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Efficiently Control Budget and Expenses with Approval Limits in Dynamics AX 2012

July 30th, 2012 Ajit Srivastava No comments

As a business grows, it becomes essential to put some control on finances. Most organizations therefore have an approval process where there is money involved. The approval process is generally hierarchy-based in the organization, and the higher the amount of money involved, the higher you have to go up the organization hierarchy to get approval.

Approval limits of individual positions help to maintain spending policies as well as control the budget of different areas of a business. Approval limits can be imposed in different areas of an organization, such as:

  • Purchase requisition approvals
  • Purchase order approvals
  • Expense approvals
  • Invoice approvals

Microsoft Dynamics AX 2012 has the ability to specify approval limits of different employee positions – you can specify how much an employee can approve. To specify the approval limit, you first need to go to Organization administration > Setup > Signing limits > Signing limit policies in Dynamics AX 2012. Create a new policy, and then select the organization hierarchy under policy organization.

Signing limit policy page in Microsoft Dynamics AX 2012

Fig 1: Signing limit policy page in Microsoft Dynamics AX 2012.

After selecting the organization hierarchy under policy organization, go to Default Signing Limit and create the Default Signing Limit rule details. In the rule details page, you have the option to select the document type for which the rule is applicable. The selections available from dropdown are as below:

  • Purchase requisition
  • Purchase order
  • Expenses report
  • Invoice

Figure 2 shows these document type selections in the dropdown box.

Selection of document type in Signing Limit rule details page

Fig 2: Selection of document type in Signing Limit rule details page.

After selecting the Document type, you need to then enter the approval amount, currency, and the job for each line.

Figures 3, 4, and 5 each show how to set up the approval amount, currency, and job lines in the Signing Limit rule details page.

Entering the approval limit in the Signing Limit rule details page

Fig 3: Entering the approval limit in the Signing Limit rule details page.

Selection of currency in Signing Limit rule details page

Fig 4: Selection of currency in Signing Limit rule details page.

Selection of Job (Position) who can approve the specified amount

Fig 5: Selection of Job (Position) who can approve the specified amount.

So for example, a global company can have different purchase requisition approval limits for different positions, such as: an Account Manager can approve up to $10,000 USD; a Budget Manager can approve up to $50,000 USD; an Operations Manager can approve up to $100,000 USD; and a CFO can approve up to $500,000 USD.

In the Default Signing Limit rule details page, you can set this up as shown in the process below in Figure 6.

Default Signing limit rule details page setup according to different organizational positions, as per example

Fig 6: Default Signing limit rule details page setup according to different organizational positions, as per example.

The setup in Figure 6 means that if the purchase requisition amount is up to $10,000 USD, it needs approval of an Account Manager only. If the amount is above 10,000 USD to 50,000 USD, then it needs approval from both the Account Manager and Budget Manager. If the amount is above $50,000 USD to $100,000 USD, it needs approval of Account Manager, Budget Manager and Operations Manage. For any amount above $100,000 USD, it needs approval from all mentioned positions, including the CFO.

A user can set this up in a purchase requisition workflow so that a purchase requisition is finally approved when the position that’s authorized to approve the purchase requisition amount (as defined by the rule above) does so.

Conclusion

Now businesses can use available Signing Limits out-of-the-box in Dynamics AX 2012 to control purchase budget, expenses and invoice payment, which enabling businesses to gain better control of their finances and savings.

Ajit Srivastava is a Sr. Technical Analyst in the Microsoft Dynamics AX practice at Ignify. Ignify is a leading provider of Microsoft Dynamics ERP solutions to mid-market and Enterprise businesses. Ignify has been ranked as Microsoft Partner of the Year Winner in 2012, 2011 and 2010, and in the Microsoft Dynamics Inner Circle, Microsoft Dynamics Presidents Club in 2009. Ignify has offices and team members in Southern California, Northern California, Arizona, Tennessee, Illinois, Washington, Canada, Singapore, Malaysia, India, Philippines, and Jakarta.