventions for manual numbering when allowed

• Document numbering schemes for user reference

User Setup and Permissions Management

Proper security configuration protects data integrity and ensures appropriate access control.

User Authentication and Setup

User Account Creation:

For each user, configure:

• User name (email address for Microsoft 365 integration)

• Authentication method (Microsoft 365, Azure AD)

• License assignment (Essentials, Premium, Team Member, Device)

• Profile/role center assignment

• Language and localization preferences

• Time zone

User Groups vs. Permission Sets:

Business Central offers flexible permission management:

Permission Sets:

• Collections of permissions to objects and data

• Granular control over read, insert, modify, delete, execute

• Standard permission sets provided (SUPER, BASIC, D365 FULL ACCESS, etc.)

• Custom permission sets for specific needs

User Groups (DEPRECATED - Do not use for new implementations):

• Legacy method for grouping permission sets

• Still visible in older BC versions for backward compatibility only

• Recommendation: Always use direct Permission Set assignment instead

Standard Permission Sets:

SUPER: Complete system access (use sparingly, typically admins only)

D365 BUS FULL ACCESS: Full business user access without system administration

D365 BUS PREMIUM: Premium license capabilities

D365 FULL ACCESS: Complete access to all business features

D365 READ: Read-only access to all business data

Role-specific permission sets:

• Accountant

• Accounts Payable Administrator

• Accounts Receivable Administrator

• Sales and Relationship Manager

• Purchasing Agent

• Inventory Manager

• Project Manager

• Manufacturing User

Permission Set Design

Creating Custom Permission Sets:

Design permission sets aligned with job functions:

Permission Set Structure:

1. Identify role and responsibilities

2. Determine required pages, reports, and tables

3. Define permission levels (Read, Insert, Modify, Delete, Execute)

4. Test thoroughly with actual users

5. Document permission set purpose and contents

Example: "Accounts Payable Clerk" Permission Set:

Required access:

• Read access: Vendors, G/L accounts, items

• Insert/Modify/Delete: Purchase invoices, purchase orders (limited)

• Execute: Payment journals, vendor reports

• No access: Sales documents, customer information, payroll

Permission Set Best Practices:

• Follow principle of least privilege (minimal necessary access)

• Create role-based permission sets, not person-based

• Combine permission sets rather than creating monolithic sets

• Regularly review and audit user permissions

• Test permission sets in sandbox before production deployment

• Document what each custom permission set provides

Segregation of Duties

Configure Business Central to enforce appropriate control separations:

Common Segregation Requirements:

• Purchase requisition vs. purchase order approval

• Payment preparation vs. payment authorization

• Journal entry vs. journal posting

• Customer master data maintenance vs. credit limit approval

• Inventory adjustment entry vs. approval

Approval Workflows:

Implement workflows to enforce segregation:

• Purchase document approval by amount threshold

• Journal batch approval before posting

• Customer credit limit changes requiring approval

• Payment journal approval workflows

• Master data change approval

Modern Workflow Configuration Options:

Business Central offers multiple approaches to workflow automation:

1. Power Automate Cloud Flows (Recommended for new implementations): Low-code/no-code workflow automation connecting Business Central to Microsoft 365 and other services

   • Pre-built connectors for Business Central

   • Visual workflow designer

   • Integration with Teams, Outlook, SharePoint

   • Cross-application workflows (e.g., BC approval → Teams notification → Outlook task)

   • Microsoft's strategic direction for workflow automation

2. Legacy Business Central Workflows (Still supported): Built-in approval workflow engine for common scenarios (purchase approvals, journal approvals, customer/vendor approvals)

   • Still functional but less flexible than Power Automate

   • Requires AL extensions for advanced customization

   • Consider for simple, BC-only approval scenarios

3. Custom AL Extension Workflows: Developer-built workflows for complex, industry-specific requirements

Recommendation: Prioritize Power Automate for new implementations due to better flexibility and Microsoft 365 integration. Legacy BC Workflows remain viable for simple, BC-only approvals. Reserve custom AL for highly specialized needs.

