- Feature
- Exclude closing-period transactions from the outstanding encumbrance report
- Availability
- Generally available in Finance 10.0.49
- Industry focus
- Public and not-for-profit hospitals
Hospital finance teams work under pressure all year, but year end is when commitments come under the closest scrutiny. Outstanding purchase orders for drugs, consumables, agency staffing and equipment maintenance all have to be understood, carried forward or closed. The outstanding encumbrance report is one of the main tools for that work, and it needs to be easy to read.
The industry challenge
Encumbrance accounting records commitments when purchase orders are confirmed, so management can see what has been promised as well as what has been spent. Public hospitals use it to show boards and regulators that spending stays within approved budgets.
At year end, closing procedures generate transactions in a closing period: commitments are closed out of the old year and often re-established in the new one. Those entries are necessary, but when they appear in the outstanding encumbrance report alongside ordinary activity they can make it hard to read. Analysts end up exporting the report and filtering out closing entries by hand before they can answer simple questions, such as how much is committed to a particular supplier or cost centre.
In a hospital with thousands of open purchase orders, that manual filtering takes time and carries a real risk of error, at exactly the point when finance teams have the least capacity.
What Microsoft delivered in Finance 10.0.49
Finance 10.0.49 adds an option to exclude closing-period transactions from the outstanding encumbrance report. Users can choose whether the report includes the year-end closing entries or shows only operational encumbrance activity.
The underlying accounting does not change. What changes is the ability to see commitments without year-end mechanics getting in the way.
Where the value shows up
| Business area | Impact |
|---|---|
| Year-end close | Analysts can review commitments directly from the report instead of filtering exports |
| Budget monitoring | Clearer view of what is genuinely outstanding by department, supplier or fund |
| Board reporting | Commitment figures that are easier to explain to finance committees |
| Accuracy | Less manual manipulation of data, reducing the risk of errors |
| Audit | A consistent, repeatable report rather than a spreadsheet rebuilt each year |
A worked scenario
(An illustrative example.) A public hospital group closes its financial year and carries open commitments into the new year. Two weeks later, the director of finance asks for a view of outstanding commitments for pharmacy and theatres.
Previously, the management accountant would have run the outstanding encumbrance report, exported it and removed the closing-period entries by hand before producing a summary, checking it twice because errors had happened before. Now, the accountant runs the report with closing-period transactions excluded, filters by department and has the answer within the hour. The figures are repeatable, so when the audit team asks the same question later, the report produces the same result.
Adoption considerations
- Know when to include closing entries. Excluding them is useful for operational review; including them may still be right for reconciliation. Document which view is used for which purpose.
- Update report packs. If board or committee reports are built from this report, confirm which setting they rely on.
- Brief users. Make sure finance staff understand what is being excluded so figures are not misread.
- Reconcile once. After the first year end, reconcile the filtered report against the general ledger to build confidence.
- Retire workarounds. Remove spreadsheet steps that are no longer needed so there is one version of the figures.
The bottom line
Year end in a hospital is busy enough without wrestling with reports. Being able to exclude closing-period transactions from the outstanding encumbrance report gives finance teams a clean view of genuine commitments, faster and with less risk. It is a modest feature that removes a recurring manual task. To make the most of it, review your year-end process with an experienced Dynamics 365 Finance adviser.
Source: Microsoft: What's new or changed in Dynamics 365 Finance 10.0.49