Dynamics 365 Business Central (Dynamics NAV)

Understanding Business Central Tenant Capacity and Extra Environments

When your company uses Microsoft Dynamics 365 Business Central, your data grows over time, just like a warehouse that fills up with more boxes as your business expands.

To help you understand how much “digital space” you are using, Business Central provides two important features in the Admin Center:

Tenant Capacity
Environments (Production and Sandbox)

Business Central Tenant Capacity

Think of Tenant Capacity as the storage dashboard for your Business Central system. Just like a warehouse needs enough space to store goods, your Business Central tenant needs enough capacity to store the data your business produces each day.

Scenario

Your company has been using Business Central for a few years. Every day, users create:

Sales orders
Purchase documents
Posted invoices
Ledger entries
Attachments such as PDFs and images

All this information takes up space, and as the business grows, so does the storage usage.

Tenant Capacity helps you answer important questions:

How much storage have we used?
What is occupying most of the space?
Are we nearing our limit?
Should we clean up old data or buy more storage?

What You See on the Tenant Capacity Page

1. Total Storage Available

This is the total storage Microsoft includes with your Business Central subscription. Think of it as knowing the total size of your warehouse.

2. Storage Used

Shows how much of your total capacity is already consumed. This number grows as your business activity increases.

3. Breakdown by Storage Type

You can see exactly what is taking up space, such as:

Database tables
Logs
Attachments and files
Each environment (Production and Sandbox)

This is like knowing which items, old boxes, new stock, damaged pallets are filling your warehouse.

4. Options to Increase Storage

If you are running out of space, the page also shows how you can purchase more capacity.
This is similar to renting additional warehouse space.

Why Tenant Capacity Matters

1. Prevent Performance Issues

Large databases can slow down the system. Monitoring usage helps avoid surprises.

2. Clean Up Unused Data

You can identify and remove:

Old logs
Unnecessary attachments
Outdated archived data
Historical entries no longer needed
Cleaning up reduces storage usage and cost.

3. Better Budget Planning

If your company is growing quickly, you’ll know in advance when you may need more capacity.

4. Clear Environment-Level Visibility

Each environment shows its storage usage so you can monitor which areas are consuming the most space.

A Simple Example

Suppose your company has 80 GB of total available capacity.

You check the Tenant Capacity page and see:

65 GB used
15 GB remaining
40 GB from posted documents
20 GB from attachments
5 GB from sandbox environments

Based on this, you may decide to:

Archive older posted documents
Delete unnecessary sandboxes
Remove large attachments
Buy additional storage
Apply data retention policies

Customers can choose additional database and capacity based on their requirements.

It is available as 1 GB, 100 GB or additional environment add-on.

Understanding Extra Environments in Business Central

Just like having separate workspaces in a company main office, training rooms, and testing areas, Business Central provides different types of environments.

Types of Environments

Production environment: Your live system with real data
Sandbox environment: A safe testing space where changes don’t affect the live system

Default Setup

A Business Central tenant starts with:

1 Production environment
3 Sandbox environments
Base storage capacity (80 GB)

This is enough for many businesses initially.

When You Need More Environments

As your business grows, you may need:

More testing areas
Multiple teams working on different projects
UAT environments
Training systems
Region-specific setups
Development environments

This is where extra environments become valuable. You can purchase this as an add-on.

Buying Additional Production Environments

Microsoft allows you to purchase extra production environments through your CSP partner.
Each extra production environment includes:

1 additional Production environment
3 Sandbox environments
4 GB of extra storage

Example

If you buy 2 additional production environments, you now have:

3 Production environments total
9 Sandbox environments
8 GB additional storage

This is ideal for organizations with multiple regions, departments, or teams.

Environments Can Be Created in Any Supported Country

You can create environments in any country where Business Central is available.

This is useful for:

Multinational companies
Local tax or regulatory compliance
Better performance for regional teams

Example:
Your headquarters is in Dubai, but you operate in India, Saudi Arabia, and the UK.
You can create environments in each of those regions.

Who Can Create Environments?

Anyone with the right permissions can create them:

Customers
Administrators
Partner consultants

Environments can be created directly from the Business Central Admin Center—no need to contact Microsoft support.

Summary:

Your company starts with:

1 Production
3 Sandboxes
80 GB storage

Your operations expand, so you purchase 1 extra production environment.
Now you have:

2 Production environments
6 Sandboxes
84 GB total storage (shared storage capacity for all the environments increases by 4 GB when you buy extra production environment)

And you can place each environment in any Business Central-supported region.

To conclude,

Tenant Capacity tells you how much storage your Business Central system is using, while extra environments give your company flexibility to test, train, and grow without affecting live business data.

Time to Upgrade: Move Your Business Central Emails to OAuth 2.0 Before March 2026

Introduction

Microsoft is retiring SMTP Basic Authentication on March 1, 2026. If your Business Central environment still uses the old username/password method for sending emails, it’s time to act. Switching to OAuth 2.0 (Modern Authentication) will keep your system secure, compliant, and ready for the future.

This guide explains why this change matters and how you can make the transition smoothly.

Why Switch to OAuth 2.0?