Role Centers Customization

Role centers provide personalized, role-specific home pages for users.

Standard Role Centers:

Business Central includes pre-configured role centers:

• Business Manager

• Accountant

• Bookkeeper

• Sales and Relationship Manager

• Purchasing Agent

• Production Planner

• Warehouse Manager

• Project Manager

Role Center Components:

Activities Tiles:

• Key metrics and counts (pending orders, overdue invoices)

• Clickable for drill-through to details

Action Items:

• Workflows requiring attention

• Approvals pending

Cues:

• Visual indicators (red/yellow/green) for KPI status

Reports and Charts:

• Embedded analytics

• Graphical representations of key data

Quick Access:

• Frequently used pages and reports

• Recently viewed records

Customization Options:

Page Personalization: Users can customize their own pages:

• Rearrange tiles and sections

• Show/hide fields and columns

• Resize areas

• Add frequently used actions

• Change list views and filters

Profile Configuration (Administrator):

• Design role-specific page layouts

• Define default views and filters

• Configure embedded analytics

• Establish page customizations for all users in a role

Best Practices:

• Start with standard role centers

• Customize based on actual user feedback

• Balance information density with clarity

• Include role-relevant KPIs in prominent positions

• Provide training on personalization capabilities

• Periodically review role center effectiveness

Currency and Exchange Rates

Configure multi-currency capabilities for international operations.

Currency Setup:

Local Currency (LCY):

• Primary reporting currency

• Defined in General Ledger Setup

• Typically company's home country currency

Additional Currencies:

For each additional currency, configure:

• Currency code (USD, EUR, GBP, etc.)

• Currency symbol and description

• ISO currency code

• Decimal places for amounts

• Invoice rounding precision

• Amount rounding precision

Exchange Rates:

Maintain exchange rate tables:

• Starting date for each rate

• Exchange rate amount

• Relational exchange rate amount

• Adjustment exchange rate

• Relational adjustment exchange rate

Exchange Rate Adjustment:

Configure automatic adjustment processes:

• Frequency (monthly, quarterly)

• Accounts to adjust (customers, vendors, bank accounts)

• Unrealized gain/loss accounts

• Realized gain/loss accounts

Additional Reporting Currency:

Enable dual-currency reporting:

• Maintain balances in both LCY and additional reporting currency

• Useful for consolidation or statutory reporting requirements

• Configure conversion rules and rounding

Best Practices:

• Update exchange rates regularly (daily for high-volume operations)

• Establish process for rate source and approval

• Reconcile exchange rate differences regularly

• Document exchange rate adjustment procedures

• Consider integration with financial data providers for automatic rate updates

VAT/Tax Setup

Proper tax configuration ensures compliance and accurate reporting.

VAT/Tax Configuration Areas:

VAT/Tax Business Posting Groups:

• Domestic customers/vendors

• EU customers/vendors (for EU companies)

• Export customers

• Tax-exempt entities

VAT/Tax Product Posting Groups:

• Standard-rated goods/services

• Reduced-rate items

• Zero-rated items

• Exempt items

VAT/Tax Posting Setup:

For each business + product combination:

• VAT calculation type:

  • Normal VAT

  • Reverse charge VAT

  • Full VAT

  • Sales tax (US/Canada)

• VAT rate percentage

• Sales VAT account (output VAT)

• Purchase VAT account (input VAT)

• Reverse charge VAT account

• VAT identifier for reporting purposes

• Certificate of Supply required

• Tax category (for electronic invoicing)

VAT/Tax Registration Numbers:

• Validate format for registration numbers

• Configure EU VAT validation service

• Set up foreign tax registration numbers for multiple jurisdictions

VAT/Tax Reporting Configuration:

• VAT statement templates for statutory returns

• VAT return periods

• Electronic filing setup (where applicable)

