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Mastering the Month End Close Process with Business Central: Accounts Receivable

As with other ERP solutions, the month end close process in Microsoft Dynamics 365 Business Central is unique. This series leverages what is unique to Business Central in order to help you draft your own period-end checklists.

This series covers the following areas:

Record Prior Month Items

Similar to accounts payable, a concern that exists with sales and receivables is ensuring that the accounts receivable balance has been posted to the correct period per the organization’s policies on receivables recognition cut-off.

Because by default Business Central uses the current date as the Work Date, you will need to be aware of this if your policy allows for leeway to post sales/revenues to a previous month.

You might have some sales or payments that came in over a month-end weekend, are mailed in, are downloaded off an online platform, or for one reason or another should be attributed to a prior period. There may be salient commissions, performance, or sales target impacts around the timing of posting sales that are closed or won in a specific month but do not get to the finance team until the next month. As we discussed with the payables side of things, often organizations will give a window of a few business days after the end of the month to include items that belong in the previous month.

Some other considerations are item price effective dates, marketing campaigns/promotions run dates, due date calculations, shipping and lead-time calculations, etc.

With cash receipts / customer payments this also be an issue as it can determine whether sales discounts or late payment charges apply.

A typical month-end process for accounts receivable would involve:

  • Separate sales invoices that belong in the previous month for data entry;
  • Separate payments (e.g. cheques) that belong in the previous month for data entry, such as with postmarked envelopes;
  • Change your Work Date in Business Central to the last day of the previous month (see ‘Accounts Payable’ article instructions for changing the Work Date);

Bad Debt Write-Offs

A solid month-end practice is to clean up your customer subledger and recognize any uncollectible debts. One of the preloaded extensions in Business Central is a late payment predictor that has machine learning capabilities and can be trained to model out and predict delinquency with payments. You can also create and use your own late payment prediction web services.

Invariably, however when there is a determination for what the actual recognized expense for your bad debts are, to post it, you would create a new journal batch for bad debts, using your Bad Debt expense as your balancing account (if using the Direct Write-off Method for uncollectible receivables).

  • Go to the Sales Journal and create your lines using the following parameters:
    • Posting Date: The last day of the previous month
    • Document Type: Credit Memo
    • Document No.: A document identifier for the transaction
    • Account Type: Customer
    • Account No.: The Customer No. in question
    • Description: A meaningful description for the transaction
      • Dimensions should be filled in as required
      • If you don’t have a dedicated write-offs batch with a Balance account number set, simply pick your bad debt expense or whatever account you’d be debiting for this write-off
  • Either select the invoice in the Applies-To Doc. No. column or click on Apply Entries… in the ribbon
  • Select the relevant invoice(s) to apply against and click on Set Applies-to ID in the ribbon;
  • Click OK;

Submit this batch to be posted by the posting-responsible team member. When it is posted, the amounts applied against the invoices will be written off directly to the balancing account as at the month-end.

Reminders and Finance Charges for Late Payments

If you’ve configured Reminders and Finance Charges in your system, the process is very similar between the two of them. Below we’ll outline the routine for charging financing fees to delinquent accounts at month-end (based on the Finance Charge Terms you set up in Business Central):

  • Search for Finance Charge Memos or explore to Finance, Receivables, Collection, Finance Charge Memos;

Click Create Finance Charge Memos in the ribbon

  • Enter the relevant Posting Date and Document Date fields in the report prompt
  • Click OK to generate the lines

Once they’re created, you can go ahead and issue them by clicking the Issue button in the ribbon:

At this point you can choose whether to print them out or email them out:

A diagram of the Finance Charge Memo process is as follows (courtesy of Microsoft Official Training Materials):

Accounts Receivable Reports and Reconciliation

The month-end for accounts receivable principally revolve around collection and collectability. If there are any delinquent accounts receivable, they may need to be written off or escalated to a more aggressive collections process or factored off to a collections agency.

The built-in aging report for A/R helps accomplish these tasks and monitor the performance of your accounts receivable and the effectiveness of your account settlement processes.

Aged Accounts Receivable

To run the Aged Accounts Receivable Report, you can use the search function to find it or exploring to Finance, Receivables, Reports. When you open it, you then:

Aging Method: Age based on Due Date, Transaction Date, or Document Date
Length of Aging Periods: The interval between the three aging periods (e.g. 30D > 30/60/61+)
Show If Overdue By: Set a length of period to use for overdue balance
Print Detail: Toggle between detailed (show all transactions overdue) or summarized (show only totals)
Customer Tab: Set filters to see specific customer(s)


With this report you now have information to use for either investigating, following up on, or write-off / credit memo any past due posted receivables. Use the total of this report by customer posting group (i.e. Domestic, US, etc.) to reconcile the sub-ledger accounts receivable balance to the corresponding receivable control account balance in the GL.

Sales Order Cleanup

Similar to with the Purchasing side, organizations that use Sales Orders and invoice them outside the SO (i.e. pull shipment lines into a manually-created Sales Invoice) may find themselves with a list of completed Sales Orders that need to be purged from the open Sales Order list. Month-end is a great time to clean up that clutter that might otherwise just keep accumulating over time.

There is a routine (a processing-only report) that you can run called that exactly does this for you. In order to run the report, simply search for “Delete Invoiced Sales Orders” and run the routine.

On the request page for this routine you can opt to filter which SOs to run it for or just run it against all open Sales Orders. In the example below, we’re just running it for any orders with an order date older than last month:

Blocking/Unblocking Customers

Sometimes Customers that you no longer want users to select or transact with in the system. This could be because they go out of business, agreements with them lapse, they are delinquent, or that you simply don’t foresee selling to again and want to avoid any mistakes with selecting them from the list. Conversely you may have blocked a Customer after creating them while vetting and onboarding them (perhaps performing a credit check) and now wish to unblock them. Periodic review of Customers is important and there are a few ‘levels’ of blocking, outlined below:


Option Description
Blank Transactions are allowed for this customer.
Ship New orders and new shipments cannot be created for this customer. Existing shipments not yet invoiced can be invoiced.
Invoice New orders, new shipments, and new invoices cannot be created for this customer. Existing shipments not yet invoiced cannot be invoiced. You can still send reminders and finance charge memos to the customer.
All No transaction is allowed for this customer, including payments.


If this is the case, you can either block them one-by-one by going to the Customer list and blocking them or en masse using a Configuration Package or the Edit in Excel functionality in Business Central. Below is how you’d use the Edit in Excel capabilities to block them.

  • First open up the Customer list;
  • In the ribbon, go to the Page tab and then Edit in Excel;
  • Under the Blocked column, set the Blocked field to whatever status is appropriate;
  • Publish the changes back to Business Central;

Note: If you do not have Edit in Excel on your pages, you may be missing the Permission Set that enables you to use the function.

Customer Credit Limits, Terms, and General Date Hygiene

A common practice is to periodically review customer credit limits and the payment terms you offer them. Additionally, your customers may notify you of address or banking information changes or your sales team may determine new sales prices for Customers/Customer Price Groups, etc. Using the Edit in Excel functionality is particularly useful for these tasks.

Got questions about Business Central? Contact us directly and one of our ERP experts will get back to you.

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