This article describes how to set up and configure Microsoft Dynamics NAV to support international operations.
Originally published in H1 2018 BCUG/NAVUG Magazine
With global consolidations occurring, international operations are becoming more common. There are a variety of issues to consider when setting up Microsoft Dynamics NAV to support these companies. There are typically corporate (head office) functions such as treasury, and now General Data Protection Regulation (GDPR), that require insight into the local companies in order to manage cash, foreign exchange, banking, and personal data. There are several ways to manage these issues. Here we will explore the possibilities for setup and configuration.
Essential to any implementation of Microsoft Dynamics NAV is the creation of a plan to configure your system. Key activities that need to be considered are:
- Legal entity structure
- Operating structure
- Tax authority requirements
These will lead to decisions about how to configure the base system. Here are key areas that need to be considered:
- Number of databases
- Location of databases
- Number of companies
- Master data management
Once your structure is defined, then the detailed work begins to identify the common business processes and data consolidation requirements. The choices for data consolidations have become more plentiful, while at the same time, there has been a change in the philosophy of where the consolidated data should reside. Historically, the approach was to make everything accessible from within Microsoft Dynamics NAV. General ledger consolidations are still used for periodic financial reporting and compliance. The common data structures that exist within, and across, localizations allow you to set up business intelligence (BI) tools. These BI tools can extract data from each operating company and consolidate it on an ongoing basis to provide an overview of global operations with as much detail as you choose to include. To be truly effective, it is key that you set up the proper intercompany Customers, vendors, and items so that intercompany information does not cloud your perspective on the external sales and purchasing activities.
There are two broad setup approaches: A centralized structure and configuration control or centralized data management requirements and local configuration control. The former allows you to establish consistency across operations, which leads to consistency in reporting (e.g., IFRS or GAAP). The latter allows you to acquire new companies and quickly move them to Microsoft Dynamics NAV without significantly impacting their internal operations and at the same time get the reporting required.
The ability to roll out localized versions of Microsoft Dynamics NAV, for example, allows you to manage VAT in the EU and sales tax in North America. Also, the use of localized versions allows you to leverage region-specific languages and add-on or external services (e.g., sales tax engine in North America).
The intercompany (IC) functionality has been improved with Microsoft Dynamics NAV 2018, so the functionality has become easier to use. The purpose of IC transactions is to streamline data management and avoid the re-keying of data. Specifically, IC is used for general journals and purchase/sales documents. IC general journals are often used for allocations while the purchase/sales documents are typically used for items.
Intercompany Setup Overview
Intercompany Supply Chain
Beyond the financial aspects of intercompany, the supply chain capabilities can be utilized to manage your replenishment across your companies. My introduction to Microsoft Dynamics NAV IC, in supply chain, was the connection of IC sales and purchases between two countries. Products were manufactured in multiple countries, including the two Microsoft Dynamics NAV countries. Supply chain planning was set up to utilize the IC purchases and sales as a source of supply and demand. This was supplemented with Microsoft Dynamics NAV stock keeping units (SKUs) to consolidate the delivery of the manufactured items to strategic locations. Inventory replenishment was accomplished in each company, and a consolidated inventory overview allowed Users to get a complete and detailed picture of the inventory requirements.
Power BI for Consolidating Data Frequently
Enhanced integration with Microsoft Dynamics NAV 2018 and Power BI allows you to embed views in Microsoft Dynamics NAV where you need them. This allows you to have both the local, current Microsoft Dynamics NAV company and global views. Power BI data is accessible on any device, so it is readily available.