• Intrastat reporting (EU)

• EC Sales List configuration

Sales Tax (US/Canada):

For sales tax jurisdictions:

• Tax areas (states, provinces, counties, cities)

• Tax groups

• Tax details with rates

• Tax jurisdiction hierarchy

• Tax liability accounts

Best Practices:

• Verify tax configuration with accounting team and tax advisors

• Test tax calculation in sandbox before production use

• Maintain documentation of tax treatment by product category

• Regularly review tax rates for updates

• Establish procedures for tax authority remittance

• Keep audit trail of VAT/tax configuration changes

Payment Terms and Methods

Configure how your organization handles payments and receipts.

Payment Terms Setup:

Define standard payment terms:

Common Payment Terms:

• NET 30: Payment due 30 days from invoice date

• NET 10: Payment due 10 days from invoice date

• 2/10 NET 30: 2% discount if paid within 10 days, otherwise net 30

• COD: Cash on delivery

• EOM: End of month

• 1/2 N/30: Half payment immediately, balance in 30 days

Payment Terms Configuration:

• Code and description

• Due date calculation (e.g., 30D = 30 days)

• Discount date calculation (e.g., 10D = 10 days)

• Discount percentage

• Calc. Pmt. Disc. on Cr. Memos

• Coupled to Payment Terms Code (for vendors)

Payment Methods:

Define how payments are made/received:

Common Payment Methods:

• Bank transfer

• Check

• Credit card

• Direct debit

• Cash

• Wire transfer

• Electronic payment (ACH, SEPA)

Payment Method Configuration:

• Code and description

• Bal. account type and number (for automatic posting)

• Direct debit mandates (for SEPA direct debit)

• Payment export format

• Payment type for electronic banking

Bank Account Setup:

Configure company bank accounts:

• Bank account number

• IBAN and SWIFT code

• Currency code

• Contact information

• Bank statement import format

• Payment export format

• Last statement number

• Balance last statement

Best Practices:

• Align payment terms with industry standards and cash flow needs

• Standardize terms across similar customer/vendor types

• Configure early payment discounts to encourage prompt payment

• Set up electronic payment formats for efficiency

• Maintain bank account reconciliation procedures

• Document payment processing workflows

Location and Bin Setup for Warehousing

Configure location and warehouse structures for inventory management.

Location Setup:

Location Types:

Basic Location:

• Simple inventory tracking

• No bin management

• Suitable for small operations or non-warehouse locations

Advanced Warehouse Location:

• Directed put-away and pick

• Bin management

• Warehouse employees

• Suitable for complex warehouse operations

Location Configuration:

For each location, configure:

General Information:

• Location code and name

• Address and contact information

• Use as in-transit location

• Location type

Warehouse Configuration:

• Require receive

• Require shipment

• Require put-away

• Require pick

• Bin mandatory

• Directed put-away and pick

• Use cross-docking

Bins and Zones:

For advanced warehouse locations:

Bin Configuration:

• Bin code (unique identifier)

• Zone code (grouping bins)

• Bin type (receive, ship, put-away, pick, quality control)

• Bin ranking (for directed put-away logic)

• Maximum cubes and weight

• Bin capacity policies

Zone Configuration:

• Zone code and description

• Bin type code

• Warehouse class code

• Special equipment code

• Zone ranking

Bin Creation Methods:

• Manual entry

• Bulk creation using worksheets

• Template-based creation

Inventory Routing:

Configure how inventory flows through locations:

• Transfer routes between locations

• In-transit location designation

• Shipping and receiving processes

• Cross-docking policies

Best Practices:

• Start with simple location setup, add complexity as needed

• Map physical warehouse layout to bin structure

• Use clear, logical bin coding schemes

• Configure bin rankings to optimize put-away and pick efficiency

• Train warehouse staff on directed put-away and pick processes

• Regularly review and optimize bin configurations

Item Categories and Attributes

Organize items for efficient management and reporting.

