RSMUS.comNonprofit organizations have different financial reporting goals than their for-profit counterparts. While for-profits tend to focus on maximizing net income and shareholder value, nonprofits prioritize transparency, accountability, and the efficient use of funds.
Microsoft Dynamics 365 Business Central offers a powerful suite of tools that can help nonprofits meet these reporting needs. Whether it’s tracking restricted and unrestricted funds, monitoring programmatic expenses, or ensuring compliance with donor restrictions, Business Central’s reporting capabilities can be tailored to deliver the insights that nonprofit organizations need to demonstrate their impact and maintain financial integrity.
In this post, we’ll explore the various reporting options available in Business Central for nonprofits, how they can be customized to meet specific reporting requirements, and some best practices for making the most of these features.
Out of Box Reporting
Business Central offers several out-of-the-box features to streamline financial reporting, making it easier for non-profits to manage their finances. This includes the use of General Ledger (G/L) account categories and subcategories, which can be applied to standard financial reports. This functionality allows non-profits to organize their accounts more efficiently by grouping related financial transactions together and organized in the way they want accounts presented on financial reports. The out-of-the-box financial reports in Business Central that use the account categories and subcategories include the following: Balance Sheet, Income Statement, Cash Flow Statement, Retained Earnings. The names and descriptions of these standard reports can be easily updated to fit the norm of nonprofit reporting (e.g., Statement of Financial Position, Statement of Activities).
Financial Dimensions
Dimensions in Business Central allow the tagging of a financial transaction with various attributes that can be used for reporting purposes. Both actuals and budgets can be tagged with dimensions. You have the flexibility to define what you would like your dimensions to be within Business Central, which allows NFPs to choose what attributes they need to report on. Some dimensions that could be utilized include:
- Fund Dimension – Can be utilized to track transactions based on fund ensuring funds are spent appropriately per their purpose and reported on correctly based on restrictions.
- Program Dimension – Can be utilized to track transactions based on the program they are tied to or if it is an admin transaction. This is especially helpful for monitoring expenses, confirming compliance with budget, and performing a breakdown of admin versus program expenses for 990 reporting.
- Project Dimension – Can be utilized to track transactions based on projects/initiatives the organization is pursuing and used in combination with other dimensions, such as fund, to ensure projects are utilizing appropriate funds based on restrictions or tracking expenditures related to certain grants.
Custom Financial Reports
In addition to the out-of-the box Business Central Financial Reports, there is the ability to customize your own by creating custom row and column definitions. This allows NFPs to produce specialized reports utilizing dimension tracking, budget vs. actual analysis, etc. Each financial report consists of a row definition and column definition. Row definitions will define the accounts used in the financial report and column definitions define amounts.
Some ways row definitions can be utilized as well as tips/tricks include:
- Use insert G/L accounts feature to bring in a group of accounts directly from your COA, this will help save time by bringing in the account structure you have already configured if utilizing begin and end total accounts for account categories and subcategories.
- Text can be put in as a row definition on the financial report even if row isn’t used to define a G/L account, rather this can function as a report heading, sub-heading, or descriptive information.
- Utilize the totaling column to define what accounts should be included in the row, this allows for greater flexibility in account analysis on financial reports to total various accounts from a variety of account categories and subcategories.
- Utilize the dimension totaling columns to define that only amounts for a certain dimension or dimensions should be included in the row. This allows for flexibility to report at a specific dimension level and offers increased visibility.
Some ways column definitions can be utilized as well as tips/tricks include:
- Use the column type to define criteria of how amounts will be calculated based on the date range the report is ran with (e.g., net change, balance at date, etc.). Formula can also be used to perform analysis with various report columns, such as comparison and variance analysis.
- You can utilize the ledger entry type column to change to budget entries, which will allow you to do budget analysis with your reports. When a user runs the report they can update the G/L budget filter as well keeping the report flexible to work with various budgets.
- Comparison Date formula column can be used for period prior analysis to compare changes between periods (month to month, year to year, etc.)
Power BI Integration
Business Central features an out-of-the-box Power BI integration with real time data connectivity. Power BI is a fantastic option for NFPS to build custom dashboards, interactive charts, and various visuals to analyze their financial data. These data visualizations can be shared easily amongst organization leadership, officers, and donors to provide an easily digestible format of financial data.
The connection between Business Central and Power BI can be facilitated by Odata web services. Using the web service page in Business Central, you can identify your desired Odata URL of the data you are trying to pull into Power BI. Within Power BI you set up the Odata feed and begin pulling in the desired data to start your report building.
Conclusion
For non-profit organizations, accurate and transparent reporting is key to maintaining trust, ensuring compliance, and making informed financial decisions. Microsoft Dynamics 365 Business Central offers a variety of powerful reporting tools to meet reporting needs for nonprofit organizations, including standard financial reports, custom reports with dimensions, budget vs. actual analysis, and integration with Power BI for data visualizations. By leveraging Business Central’s reporting capabilities, NFPs can ensure that they remain accountable to their donors and make better decisions to drive their mission forward.
