Financial Statements in NAV 2017

Most commonly used financial statements are available upon your first login to Microsoft Dynamics NAV 2017.

When you sign in to your Microsoft Dynamics NAV 2017 account (or open the Role Tailored Client), you can now run your financial statements in a matter of moments. In the following example we are using the Business Manager user profile.

From Home, select the actions tab in the upper left corner, and then choose Financial Statements.

Choose the financial statement you wish to view. You will have a choice of the 4 most commonly used statements:

  • Balance Sheet
  • Income Statement
  • Statement of Cash Flow
  • Statement of Retained Earnings

For Example, let us take Balance Sheet:

Specify date, or date range, you wish to report on and then select Preview.

And just like that, you are now viewing financial statements in Microsoft Dynamics NAV 2017!

Business Activity Statements (BAS)

This is an Australian local functionality available in Microsoft Dynamics NAV.

A Business Activity Statement (BAS) is a form that businesses must submit to the
Australian Tax Office (ATO) on a monthly or quarterly basis.

BAS reports both:

  • The total Goods and Services Tax (GST) collected from sales activities—which must be paid to the ATO and
  • The total GST paid on purchases – which is claimed as an input tax credit.

Companies can report their taxes:

  • Manually using a form, or
  • Electronically using Electronic Commerce Interface (ECI) software provided by the ATO. The ATO provides the ECI software at no cost.

Filing BAS Electronically

When you file your BAS electronically, you must perform the following tasks:

  1. Ensure that the BAS setup has been completed.
  2. Using the ECI software, download your monthly or quarterly file from the ATO.
  3. Import this file into the BAS area.
  4. Update your tax details.
  5. Export the data to an XML file.
  6. Upload the completed XML file to the ATO using the ECI software.
  7. Update BAS with the receipt number received from the ATO.

Direct Debit Collections

With Payment Registration we can efficiently post incoming documents from customers. However, in that case, still the customer is the one who initiates the payments.

The Direct Debit Collections, provides a way in which we can initiate the payment. Based on the mandate and agreement that we have with the customers, we can send a file to the bank with a list of customer invoices that should be paid. This is based on SEPA (Single Euro Payment Area) format.

Setup

Bank Account Card

It is important that you use the bank accounts and customers in euro, since it is based on SEPA. The following example uses World Wide Bank Euro (WWB-EUR).

Enter the Country/Region Code to specify in which country you are using the bank. In this example we are using GB (Great Britain). Although Great Britain has a different local currency, but it belongs to the SEPA area and is one of the SEPA countries.

Notice the currency in Euro.

We need to have IBAN number and also a SEPA Direct Debit Exp. Format. In this example we will use SEPA format, but you can also use other formats. We will also enter Direct Debit Msg. Nos., so that the system can use the number series to number the SEPA direct debit messages.

That’s basically the setup we need to do on the bank account card, where most important is specifying the format that you can use. A format is all about defining the processing code units and xml ports that the system can use to create xml files based on a specific format.

Customers

In this example we will choose a Euro customer (34010100 Libros S.A.).

If we need to use direct debit for this customer, we need to specify certain fields in the Payments fast tab on the customer card.

So, the first thing that we need to do is to specify Payment Terms Code where we have to distinguish between a company and a person. In this case it is a Company.

Next we need to setup Payment Method. Based on the payment method, the system knows whether it is a direct debit customer or not. Here we have created a new direct debit payment method code.

Last but not the least, we will also specify Direct Debit Mandate. On the Direct Debit Mandates window:

Specify the ID, which is auto generated.

Then specify Customer Bank Account, which is used by the customer to pay the invoices. Let’s have a look at the bank account card of the bank account UTR (Utrecht) being used here and note the important fields. First of all, the Currency Code is Euro (EUR). The Country/ Region Code is one of the SEPA countries The Netherlands (NL). The bank account also has a valid IBAN number (NL91ABNA0417164300) and SWIFT Code (KREDBEBB). So basically, these fields have to be placed in the bank account to be able to use it in direct debit.

