Microsoft Copilot & AI Stack Explained: How It Transforms Business

AI is no longer futuristic it’s here, and it’s practical. Microsoft’s Copilot & AI Stack is a framework that empowers businesses to extend existing copilots, create custom copilots, and innovate with AI automation. Let’s break it down in simple terms with real-world scenarios.

What is the Copilot & AI Stack?

Think of it as a toolbox for AI innovation. It combines Microsoft Copilot, Azure AI services, and developer tools like Copilot Studio, Visual Studio, and GitHub to make AI accessible and secure.

Three Big Goals

1. Extend Microsoft Copilot

Customize Microsoft Copilot for your organization.
Example: Add a custom command in Teams Copilot to pull live project updates from your ERP system.

2. Build Your Own Copilot

Create a unique copilot using developer tools.
Example: A furniture company builds a copilot that helps sales teams generate quotes by pulling BOM and pricing from Business Central.

3. Innovate and Automate with AI

Use AI to automate repetitive tasks.
Example: Automate invoice matching in Accounts Payable using AI models hosted on Azure.

 

The Technology Layers (Powered by Azure)

• AI Platform: The brain large language models and cognitive services.
  Example: GPT-based model that answers, “Show me pending purchase orders.”
• App Services: Connect AI to apps and workflows.
  Example: Integrate AI with Dynamics 365 or your custom ERP.
• Data Services: Manage and analyze data for smarter AI.
  Example: Pull historical sales data to predict demand.
• AI Infrastructure: The backbone - compute, storage, and networking.
  Example: Azure GPUs powering real-time recommendations.

Why It Matters

• For Developers: GitHub and Visual Studio make building copilots easy.
• For Businesses: Faster decisions, less manual work, smarter automation.
• For Everyone: AI that respects privacy, safety, and security.

 

Real-World Scenarios

• Retail: AI copilot for inventory forecasting.
• Finance: Automating compliance checks.
• Manufacturing: AI-driven production planning.
• HR: Copilot that answers employee queries about policies.

 

Stay tuned, we'll talk more about Declarative agents in the coming blogs

UAE eInvoicing Is Mandatory - Ready or Not, It’s Time to Act

Starting July 2026, the UAE will begin rolling out its mandatory eInvoicing system, transforming how businesses issue, exchange, and report invoices. This initiative, led by the Ministry of Finance (MoF) and the Federal Tax Authority (FTA), aims to digitize tax reporting, reduce VAT fraud, and align the UAE with global best practices.

Whether you're a CFO, ERP consultant, or business owner, this guide will walk you through the entire eInvoicing process, explain the five-corner model, and show how to prepare your systems especially if you're using Microsoft Dynamics 365 Business Central.

 

What Is UAE eInvoicing?

EInvoicing is the electronic creation, exchange, and reporting of invoices in a structured format (not PDFs or scanned copies). It ensures:

• Real-time validation
• Automated VAT reporting
• Secure data exchange
• Reduced manual errors

The UAE will adopt the Decentralized Continuous Transaction Control and Exchange (DCTCE) model, also known as the Five-Corner Model, using the Peppol network for invoice exchange

 

Timeline & Phases

Phase	Description	Deadline
Pilot	Testing with selected taxpayers	July 1, 2026
Phase 1	Businesses with revenue ≥ AED 50M must onboard ASPs	July 31, 2026
Go-Live	Phase 1 businesses must be live	January 1, 2027
Phase 2	Businesses with revenue < AED 50M	July 1, 2027
Government Entities	Mandatory use	October 1, 2027

 

How the Five-Corner Model Works

The five entities involved in every eInvoice transaction:

1. Seller’s ERP - Generates the invoice.
2. Seller’s ASP (Accredited Service Provider) - Validates and enriches the invoice.
3. Buyer’s ASP - Receives and verifies the invoice.
4. Buyer’s ERP - Posts the invoice for accounting.
5. FTA - Receives the invoice data from both ASPs for compliance and audit.

All transactions are real-time, and both ASPs must report the invoice to the FTA simultaneously.