Item Categories:

Create hierarchical item categorization:

Category Structure Example:

Category Configuration:

• Category code and description

• Parent category (for hierarchy)

• Default posting groups

• Default values for new items

• Attributes assigned to category

Item Attributes:

Define characteristics for items:

Common Attributes:

• Color

• Size

• Weight

• Material

• Brand

• Power rating

• Warranty period

Attribute Configuration:

• Attribute name

• Type (Option, Text, Integer, Decimal, Date)

• Values (for Option type)

• Unit of measure (for numeric types)

Attribute Values:

For option-based attributes, define allowed values:

• Color: Red, Blue, Green, Black, White

• Size: S, M, L, XL, XXL

• Material: Cotton, Polyester, Wool, Silk

Using Attributes:

Leverage attributes for:

• Product configuration and variants

• Item filtering and search

• Customer-facing catalogs

• Reporting and analysis

Best Practices:

• Design category structure to reflect how users think about items

• Limit category levels to 3-4 for manageability

• Use attributes instead of creating separate items for variants

• Standardize attribute names and values across categories

• Document category and attribute usage guidelines

• Review and refine categorization as catalog grows

Configuration Documentation and Standards

Document configuration decisions for future reference and consistency.

Configuration Documentation Components:

Setup Documentation:

• G/L account purposes and usage rules

• Dimension definitions and value meanings

• Posting group mappings and logic

• Number series schemes and conventions

• User roles and permission sets

Configuration Workbook:

Maintain spreadsheet or database tracking:

• All configuration decisions made

• Rationale for each decision

• Date implemented

• Who requested/approved

• Related requirements

Standard Operating Procedures:

Document processes for:

• Creating new customers, vendors, items

• Processing different transaction types

• Period-end procedures

• User access requests

• Configuration change requests

Configuration Management:

Establish governance for changes:

• Change request process

• Impact analysis requirements

• Approval authorities

• Testing requirements before production

• Documentation update procedures

• Communication to affected users

Deliverables: Configuration Phase Outputs

Complete this phase with comprehensive configuration in place:

1. Configuration Checklist

Document completion of all configuration areas:

• ✓ Company information

• ✓ General ledger and chart of accounts

• ✓ Dimensions and analysis views

• ✓ Posting groups

• ✓ Number series

• ✓ User accounts and permissions

• ✓ Role centers

• ✓ Currency and exchange rates

• ✓ VAT/tax setup

• ✓ Payment terms and methods

• ✓ Locations and bins

• ✓ Item categories and attributes

2. Setup Documentation Standards

Comprehensive documentation including:

• Configuration decision log

• Account and dimension guide

• Posting group reference

• Number series conventions

• User role definitions

• Standard operating procedures

3. Permission Set Templates

Role-based security configuration:

• Permission set definitions

• User-to-role mappings

• Segregation of duties matrix

• Access review procedures

4. Chart of Accounts Structure

Complete financial structure:

• Chart of accounts listing

• Account descriptions and usage rules

• Financial statement mapping

• Consolidation account relationships

Frequently Asked Questions (FAQ)

How do you configure Business Central?

Business Central configuration follows a structured 10-phase approach:

Phase 1: Environment Preparation

• Create Sandbox environment for configuration work

• Set up Production environment (initially empty)

• Configure environment-specific settings (Admin Center)

Phase 2: Company Foundation

• Navigate to Company Information and enter:

  • Legal company name and address

  • Tax registration numbers (VAT/EIN)

  • Fiscal year start date

  • Base currency

  • Country/region localization

Phase 3: Financial Core Setup

• Chart of Accounts: Import template or create custom structure (Assets, Liabilities, Equity, Revenue, Expenses)

• Posting Groups: Configure General/Customer/Vendor/Inventory posting groups

• Dimensions: Create global dimensions (Department, Project, Location) for analysis

• Accounting Periods: Define fiscal periods and lock past periods

Phase 4: Master Data Configuration

• Number Series: Define prefixes/formats for customers (CUST-0001), vendors (VEND-0001), items, documents

• Templates: Create customer/vendor/item templates for consistent data entry

• Payment Terms: Configure terms (Net 30, 2/10 Net 30, etc.)