In real life the Valid From, Valid To and Date of Signature field values are provided by the bank.

We will choose the Type of Payment as Recurrent and let us say we expect 12 payments (for example 1 payment per month). You will see that there is a Debit Counter, which will increment based on the direct debit collection.

Furthermore, you can Block a mandate and also see if the mandate is Closed or not.

After we have done this setup, we are ready to use this customer for direct debit collection.

  1. Process

Create a simple sales invoice for the customer Libros S.A based on a G/L account. Let us say we have sold some consulting fees to this customer.

Now go to the Invoicing tab, and check the direct debit information is filled in automatically. Therefore, the system knows that this invoice can be paid by direct debit. However, you can also change this information.

Post the sales invoice. Once the sales invoice is posted, it means that now I have an invoice which can be paid using direct debit collection and that’s the next thing that I will do.

Direct Debit Collections

Click Departments/Financial Management/Receivables/Direct Debit Collections

Click Direct Debit Collection

You can specify due dates, filter on partner type.

You can let system check the customers having valid mandate.

You can also let the system check the invoices that have a valid mandate. If you do not select the field, in that case all the invoices that were previously posted without mandate will also be included in the collection, in this way you can specify mandate for those invoices.

Specify the Bank Account and If you want you can filter on customers, and so on.

Click Ok. This will create an entry.

Check Entry

On Direct Debit Collections window, select the record and click on Direct Debit Collect. Entries.

This will show you Direct Debit Entries.

So here you can check the customer, the document, transaction, mandate and so on as suggested by the system.

After you have checked that everything is Ok, you can Export Direct Debit File from the collection.

Open the xml file which is based on what SEPA direct Debit files.

Post Payment Receipt

The file is created, but the transactions are not posted yet. You can do this by clicking on Post Payment Receipts.

Specify the fields on the Post Direct Debit Collection window and click OK.

Now, check the result in the Cash Receipt Journal and post the journal.

Close Collection

Click on Close Collection action.

This is something you would only like to do once you are sure that everything has been processed correctly.

Payment Registration

What are the benefits of using Payment Registration?

Simplicity:

  • All processes are brought together on one page to efficiently handle registration of incoming documents.
  • Ability to accommodate various ways of doing payment registration.

Productivity:

  • Easy overview of open entries.
  • Easy sorting and filtering across open entries.
  • Less data entry.

Ease of Use:

  • In common scenarios, the user only has to mark entries and post, and then is done.
  • Totals to show that all registrations are made.
  • Users can define payment registration setup according to responsibilities and processes.

What do we see in Payment Registration?

  • All outstanding payments for all customers.
  • This is everything that customers need to pay.
  • You can also see positive as well as negative amounts.
  • Also, credit memos are included here.

What are the useful features?

  • You can easily search for customers using the Search Customers action.
  • You can easily filter on the certain customer. Right-click on a customer and click Filter to This Value (Att+f3).
  • You can sort on specific columns by clicking on the column.
  • You can also Search Documents based on different filters.

Setup

Go to Departments/Financial Management/Cash Management.

Open Payment Registration. If you are opening it for the first time, the system will populate the Payment Registration Setup page.


If not already specified, you will have to specify the journal template and batch you want to use for the payment registration and also the balancing account type, for example in which bank account would you like to balance the incoming payments? You can choose to use the account as default and also if you want the date received to be filled automatically.


So once this setup is done, we are already up and running and we can start using the payment registration function.

Post Payments

All we need to do is to go to specific line, for example in this case we select customer Selangorian Ltd. (Invoice 103002).

Suppose that the customer has already paid the invoice. So all we need to do is select the Payment Made checkbox.

You will notice that the system automatically fills in the Date Received, based on the Work Date and also the Amount Received is entered.


Post Lump Payments

Suppose multiple documents have been paid by a customer; that’s what we call lump payment.

In the following example we can see couple of documents from John Haddock Insurance Co., so we select the relevant documents that the customer paid.

