Understanding the ERP module's integration

The core objective of running a business is making a profit, which requires making revenue that covers the costs and adding a margin to secure a profit. The core role of management is to achieve this profit; the ERP application gives the management the necessary business insights to monitor business performance.

Microsoft Dynamics 365 for Finance and Operations manages and controls day-to-day transactions that occur in the company; these transactions are transformed into financial information that represents the key component of financial statements (balance sheet and income statement), which are expenditure and income; in other words, cash out and cash in. All these are shown in the following diagram:

The cash to cash cycle entails two core cycles, which are commonly known as procure-to-pay and order-to-cash. The first cycle covers the expenditure part (cash out), that is, every aspect related to vendor management, procurement management, purchasing management, product reception, and vendor invoices, payment, and settlement. The second cycle covers the revenue part (cash in), that is, every aspect related to customer management, sales management, product delivery, customer invoices, collection, and settlement. These activities could be distinguished by financial activities, that is, every aspect related to finance and accounting activities, and operations activities, that is, every aspect related to the company's daily operations of the supply chain.

Microsoft Dynamics 365 for Finance and Operations enables the module's integration when relating transactions to each other and can automatically inherit information from one and pass it to another after adding additional information, along with generating automatic financial entries in the general ledger and control points to monitor transactions. There is integration between the Microsoft Dynamics 365 Finance and Operations modules, where production modules are integrated with the inventory module, the warehouse management module and the sales and marketing module, in addition to the procurement and sourcing module.

The project module is integrated with the inventory module, the sales and marketing module, the accounts receivable modules, the procurement and sourcing modules, and the accounts payable module. This book focuses on core financial module and its integrations with operational activities.