• Shipping Methods: Define methods (UPS, FedEx, Will Call)

Phase 5: Sales & Receivables

• Sales & Receivables Setup page: Configure invoice numbering, credit limits, stockout warnings

• Customer Posting Groups: Link customers to G/L accounts

• Price Lists: Set up customer-specific or item-based pricing

• Approval Workflows: Configure sales order/quote approvals (Power Automate or standard BC)

Phase 6: Purchase & Payables

• Purchases & Payables Setup: Configure PO numbering, vendor approval, receiving processes

• Vendor Posting Groups: Link vendors to G/L accounts

• Requisition Workflows: Set up purchase requisition approvals

Phase 7: Inventory Management

• Locations: Define warehouses, stores, or bins

• Costing Methods: Choose FIFO, Average, Standard, or Specific per item

• Item Categories: Group items for reporting and analysis

• Units of Measure: Define base and alternate UOMs

Phase 8: User Security

• Create user accounts (Azure AD/Entra ID integration)

• Assign permission sets (Super, Accountant, Sales Rep, Warehouse Worker)

• Configure role centers (dashboard layout per role)

• Set up record-level security (e.g., sales reps see only their customers)

Phase 9: Integrations

• Power Platform: Enable Power Automate, Power BI, Dataverse connections

• APIs: Configure OData/REST API access for external systems

• Third-Party Apps: Install AppSource extensions (Shopify, Avalara, etc.)

Phase 10: Testing & Go-Live Preparation

• Run end-to-end transactions (quote → order → shipment → invoice → payment)

• Validate posting to correct G/L accounts

• Test reporting and financial statements

• Document configuration decisions

• Export configuration as RapidStart package for production deployment

Typical Configuration Timeline: 4-8 weeks depending on complexity.

What environments do you need for Business Central?

Business Central implementations require multiple environments for different purposes:

Essential Environments:

1. Production Environment (REQUIRED)

   • Purpose: Live business operations and transactions

   • Characteristics:

     • High availability with Microsoft's financially-backed SLA (typically 99.9% uptime - verify current terms at Microsoft SLA documentation)

     • Automatic backups (retention policies vary - consult Microsoft documentation for current terms)

     • Protected from accidental changes

     • High-security access controls

   • Who accesses: All end users for daily work

2. Sandbox Environment (REQUIRED)

   • Purpose: Configuration, testing, training, and updates

   • Characteristics:

     • Can be reset/recreated without affecting production

     • Copy production data for realistic testing

     • Free sandbox included with BC licenses

   • Who accesses: Administrators, developers, power users, trainers

   • Use Cases:

     • Initial system configuration and setup

     • User Acceptance Testing (UAT)

     • Training new employees

     • Testing BC updates before production

     • Developing AL extensions

     • Testing integrations

Recommended Additional Environments (Medium/Large Orgs):

3. Pre-Production/Staging Environment

   • Purpose: Final validation before production deployment

   • Characteristics: Mirror of production configuration, limited access

   • Use Cases:

     • Final approval testing for major changes

     • Integration smoke testing

     • Performance/load testing

4. Development Environment (If doing custom AL development)

   • Purpose: AL extension development and debugging

   • Characteristics: Frequent resets, developer tools enabled

   • Who accesses: AL developers only

5. Training Environment

   • Purpose: Dedicated environment for ongoing user training

   • Characteristics: Refreshed quarterly from production, safe for experimentation

   • Use Cases: Onboarding new users, refresher training, process documentation

Environment Strategy by Organization Size:

Environment Refresh Strategy:

• Refresh Sandbox from Production: Monthly (for realistic testing data)

• Refresh Training from Production: Quarterly (anonymize sensitive data)

• Pre-Production: Maintain exact mirror of Production configuration

Cost: Production environment included in BC licensing. Additional Sandbox environments typically included (check your license—usually 3 sandboxes per tenant).