Now instead of using Post Payments action, we can now use Post as Lump Payment action.

NOTE: Once the full payment has been posted, the relevant lines are removed from the Payment Registration window.


Result:

Go to customers.

Here we select customer John Haddock Insurance Co. (30000), for which we had posted the lump payment and open the Customer Ledger Entries.

Here you can see the payment line, no remaining amount anymore and in the fact box you can see that there are two applied entries.

When you check the applied entries, you can see the two invoices that we have posted to (remember during the lump payment the two invoices that we had selected). Basically, that how the payments have been posted.

Customer Ledger Entries


Applied Entries


Search Customers and Documents

It could be interesting to search for customers using the Search Customers action. So we can search for customer 10000 (The Cannon Group PLC) for example and go to the ledger entries to look for detailed information.


Once that we decide that this is the customer that we would like to use in the Payment Registration, you can also choose to start filtering on the customers.


You can also perform Sorting by clicking on the columns. For example, sort the records in the Payment Registration based on Due Date. By clicking on the column you can sort the records in ascending or descending order based on the column value (note the arrow key beside the column name when you sort).


You can Search Documents and apply various filters.


Let us enter a document number 101022 (sales order number). Let’s say, this is the reference that we see on the bank statement, that is provided by the customer.

Click Search and now we see that there indeed is a sales order.


Click Show to open the sale order. If we check the order, we see that there is no shipment or invoice. But let’s say based on an agreement the customer has paid in advance on this sales order.

Post Payments Manually Without a related Document

So let’s go back to payment registration window and click General Journal. This will allow us to directly enter advance that we received from the customer. So in this example, we received the Payment from Customer MEMA Ljubljana d.o.o. (38128456) for -1200/-.


We can now simply post the payment. This is now added as an open payment in the payment registration overview.

Create a Finance Charge Memo from the Payment Registration Page

If we sort on the Due Date, we can see that some invoices are overdue.

We can select the invoice, and now we can see that the payment is overdue and you can calculate interests.


So before posting the payment we can let the system create the Finance Charge Memo. So maybe the customer paid quiet late and based on the general conditions we will charge interest.

Click on Finance Charge Memo. Fill in the customer details, click Suggest Fin. Charge memo Lines. This will create the lines showing the amount (interest) the customer need to pay. Click Issue and Ok.


Now you can post the payment on the payment registration as the customer has paid.

As a result, you will see that a line has been added, because now a Finance Charge Memo is also due by the customer. So they have to pay the interest.

Business Plan, Supply Chain Strategy, Collaboration Relationships

The following topics are discussed in this section:

Business Plan

  • A business plan is a written document that describes the overall direction of the firm and what it wants to become in future.

(Definition) Business Plan is a statement if long-range strategy and revenue, cost and profit objectives usually accompanied by budgets, a projected balance sheet and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although, frequently stated in different terms (dollars vs units), these tactical plans should agree with each other and with the business plan.

  • Key function such a finance, engineering, marketing and operations typically have input into the plans.

  1. Finance
    The finance function manages and tracks the sources of funds, amounts available for use, cash flows, budgets, profits and return on investment.
  2. Engineering
    The Engineering function is responsible for research and development and the design and redesign of products that can be made most economically.
  3. Marketing
    The Marketing function focus is on analysis of the market place and how the form positions itself and its products.
  4. Operations
    The goal of the operations function is to meet the demands of the market place via the organization’s product. Operations also manage the manufacturing facilities, machinery, equipment, labor and materials as efficiently as possible.
  • The functional roles collectively support the success of the supply chain.

Supply Chain Strategy

  • Functional strategies underlying supply chain management must articulate with the business plan.
  • The purpose of supply chains is to be globally competitive.
  • Time, distance and collaboration are basic elements in modern supply chains that impact the chains ability to respond to competitive changes in the global market place.

Collaborative Relationships

  • In the virtual corporation and virtual networks, we can and therefore we must share ideas and data to be competitive.
  • What do these strategic partnerships look like in action? Suppliers, manufacturers and customers all come together on design teams to create products that will not only satisfy customer demand but will be efficient to produce, assemble, transport and store.