Microsoft is pushing this upgrade because:

Basic Auth is outdated, and risky - passwords can be hacked easily.
OAuth 2.0 is more secure - uses tokens instead of passwords.
Supports MFA, conditional access, and better compliance.
Works perfectly with Business Central’s modern email framework.

After March 1, 2026, Basic Auth will stop working completely.

How to Migrate in Simple Steps

1. Check Your Current Setup

If you’re using SMTP with username/password (smtp.office365.com), you need to migrate.

2. Use Business Central’s Modern Email Accounts

Go to Tell Me - Email Accounts
Click New - Microsoft 365
Sign in using OAuth and approve permissions
Set this as your default email account

3. (Optional) Register an Azure AD App

Needed only for advanced scenarios like custom integrations.

Register app in Azure
Add permissions: SMTP.Send, offline_access, email, openid, profile
Add redirect URI: https://businesscentral.dynamics.com/oauth/redirect
Grant admin consent

4. Update Business Central Settings

Disable old SMTP setup
Update workflows, report selections, and job queues
Replace SMTP references in custom AL code with modern email APIs

5. Test Everything

Send test emails, check invoices, approvals, and job queues.

6. Remove Old SMTP Configurations

Delete credentials and server entries to avoid fallback.

Benefits of OAuth 2.0

Stronger security
No stored passwords
MFA and conditional access support
Microsoft-recommended best practice

Future-ready and compliant

Deadline Reminder

March 1, 2026 - After this date, SMTP Basic Auth will stop working. Migrate now to avoid email failures.

References & Credit

Exchange Online to retire Basic auth for Client Submission (SMTP AUTH) | Microsoft Community Hub

(Original content inspired by https://dynamicsdecoded.wordpress.com/2025/12/10/secure-your-business-central-emails-migrate-to-oauth-2-0/)

Sales Return Order vs Sales Credit Memo in Business Central: Key Differences and GL Impact

When handling customer returns or financial corrections in Microsoft Dynamics 365 Business Central, two documents often come into play: Sales Return Order and Sales Credit Memo. While they may seem similar, their purpose and operational flow differ significantly. Let’s break it down.

Comparison at a Glance

Feature	Sales Return Order	Sales Credit Memo
Primary Purpose	Handle physical returns of goods	Handle financial corrections (can include inventory if item lines are used)
Inventory Impact	Yes - inventory increases when goods are received	Yes, if item lines are included; No if only G/L or Charge lines
Warehouse Integration	Yes - supports Return Receipts, warehouse docs	No – skips warehouse steps
Return Reason Codes	Supported	Not supported
Link to Original Sales Order	Yes - can copy from original order	Yes - can apply to posted invoice
Posting Effect	· Debit Inventory · Credit COGS · Credit Customer	· Debit Inventory (if item lines) · Credit COGS · Credit Customer
Best Use Case	Customer sends goods back physically	Price correction, discount adjustment, or quick reversal without warehouse handling
Complexity	Higher - involves logistics and warehouse	Lower - direct posting
Audit & Traceability	High - structured process	Limited - no return reason or warehouse trace

Sales Return Order = Full return process with warehouse and logistics.
Sales Credit Memo = Quick reversal; can affect inventory if item lines are used.
For financial-only adjustments, use G/L Account lines in Credit Memo (no inventory impact).

How General Ledger (GL) Accounts Are Affected

Both documents impact GL differently depending on whether inventory is involved:

Sales Return Order Posting

Debit Inventory (stock increases)
Credit COGS (reverse cost of goods sold)
Credit Customer (reduce receivable)

Sales Credit Memo Posting

If item lines:

§ Same as above: Debit Inventory, Credit COGS, Credit Customer

If G/L Account lines only:

§ Debit Revenue Adjustment Account

§ Credit Customer

§ No inventory or COGS impact

Business Scenarios

Scenario 1: Physical Return of Goods

Customer returns 10 chairs worth $500 each.

Document: Sales Return Order
GL Impact:

Debit Inventory: $5,000
Credit COGS: $3,500 (assuming cost)
Credit Customer: $5,000

Scenario 2: Price Correction

Invoice posted at $1,000, should be $900.

Document: Sales Credit Memo (G/L Account line)
GL Impact:

Debit Revenue Adjustment: $100
Credit Customer: $100
No inventory impact

Scenario 3: Quick Reversal with Inventory

Customer cancels order after shipment but before payment.

Document: Sales Credit Memo (Item lines)
GL Impact:

Debit Inventory: Item cost
Credit COGS: Item cost
Credit Customer: Sales amount

So, in general,

Use Sales Return Order for structured returns involving warehouse.
Use Sales Credit Memo for quick financial adjustments or when warehouse steps are unnecessary.
Always define Return Reason Codes for better audit trails in return orders.

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:

Seller’s ERP - Generates the invoice.
Seller’s ASP (Accredited Service Provider) - Validates and enriches the invoice.
Buyer’s ASP - Receives and verifies the invoice.
Buyer’s ERP - Posts the invoice for accounting.
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

Assess your ERP readiness: Compare your invoice data with the PINT AE Dictionary.
Choose an ASP: Ensure they’re accredited and compliant with FTA requirements.
Plan integration: Use APIs or connectors to link your ERP with the ASP.
Train your team: Educate finance and IT teams on the new process.
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.