How do you set up chart of accounts in Business Central?

Chart of Accounts (COA) setup in Business Central involves 7 key steps:

Step 1: Choose Starting Point

Option A: Use Configuration Package Templates (Recommended for most)

• Business Central localizations include example Chart of Accounts structures

• Access COA templates via Configuration Packages (RapidStart Services)

• Navigate to Configuration Packages page

• Select or import relevant package (e.g., "Chart of Accounts - US GAAP")

• Apply package to import template structure

• Alternatively: Review Chart of Accounts in a demo company and manually recreate structure

• Templates available:

  • Standard GAAP structure (US)

  • IFRS-compliant structure (International)

  • Industry-specific examples (Manufacturing, Retail, Services)

Option B: Import Custom COA

• Create Excel/CSV with account structure

• Use Configuration Packages to import

• Map required fields (No., Name, Account Type, Account Category)

Option C: Build from Scratch (Rare—only for very unique needs)

Step 2: Define Account Structure

Standard numbering convention:

Step 3: Configure Account Properties

For each G/L account, define:

• No.: Unique account number (4-6 digits typical)

• Name: Descriptive name ("Cash - Operating Account")

• Account Type:

  • Posting: Accepts transactions (detail accounts)

  • Heading: Subtotal/section header (no posting)

  • Total: Calculates range sum (e.g., "Total Current Assets")

  • Begin-Total / End-Total: Defines summation range

• Account Category: Asset, Liability, Equity, Income, COGS, Expense (for financial reporting)

• Account Subcategory: Detail classification (Cash, AR, Inventory, etc.)

• Debit/Credit: Normal balance (Assets/Expenses = Debit, Liabilities/Equity/Revenue = Credit)

• Direct Posting: Allow/block direct journal entries (some accounts may only post via documents)

Step 4: Set Up Account Categories (Financial Statement Mapping)

• Navigate to G/L Account Categories

• Map accounts to financial statement line items:

  • Balance Sheet sections (Current Assets, Fixed Assets, Current Liabilities, etc.)

  • Income Statement sections (Revenue, COGS, Operating Expenses, etc.)

  • Cash Flow categories (Operating, Investing, Financing)

• This enables automatic financial statement generation

Step 5: Configure Dimensions (Cross-Account Analysis)

• Global Dimensions (2 max): Department, Project, Location, Cost Center

• Example: Track revenue by Product Line AND Geographic Region

• Dimensions allow P&L by department without separate account numbers

Step 6: Set Up Posting Groups (Automation)

• General Posting Groups: Link transaction types to G/L accounts

  • Business Posting Groups: Customer/Vendor types (Domestic, EU, Export)

  • Product Posting Groups: Item types (Retail, Wholesale, Services)

• Example mapping:

  • Sales (Domestic + Retail) → Posts to Account 4100 (Domestic Retail Revenue)

  • Sales (Export + Retail) → Posts to Account 4150 (Export Retail Revenue)

Step 7: Test and Validate

• Post test transactions (sales invoice, purchase invoice, journal entry)

• Verify posting to correct accounts

• Generate trial balance and financial statements

• Validate totaling formulas (Begin-Total/End-Total ranges)

• Test dimension reporting

Best Practices:

• ✓ Leave gaps in numbering (1000, 1010, 1020) for future accounts

• ✓ Use consistent account naming conventions

• ✓ Limit posting accounts (fewer accounts = cleaner reporting)

• ✓ Use dimensions instead of creating too many accounts

• ✓ Document account usage and mapping decisions

• ✗ Avoid creating duplicate accounts for dimension analysis

Time Required: 1-3 days for initial setup, depending on COA complexity.