Partnership Criteria

  • Seven factors need to be carefully researched and considered when forming a supply chain strategy:
    • Add value.
    • Improve Market Access.
    • Strengthen Operations.
    • Add Technological Strength.
    • Enhance Strategic Growth.
    • Share Insights and Learning.
    • Increase Financial Strength.
  • Every potential partner organization has its strengths or core competencies.
  • It’s only a successful strategic alliance if the partnership results in a “win-win” for both parties.
  • Effective partnerships are a combination of shared risks, resources, rewards, vision and values.

Building Collaborative Relationships

  • In order to build the foundation of collaborative partnership, the partners must:
    • Initiate management tasks.
    • Overcome barriers to collaboration.
    • Build levels of communication.
    • Determine levels of collaborative intensity.
    • Examine strategic importance versus difficulty to determine product categories.
  • Initiate Management Tasks
    • Once the collaboration is official, it’s critical that top management demonstrate their enthusiastic commitment to the partnership.
    • This process begins with determining the specific contribution of each party and the criteria for measuring that contribution.
    • In early stages, relationships should emphasize equity in profits among all parties. Equity will help motivate all parties to work toward the good of the whole.
    • The next talk is to define roles for each party, taking care to avoid redundant efforts. Conflicts can occur if these roles make one party more dependent upon another than they wish to be. To alleviate this common problem, networks should avoid sequential interdependence, in which the second party cannot begin work until the first party is done. Instead, they should establish reciprocal interdependence, in which the exchange of tasks and services occur in both directions. Examples of this include CPFR (Collaborative Planning, Forecasting and Replenishment).
    • Since no contract can cover all contingencies, the next task is to create a policy for resolving conflicts.
  • Overcome Barriers to Collaboration

    Building successful collaboration requires overcoming predictable obstacles, including the following challenges:

  1. Sub Optimization

    Sub optimization refers to a solution to a problem that is best from a narrow point of view but not from a higher or overall company point of view.

  2. Individual Incentives that Conflict with Organizational Goals
  • Incentives, such as sales force bonuses, structured without thought for the supply chain strategy, can often be counterproductive.
  • These practices create a great deal of excess inventory as well as variability in demand that the manufacturer must then deal with. Instead sales goals must be aligned with actual demand.
  1. Working with Competitors

    One firm may try to win market share at the expense of the other. Such relationships should be kept at arm’s length to ensure fairness and extra caution must be devoted to sharing information. Companies may pretend to embrace collaboration when they really only want access to information for their own benefit.

  2. Bottlenecks Caused by Weak or Slow Partners

    If the firm is not willing to invest un a technical and social change process, the only alternative may be to find a more willing or able partner who can keep up with the networks collaboration curve.

  3. Technology Barriers
  • When potential partners have incompatible systems, it increases the difficulty of sharing data.
  • Incompatible and / or antiquated hardware infrastructures can also prove a barrier to collaboration.
  1. Power-Based Relationship
  • Rather than building relationships based upon trust and mutual benefit, the nucleus firm may use its leverage to dedicate the terms of relationships to other members.
  • While the profits of the nucleus firm increase, other members of the network may suffer losses. When this occurs, the disadvantaged partner may rebel.
  • Resistance may result in redundancy, loss of overall profitability for the chain or an actual reversal of the power relationship. Once in power, the mistreated party may retaliate instead of using the opportunity to develop equitable relationships along the chain.
  1. Underestimated Benefits
  • When collaboration is viewed as another type of process reengineering, the partners generally measure the results in reduced cost and cycle time rather than return on investment (ROI), which is a better long-term indicator.
  • Simply measuring efficiency increases will fail to account for some of the true long-term benefits or collaboration.
  • This may lead managers to reject a collaborative venture based on a failure to see gains such as removal of reduplicated efforts, enhanced innovation and better use of total system assets and processes.
  1. Culture Conflicts
  • Cultures tend to be egocentric and thus tens to resist external collaboration. They feel that their ways are the best ways of doing things and will often reject a different way without even considering it.
  • Culture conflicts are increased when each company relies on its own sources of information and unable to see the impact of its choices on other areas of the network. When companies don’t see the negative results of their actions, they can’t learn from their mistakes.
  • Another potential culture conflict can arise when managers delay or prevent collaboration. Such managers generally have safeguarded their positions by not sharing information so that they may be sought for their expertise.
  • Others feel that collaboration is a fad or a bad idea altogether. Still others talk about collaboration, but they are only interested in receiving the benefits from a partner without reciprocating.
  • Build Levels of Communication