 

ERP Integration: What Businesses Must Do

To comply, businesses must:

• Integrate their ERP (e.g., Business Central) with an ASP via API, SFTP, or database connectors.

• Conduct a gap assessment using the PINT AE (300+ fields).

• Configure missing fields in their ERP to match eInvoicing standards.
• Obtain a Peppol ID linked to their VAT number for invoice exchange.

Many Accredited Service Providers (ASPs) offer ready-made connectors for ERP platforms like Microsoft, Oracle, and SAP, enabling businesses to validate, enrich, and transmit invoice data in real-time to the FTA.

What Is the PINT AE Dictionary?

This is the UAE’s standardized field list for eInvoices:

• Mandatory fields: Required for all invoices.
• Conditional fields: Required based on transaction type.
• Optional fields: Used for specific business scenarios.

Some fields in the dictionary are not currently part of VAT return platforms, meaning ERP systems must be updated to include them for future compliance.

 

Data Residency & Security

ASP platforms must:

• Be hosted locally in the UAE (e.g., AWS UAE zones).
• Be Soft Level 2 certified.
• Ensure no data leaves the region.
• Maintain audit trails and encryption for all transactions.

Cross-Border Transactions

If both buyer and seller are on the Peppol network, invoices can be exchanged internationally. For non-participating buyers, ASPs use dummy access points to ensure FTA compliance.

 

What’s Still Pending?

• Final legislation and schema definitions (expected by end of 2025).
• Clarification on penalties for non-compliance.
• Rules for B2C inclusion in future phases.
• Downtime handling protocols for ASPs and FTA.

 

How to Prepare Now

1. Assess your ERP readiness: Compare your invoice data with the PINT AE Dictionary.
2. Choose an ASP: Ensure they’re accredited and compliant with FTA requirements.
3. Plan integration: Use APIs or connectors to link your ERP with the ASP.
4. Train your team: Educate finance and IT teams on the new process.
5. Monitor updates: Stay informed on FTA announcements and schema changes.

 

Final Thoughts

The UAE’s eInvoicing initiative is more than a compliance requirement it’s a leap toward smarter, more secure, and automated financial governance. By preparing early and integrating your ERP with a trusted ASP, you can ensure a smooth transition and avoid last-minute surprises.

If you're using Microsoft Dynamics 365 Business Central, now is the time to:

• Review your invoice templates
• Map your data fields
• Plan your integration strategy

More Details:

eInvoicing - Ministry of Finance - United Arab Emirates

VAT Without the Headache: From Dubai to Dublin - How Reverse Charge Works in Dynamics 365 Business Central

Reverse Charge VAT in Dynamics 365 Business Central:

Setup Guide for UAE and Beyond

Navigating VAT regulations can feel overwhelming especially when dealing with reverse charge rules across different countries. Whether you're managing construction contracts in Dubai or software sales in Europe, understanding how reverse charge VAT works is essential for compliance and efficiency. In this guide, we break down real-world scenarios from UAE domestic transactions to international B2B services and show you exactly how to implement reverse charge VAT in Microsoft Dynamics 365 Business Central. No jargon, no confusion just practical insights and setup tips that make VAT management seamless.

This post walks through real-world scenarios both domestic and international and shows how to configure each in Microsoft Dynamics 365 Business Central, with a special focus on UAE compliance.

What Is Reverse Charge VAT?

Reverse Charge VAT flips the usual tax process: instead of the seller charging VAT, the buyer accounts for it. This is common in:

• Cross-border B2B services
• High-risk domestic sectors (e.g., construction, electronics)
• Intercompany transactions
• Imports and intra-GCC trade

 

UAE Domestic Scenarios

Construction Services

Scenario: A subcontractor in Dubai invoices a main contractor without VAT.

Business Central Setup:

• Assign VAT Business Posting Group for domestic buyers.
• Use VAT Product Posting Group for construction services.
• In VAT Posting Setup, define reverse charge VAT % and GL accounts.
• On the purchase invoice, Business Central calculates VAT and posts it to the buyer’s VAT account.
• Use bilingual invoice templates (Arabic & English) to comply with FTA rules.

