Understanding BC (Business Central)
Understanding Microsoft Dynamics 365 Business Central means understanding how a business actually runs inside the system. Business Central is not just a collection of features or screens; it is a system built around business processes, where each activity follows a logical flow and automatically affects other areas of the business.
This page explains how Business Central works at a practical level by breaking down its core business flows. The goal is to help you understand what happens inside the system when real business activities take place.
How Business Central Thinks About a Business
Business Central is designed around the idea that a business is made up of connected activities. Sales, purchasing, inventory, finance, and other areas do not operate independently. Instead, they are linked through shared data and structured processes.
Every action in Business Central starts with basic data, moves through a process, and ends with recorded results. These results are then visible across the system. This approach ensures that nothing is missed and that all departments work with the same information.
Core Concept: Master Data and Transactions
Before understanding flows, it is important to understand two key concepts used throughout Business Central.
Master Data
Master data is the basic information that does not change frequently. Examples include:
• Customers
• Vendors
• Items
• Accounts
• Locations
This data forms the foundation of all business processes.
Transactions
Transactions are daily business activities such as:
• Sales orders
• Purchase orders
• Inventory movements
• Payments
• Invoices
Transactions use master data and move through defined flows.
Understanding the Sales Flow in Business Central
The sales flow is one of the most common and important processes in Business Central.
Step 1: Customer Setup
Before selling anything, a customer must exist in the system. The customer record stores details such as address, payment terms (how and when the customer is expected to pay, for example immediately or within 30 days), and credit limits (the maximum amount the customer is allowed to owe at a given time) . This ensures that sales transactions follow company rules.
Step 2: Sales Order Creation
A sales order is created to represent what the customer wants to buy. Inside the sales order, sales lines are added. Sales lines specify:
• The item or service
• Quantity
• Price
At this stage, the system checks availability and pricing rules.
Step 3: Shipping
When goods are ready to be delivered, the order can be shipped. Shipping reduces inventory quantities and confirms that items have physically left the business.
Step 4: Invoicing
After shipping, the order is invoiced. Invoicing records the sale financially. This step updates:
• Customer balances
• Revenue accounts
• Inventory value
• Financial reports
Shipping and invoicing can happen together or separately, depending on business needs.
Step 5: Posting
Posting is the action that makes the transaction official in the system. Once posted, the transaction affects inventory and finance permanently and appears in reports.
Understanding the Purchasing Flow
The purchasing flow mirrors the sales flow but works in the opposite direction.
Step 1: Vendor Setup
A vendor must exist in the system. Vendor records store supplier details, payment terms, and tax information (such as applicable tax rates and tax registration details needed to correctly calculate and record taxes on purchases) .
Step 2: Purchase Order
A purchase order is created to request goods or services from a vendor. It includes item details, quantities, and costs.
Step 3: Receiving
When goods arrive, they are received in the system. Receiving increases inventory quantities and confirms that goods have been delivered.
Step 4: Vendor Invoice
The vendor invoice is recorded, which updates:
• Vendor balances
• Inventory costs
• Financial accounts
Step 5: Posting
Posting finalizes the purchase transaction and reflects it in financial reports.
Understanding Inventory Flow
Inventory flow tracks how items move through the business.
Inventory is affected by:
• Sales shipments
• Purchase receipts
• Transfers between locations
• Adjustments
• Production activities
Every inventory movement updates both quantity and value. Business Central ensures that inventory levels and inventory valuation remain accurate at all times.
Understanding Financial Flow
Finance is at the center of Business Central.
Almost every business activity eventually affects financial accounts. Sales, purchases, inventory movements, and operational costs are automatically recorded in the General Ledger, which is the main financial record that summarizes all business transactions and shows the overall financial position of the company, when transactions are posted.
This Means:
• Financial reports are always up to date
• There is no need to manually re-enter data
• Finance reflects actual business activity
Understanding Posting in Business Central
Posting is a key concept in Business Central.
Posting means confirming a transaction so that it:
• Updates inventory
• Updates financial accounts
• Becomes part of official records
Before posting, transactions can usually be edited. After posting, they become permanent and auditable. This ensures data integrity and accurate reporting.
How Different Flows Work Together
One of the biggest strengths of Business Central is how different flows interact.
For example:
• A sales order affects inventory and finance
• A purchase order affects inventory and vendor balances
• Inventory movements affect financial valuation
• Financial reports summarize all business activity
Because all flows are connected, Business Central provides a complete picture of the business.
Role-Based Experience in Business Central
Business Central presents information based on user roles.
A finance user sees financial tasks and reports.
A sales user focuses on customers and orders.
A purchasing user works with vendors and procurement.
Even though users see different screens, they all work on the same underlying data. This improves efficiency and reduces confusion.
Why Business Central Uses Process-Based Design
Business Central follows process-based design to ensure:• Consistency across departments
• Accurate data recording
• Reduced manual work
• Better decision-making
Instead of letting users perform random actions, the system guides them through structured flows that match real business operations.
Common Misunderstandings for New Users
New users often expect Business Central to behave like basic accounting software. However, Business Central does more than record numbers.
IT:
• Connects operations with finance
• Tracks inventory movement in real time
• Enforces business rules
• Maintains audit trails
Understanding this difference helps users work more effectively with the system.
How This Understanding Helps You Learn Faster
Once you understand how Business Central works through flows, learning becomes easier.
Instead of memorizing screens and buttons, you start understanding:• Why certain steps are required
• How one action affects another
• How reports are generated
• How errors occur and how to fix them
This foundation makes advanced topics much easier to grasp.
Summary
Understanding BC (Business Central) means understanding how business activities move through connected processes rather than isolated tasks.
Sales, purchasing, inventory, and finance are all part of structured workflows that ensure data remains accurate and consistent across the system.
To explore these processes in detail, continue with the individual modules below:
• Sales in Business Central
• Purchasing in Business Central
• Inventory Management in Business Central
• Finance in Business Central
• Warehouse Management in Business Central
• Production in Business Central
• Service Management in Business Central
Each module explains its respective flow step by step and shows how it connects with other parts of Business Central.
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