    Communication between partners can take place on different levels; not all collaborations dependent upon the same degree of intensity of communication.

    Four levels of communication:

  1. Transactional with Information Sharing

    At this level of communication, each partner has access to a single source of data about matters such as workflow, forecasts and transactions. Contracts are generally medium term.

  2. Shared Processes and Partnership

    At this level, partners collaborative in specific processes such as design. They share knowledge across the network, contracts are longer term.

  3. Linked Competitive Vision and Strategic Alliance

    At this level, supply chain partners function as virtual entity, working out even the highest level of strategy together. The partners develop considerable trust and achieve social and cultural understanding as well as information sharing. Strategic alliances may last for decades.

  4. Backward Integration (Mergers and Administrations)
  • Outsourcing current functions isn’t the only way to forge links in a chain. Mergers or acquisitions may involve two companies in the same till rather than horizontal supplier-customer partners.
  • Although mergers would seem to provide the deepest level of trust and communication, the sudden clash of business, regional and national cultures involved often requires years of work to align attitudes, technology and business practices.
  • Determine Levels of Collaborative Intensity
    • Determining the level of collaborative intensity that each relationship requires depends on cost, quality, delivery, reliability, precision and flexibility.
    • Cost speaks for itself, but cost and quality often are inversely proportional.
    • Quality and delivery reliability are usually measured by number of defects allowed or late orders and are often collectively rated by members of an exchange using supplier history.
    • Precision is measured as degree of variance from specifications.
    • Flexibility is the ability of the supplier or manufacturer to deliver in varying quantities when given a specific number of days’ notice.
    • These criteria are strongly influenced by four factors related to the product or service:
      • Strategic Importance
      • Complexity
      • Number of Suppliers
      • Uncertainty
  • Examine Strategic Importance vs Difficulty to Determine Product categories

    If a partnership requires more than one of the intense collaboration levels – for example, when there is a limited number of suppliers and uncertainty about an item’s availability – then the need for higher collaborative intensity can be turned as “high strategic importance”.

    This model can be used to determine which suppliers are most appropriate for each of the four types of goods:

  1. Commodity Materials
  • Low strategic importance
  • Low supply chain difficulty

They require suppliers whose priority is cost reduction. These item are best purchased at arm’s length. Which of your suppliers can provide the best cost reduction on the commodity items you need?

  1. Bottleneck Materials
  • Low strategic importance
  • High supply chain difficulty

Efforts must be made to ensure that the need for these items is fulfilled. Therefore, some level of ongoing relationship with a particular supplier may be called for.

  1. Leveragable Materials
  • High strategic importance
  • Low difficulty levels

They call for collaboration to maximize both cost savings and reliability through means such as bulk purchasing by multiple members of the supply chain.

  1. Direct or Core Competency Materials
  • High strategic importance
  • High difficulty

Require strategic partnerships for longer periods of time to ensure availability and quality.

Features and Benefits of Collaboration

Collaborative Relationship Features Benefits
Joint development of shared processes. Lower costs.
Open sharing of information and knowledge. Improved quality.
Jointly developed performance metrics. Better customer service.
Open two-way communications. Reduced inventories.
Network wide visibility. Rapid project results.
Clear roles and responsibility. Reduced cycle times and lead times.
Joint problem solving. More effective working relationships.
Commitment to the relationship. Enhanced commitment to one another.