 

High-Risk Goods (Electronics, Metals)

Scenario: A UAE wholesaler sells mobile phones to a VAT-registered retailer.

Business Central Setup:

• Create a VAT Product Posting Group for high-risk goods.
• Assign a Reverse Charge VAT Calculation Type in VAT Posting Setup.
• Buyer’s purchase invoice triggers VAT self-assessment.
• Use country-specific print layouts to show VAT summary clearly.

International Scenarios

EU to EU – Software Sale

Scenario: French SaaS company sells to Estonian agency.

Business Central Setup:

• Assign VAT Business Posting Group for EU customers.
• Use VAT Product Posting Group for digital services.
• In VAT Posting Setup, define reverse charge logic for intra-community services.
• On the sales invoice, VAT is not charged; buyer self-assesses.

 

Non-EU to EU – Advisory Services

Scenario: US firm advises German company.

Business Central Setup:

• Use VAT Business Posting Group for non-EU vendors.
• Define reverse charge in VAT Posting Setup.
• Buyer posts VAT via purchase invoice; no VAT charged by seller.

UK Post-Brexit – Import Services

Scenario: Polish firm invoices UK client.

Business Central Setup:

• Assign UK-specific VAT Business Posting Group.
• Configure reverse charge VAT % in VAT Posting Setup.
• Buyer posts VAT on purchase invoice. 

UK Domestic Reverse Charge – Construction Industry Scheme (CIS)

Scenario: UK subcontractor refurbishes a commercial building for a main contractor.

Business Central Setup:

• Use VAT Business Posting Group for UK domestic buyers.
• Assign VAT Product Posting Group for CIS services.
• In VAT Posting Setup, define reverse charge VAT % and GL accounts.
• On the purchase invoice, VAT is calculated and posted by buyer.

 

Intercompany Transactions (e.g., LegatEntity1 DMCC → LegalEntity2 DMCC)

Scenario: Freight services between two UAE entities.

Business Central Setup:

• Create VAT Business Posting Group as “Intercompany”.
• Tag intercompany accounts with this group to exempt VAT.
• Use Intercompany Journals to post entries across companies.
• VAT is not charged; transactions are recorded cleanly.

 

Key Features in Business Central for UAE VAT Compliance

VAT Reverse Charge Mechanism

Automatically applies correct VAT treatment for imports and cross-border services.

VAT Return Declaration

Generates FTA-compliant reports for direct upload to the e-Tax portal.

FTA VAT Audit File (FAF)

Exports audit file in CSV format for inspections.

Bilingual Invoices

Arabic & English templates for sales invoices and credit notes.

Country-Specific Print Layouts

Enhanced invoice formats with VAT summary columns.

Simplified VAT Setup

Intuitive interface for VAT codes, rates, and reporting schedules.

 

Final Thoughts

Reverse Charge VAT isn’t just a tax rule it’s a strategic tool for compliance and efficiency. With Dynamics 365 Business Central, businesses in the UAE and globally can automate VAT processes, reduce errors, and stay audit-ready.

Whether you're handling domestic construction contracts or cross-border SaaS sales, Business Central’s built-in VAT features combined with its cloud flexibility and Power BI integration make it a powerful ally in your financial operations.

 

From Chaos to Confidence: How Business Central’s New Quality Management Feature Transforms Incoming Goods Control

Imagine this:

A furniture manufacturer receives a shipment of raw materials - wood, fabric, and metal components. The warehouse team logs the delivery, but a few days later, production halts. Why? Some of the wood was warped, and the fabric had defects. The issue wasn’t caught early, and now the company faces delays, rework, and unhappy customers.

This is a common pain point for businesses that rely on incoming goods to maintain production schedules and quality standards. Until now, many companies had to rely on manual checks or disconnected systems to manage quality control.

But with the 2025 Wave 2 release of Microsoft Dynamics 365 Business Central, that’s changing.

Microsoft has introduced a powerful new feature: Quality Management for Incoming Goods and Materials. This enhancement helps businesses ensure product reliability, meet regulatory standards, and build customer trust through consistent quality control.