What is the difference between Sandbox and Production in Business Central?

Sandbox and Production environments serve distinct purposes with different characteristics:

Production Environment:

Purpose: Live business operations and official transactions

Characteristics:

• ✅ High Availability: Financially-backed SLA from Microsoft (typically 99.9% uptime - verify current terms)

• ✅ Automatic Backups: Automated backup system (retention policies vary - consult current Microsoft documentation)

• ✅ Protected: Cannot be deleted accidentally, requires admin authorization for major changes

• ✅ Audited: All transactions logged for compliance and auditing

• ✅ Performance Optimized: Dedicated resources, optimized for transaction volume

• ✅ Real Data: Actual customer, vendor, inventory, and financial data

• ❌ No Testing: Never test configurations or updates here (risk to live data)

• ❌ Limited Resets: Cannot easily reset or restore to blank state

Who Accesses: All end users (sales, purchasing, finance, warehouse staff)

Use Cases:

• Daily sales orders, purchase orders, invoicing

• Financial closing and reporting

• Inventory transactions

• Live customer service

Sandbox Environment:

Purpose: Safe environment for development, testing, training, and experimentation

Characteristics:

• ✅ Safe to Break: Can be reset, recreated, or deleted without affecting business

• ✅ Flexible: Can copy production data OR start fresh with sample data

• ✅ Multiple Instances: Can create multiple sandboxes for different purposes

• ✅ Testing Ground: Test configurations, updates, integrations, custom code

• ✅ Training Safe: Users can practice without fear of corrupting real data

• ✅ Development: AL extension development and debugging enabled

• ❌ No SLA: May experience occasional downtime (not business-critical)

• ❌ Temporary Data: Regularly refreshed from production or reset

Who Accesses: Administrators, developers, power users, trainers

Use Cases:

• Testing new Business Central features before enabling in production

• User Acceptance Testing (UAT) for customizations

• Training new employees

• Developing and debugging AL extensions

• Testing integrations with external systems

• Experimenting with configuration changes

• Rehearsing data migration procedures

Key Differences Summary:

Recommended Workflow:

1. Configure and test in Sandbox

2. Validate with users in Sandbox (UAT)

3. Export configuration as RapidStart package

4. Import and deploy to Production

5. Never make untested changes directly in Production

How do you manage user permissions in Business Central?

Business Central uses role-based permission sets for granular security:

Step 1: Understand Permission Set Hierarchy

Business Central permissions operate on 5 levels:

1. SUPER: Full system access (administrators only—use sparingly)

2. System App - Admin: Administrative tasks without full SUPER access

3. Functional Roles: Job-specific access (Accountant, Sales Rep, Warehouse Worker)

4. Limited Roles: Read-only or specific task access (Team Member, External Accountant)

5. Custom Permission Sets: Tailored combinations for unique roles

Step 2: Create User Accounts

1. Navigate to Users page in Business Central

2. Click New to create user

3. Enter User Name (typically email address from Azure AD/Entra ID)

4. User automatically syncs from Microsoft 365 / Azure AD

5. Assign Authentication Email for notifications

Step 3: Assign Permission Sets

Common pre-built permission sets:

• D365 FULL ACCESS: Complete access (use for admins only)

• D365 ACC. RECEIVABLE: Sales, customers, invoicing

• D365 ACC. PAYABLE: Purchasing, vendors, payments

• D365 FA, EDIT: Fixed asset management

• D365 INV, EDIT: Inventory management and posting

• D365 JOURNALS, POST: General ledger journal posting

• D365 RAPIDSTART: Configuration package management

• D365 TEAM MEMBER: Read-only access for occasional users

Assign multiple permission sets to combine access:

• Example: Sales Manager = "D365 ACC. RECEIVABLE" + "D365 INV, EDIT" + "D365 TEAM MEMBER"