 

Why It Matters

Whether you're receiving raw materials, assembling products, or managing production output, quality checks are now embedded into your workflows. This means fewer surprises, better compliance, and more confidence in your supply chain.

 

What You Can Do with It

1. Quality Checks at Key Stages

Scenario:
A company receives a batch of steel rods. Upon posting the purchase receipt, Business Central automatically triggers a quality check to measure length and tensile strength.

• Purchase Receipts: Quality checks can be triggered automatically after posting receipts, even if warehouse handling is involved.
• Production Output: As furniture is manufactured, quality checks (manual or automatic) ensure that dimensions and finishes meet standards.
• Assembly Output: For assembled items like modular cabinets, checks confirm that all components are correctly fitted and meet specifications.

 

2. Flexible Triggers & Scheduling

Scenario:
A food processing company wants to test every 10th batch of canned goods for seal integrity and weight. They set up a recurring quality check every 2 hours.

• Run checks manually or schedule them at regular intervals.
• Define triggers based on events like posting a receipt or completing production.

 

3. Detailed Scope & Parameters

Scenario:
A chemical supplier needs to verify the density and pH level of incoming liquids. Business Central allows checks at the lot level, with parameters like weight and composition.

• Apply checks to individual items, item groups, lots, serial numbers, or packages.
• Assess physical attributes like weight, dimensions, and density.

 

4. External Analysis & Sampling

Scenario:
A pharmaceutical company sends a sample of each batch to a third-party lab. Business Central lets them configure sampling rules - e.g., 5% of each batch or a fixed quantity.

• Configure samples for external lab testing.
• Choose fixed quantity or percentage-based sampling.

 

5. Quarantine & Control

Scenario:
A shipment of electronic components arrives with suspected defects. Business Central automatically quarantines the items until quality checks are complete.

• Freeze items or restrict usage until quality is verified.
• Prevent defective goods from entering production or sales.

 

Reporting & Compliance Tools

1. Quality Certificates

Scenario:
A textile exporter needs to provide a certificate of compliance for every shipment. Business Central auto-generates these documents based on passed quality checks.

• Automatically generate documents to verify product safety and compliance.

 

2. Certificates of Analysis

Scenario:
A food company sends a breakdown of ingredients and nutritional values with each batch. Business Central generates detailed analysis reports.

• Provide detailed breakdowns of product composition.

 

3. Quality Status Overview

Scenario:
A warehouse manager wants to see which items are pending quality checks. The dashboard shows real-time status across all batches.

• Get a snapshot of current quality levels across items and batches.

 

4. Quality Orders Overview

Scenario:
A customer requests specific quality checks for their custom order. Business Central tracks these requirements and links them to production batches.

• Track customer-specific requirements and production batches.

 

Getting Started

This feature is delivered as an extension:

1. New environments: Installed by default.

2. Upgraded environments: install the extension from AppSource. 

More Details available in the following link: https://learn.microsoft.com/en-us/dynamics365/release-plan/2025wave2/smb/dynamics365-business-central/evaluate-quality-incoming-goods-materials.

 

Final Thoughts

This release marks a major step forward in integrating quality assurance into everyday operations. Whether you're in manufacturing, distribution, or retail, this feature helps you catch issues early, stay compliant, and deliver consistent quality to your customers.

 

Finance Fundamentals in Business Central: A Functional Overview for Accounting Operations

Whether you're a seasoned finance professional or just getting started with ERP systems, understanding how core accounting elements translate into system transactions is essential. Microsoft Dynamics 365 Business Central offers a robust framework for managing financial operations - from purchases and sales to accruals, deferrals, and journal postings.

This blog post breaks down the key accounting concepts and shows how they map to Business Central functionality, with clear examples and G/L impacts.

 

The Five Accounting Elements

Element	Nature	Debit Effect	Credit Effect	Examples
Asset	What you own	Increases	Decreases	Inventory, Bank, Accounts Receivable
Liability	What you owe	Decreases	Increases	Accounts Payable, VAT Payable
Equity	Owner’s interest	Decreases	Increases	Retained Earnings, Capital
Revenue	Income earned	Decreases	Increases	Sales Revenue
Expense	Cost incurred	Increases	Decreases	COGS, Purchases, Salaries

 

Purchase Transaction Flow

Let’s say you purchase goods worth ₹10,000 with 18% VAT.

Step 1: Purchase Invoice Posting

Account	Type	Debit/Credit	Amount	Impact
Inventory/Expense	Asset/Expense	Debit	₹10,000	Asset increases or expense incurred
VAT Receivable	Asset	Debit	₹1,800	Input VAT to reclaim
Accounts Payable	Liability	Credit	₹11,800	Liability to vendor increases

Financial Statement Impact:

• Balance Sheet: Inventory ↑, VAT ↑, Payables ↑
• Income Statement: No impact yet

Step 2: Payment Journal

Account	Type	Debit/Credit	Amount	Impact
Accounts Payable	Liability	Debit	₹11,800	Liability cleared
Bank Account	Asset	Credit	₹11,800	Cash outflow

When Expense Hits Income Statement

Only when inventory is sold or consumed:

Account	Type	Debit/Credit	Amount	Impact
COGS	Expense	Debit	₹10,000	Expense recognized
Inventory	Asset	Credit	₹10,000	Inventory reduced

 

Sales Transaction Flow

Selling goods worth ₹10,000 with 18% VAT.

Step 1: Sales Invoice Posting

Account	Type	Debit/Credit	Amount	Impact
Accounts Receivable	Asset	Debit	₹11,800	Customer owes you
Sales Revenue	Revenue	Credit	₹10,000	Income earned
VAT Payable	Liability	Credit	₹1,800	Tax liability increases
COGS	Expense	Debit	₹7,000	Expense incurred
Inventory	Asset	Credit	₹7,000	Inventory reduced

Step 2: Cash Receipt Journal

Account	Type	Debit/Credit	Amount	Impact
Bank Account	Asset	Debit	₹11,800	Cash received
Accounts Receivable	Asset	Credit	₹11,800	Customer balance cleared

 

Accruals vs Deferrals

Accruals

Recognize revenue or expense before cash or invoice is received/paid.

Account	Type	Debit/Credit	Financial Statement
Accrued Revenue	Asset	Debit	Balance Sheet
Revenue	Revenue	Credit	Income Statement
Accrued Expense	Liability	Credit	Balance Sheet
Expense	Expense	Debit	Income Statement

Deferrals

Delay recognition of revenue or expense to future periods, even if cash/invoice is received/paid.

Account	Type	Debit/Credit	Financial Statement
Deferred Revenue	Liability	Credit	Balance Sheet
Deferred Expense	Asset	Debit	Balance Sheet
Revenue	Revenue	Credit	Income Statement
Expense	Expense	Debit	Income Statement

Business Central supports deferrals using:

• Deferral Templates
• Deferral Codes on G/L accounts

Accounts Receivable vs Accrued Revenue

Concept	Definition	When Used
Accrued Revenue	Revenue earned but not invoiced	Service delivered, invoice pending
Accounts Receivable	Amount invoiced and owed by customer	Invoice posted

Example:

• March 30: Service delivered → Accrued Revenue
• April 5: Invoice posted → AR replaces Accrued Revenue
• April 20: Payment received → AR cleared, Bank ↑

 

Summary by Accounting Element

Element	Examples from Business Central Transactions
Asset	Bank, Inventory, AR, VAT Receivable, Deferred Expense, Accrued Revenue
Liability	AP, VAT Payable, Deferred Revenue, Accrued Expense
Revenue	Sales Revenue, Accrued Revenue
Expense	COGS, Purchases, Accrued Expense, Deferred Expense
Equity	Indirectly affected via Net Income

 

Final Thoughts

Understanding how each transaction flows through the financial statements - and how Business Central handles them - is key to maintaining accurate books and making informed decisions. Whether you're posting invoices, managing accruals, or configuring deferrals, Business Central provides the tools to align your operations with accounting best practices.