Step 4: Create Custom Permission Sets (if needed)

1. Navigate to Permission Sets page

2. Click New and name permission set ("Custom Sales Rep")

3. Click Permissions to define access:

   • Table Permissions: Read, Insert, Modify, Delete access per table

   • Page Permissions: Which pages user can open

   • Report Permissions: Which reports user can run

4. Use Permission Set Inheritance: Copy existing set and modify

Permission Levels:

• Read: View data only

• Insert: Create new records

• Modify: Edit existing records

• Delete: Remove records

• Yes: Full RIMD (Read, Insert, Modify, Delete)

• Indirect: Access only through related pages (not directly)

Step 5: Configure Data Security (Record-Level)

Beyond permission sets, restrict which records users can access:

Security Filters (limit data visibility):

• Example: Sales reps see only their assigned customers

• Set on User Permission Set table with filter (e.g., "Salesperson Code = CURRENT USER")

User Groups (DEPRECATED - Do not use for new implementations):

• Legacy method for grouping permission sets from older BC versions

• Still visible for backward compatibility only

• Action Required: Migrate existing User Groups to direct Permission Set assignments

• For new implementations: Skip User Groups entirely and assign Permission Sets directly to users

Step 6: Assign Role Centers (User Experience)

• Role Center = Homepage/dashboard layout per user role

• Examples:

  • Business Manager (executive KPIs)

  • Sales Order Processor (sales-focused dashboard)

  • Accountant (financial reports and journals)

  • Warehouse Worker (picking and shipping tasks)

• Assigned automatically based on permission sets OR manually configured per user

Step 7: Test User Access

1. Log in as test user (or use Effective Permissions feature)

2. Verify access to required pages, tables, reports

3. Test that restricted areas are blocked

4. Validate workflows (can submit, can approve, etc.)

Best Practices:

• ✓ Principle of Least Privilege: Grant minimum access needed for job function

• ✓ Use Standard Permission Sets: Leverage Microsoft's pre-built sets before customizing

• ✓ Regular Access Reviews: Quarterly review of who has SUPER access

• ✓ Segregation of Duties: Sales reps shouldn't post GL journals; accountants shouldn't ship inventory

• ✓ Document Role Definitions: Maintain matrix of Role → Permission Sets

• ✗ Avoid SUPER for Everyone: Only 2-3 admins should have SUPER (audit trail required)

• ✗ Don't Share Accounts: Each person needs unique user account (accountability)

Common Permission Set Combinations:

Time to Configure: 2-4 hours for initial user setup (20-50 users); ongoing as users join/leave.

Conclusion: From Configuration to Capability

Thorough system configuration transforms Business Central from a blank canvas into a powerful business management platform tailored to your organization. The choices you make during configuration impact every transaction, report, and user interaction going forward.

Key Takeaways:

✓ Start with Standards: Leverage Business Central's built-in configurations as starting points

✓ Think Long-Term: Configuration decisions have lasting impact—plan for scalability

✓ Test Thoroughly: Validate every configuration in sandbox before production deployment

✓ Document Everything: Future you (and your colleagues) will thank present you

✓ Prioritize Security: Proper permission configuration protects data integrity

✓ Train Users: Even perfect configuration fails without user understanding

With solid configuration in place, you're positioned for the next critical phase: Data Migration Strategy & Execution, where you'll populate your configured system with business data.

Next in Series: Blog 4: Data Migration Strategy & Execution - Learn how to plan, prepare, and execute successful data migration from legacy systems to Business Central.

Download Resources:

• Configuration Checklist

• Chart of Accounts Template

• Permission Set Matrix

• Setup Documentation Template

Questions or Comments? Share your configuration experiences and challenges in the comments below.

This is Part 3 of an 8-part series on Business Central Implementation. Subscribe to receive notifications when new articles are published.

Tags: #BusinessCentral #SystemConfiguration #ERPSetup #Dynamics365 #FinancialManagement #Security