Dynamics 365 Finance and Supply Chain Management compared to Dynamics 365 Business Central

The challenge is therefore not to find the “better” or “stronger” system; the real question is which system better meets the individual requirements of your company.

In this blog post, we compare both ERP systems neutrally, focusing on their functions and requirements.

As a Microsoft Dynamics 365 partner with specialists in both Business Central and Finance & Supply Chain Management, we provide you with a valuable basis for your decision.

Our comparison covers the most important functions and topics:

1.    Intercompany processes
2.    International growth
3.    The purchasing and finance modules
4.    The production, quality management, and project modules
5.    Outlook and Microsoft 365 integration
6.    Implementation and go-live

In addition, let's take a look at the criteria:

7.    Company size
8.    Cost of the ERP system
9.    Industry solution

Both Business Central and Finance & Supply Chain Management offer powerful purchasing and finance functions—albeit with differences in depth and scalability.

Business Central offers a very solid foundation here:

• Standard functions for accounts payable and accounts receivable accounting
• Management of purchase orders and invoices
• Approval workflows in purchasing
• Budget management and reporting

These functions are usually perfectly adequate for small and medium-sized enterprises.

Finance & Supply Chain Management, on the other hand, goes beyond these standard processes and offers:

• Group-wide financial accounting with intercompany reconciliations and consolidations
• Advanced functions such as credit management, cost accounting, treasury, and cash management
• Automated processes in purchasing and procurement, e.g., via central purchasing catalogs, supplier portals, and tendering procedures
• Strong support for complex compliance and tax requirements in different countries

The differences between Business Central and Finance & Supply Chain Management become somewhat more apparent in production, quality management, and the project module—especially when it comes to complex production processes, quality controls, and the management of larger projects.

Business Central offers:

• Basic functions for manufacturing and assembly
• Support for bills of materials, work plans, and capacity planning
• Basic project management functions: time tracking, resource allocation, project billing
• Simple tools for service management and post-calculation

As long as the processes are not too complex, these functions are perfectly adequate for small and medium-sized manufacturing companies and project service providers.

However, Finance & Supply Chain Management goes a step further:

• Comprehensive production planning including MRP (Material Requirements Planning), production orders, capacity balancing, and multi-site production scenarios
• Quality management with inspection plans, inspection orders, and traceability across the entire supply chain
• Full integration of maintenance and asset management into production
• Enterprise-level project management: from quoting and budgeting to billing and resource allocation to multi-stage, international projects
• Closer integration with other modules (e.g., purchasing, logistics, HR) for consistent processes and workflows

Furthermore, only Finance & Supply Chain Management offers the option of conveniently creating products that are available in different variants (shape, color, size, material, etc.) using simple parent and child items. This is done with the help of the so-called variant configurator. In Business Central, this would be a lot of hard work, as you would have to create an item for every possible variant combination. So, the more diverse the possible variants of your products are, the happier you will be with Finance & Supply Chain Management.

One of the major advantages of both ERP systems is their close integration with the Microsoft world. In addition to Word, Excel, Teams, and others, Microsoft Outlook plays a particularly important role. The reason: many companies receive requests for quotes, orders, and invoices via email. And although Outlook integration is possible in both solutions, Business Central has a clear advantage here.

Business Central offers practical and in-depth Outlook integration:

• Direct creation of documents from Outlook: Sales quotes, orders, and invoices can be created without opening Business Central.
• Automatic reading of emails: Relevant data from a message can be transferred directly without tedious typing.
• Efficiency in everyday work: Users work in the familiar Outlook environment and save time by switching between systems less often.

Finance & Supply Chain Management is also integrated into the Microsoft 365 world, but does not offer this close, practical Outlook link. Here, the focus is more on complex processes and integration with other Dynamics modules (e.g., Sales, Customer Service).

While points 1 to 6 highlight clear differences between Business Central and Finance & Supply Chain Management—some of which are even clear knockout criteria—the following aspects are less black and white. This is not a question of “better or worse,” but rather of nuances, priorities, and ultimately personal assessments. Points 7 to 9 therefore leave more room for interpretation and depend on the individual circumstances of your company. Nevertheless, we believe it is important to address them in this comparison.

For a long time, the rule of thumb was that Business Central was the ERP system for companies

• with between 1 and 100 full users and between 5 and 300 employees.

And Finance and Supply Chain Management is the ERP system for companies

• with at least 20 full users and over 100 employees.

At the same time, it was important to consider not only the current size of the company, but also its future size, i.e., the number of employees and users in three to five years. This made the assessment somewhat more challenging.

This rule of thumb is still correct in general, but we find it difficult to apply, which is why we no longer consider the current size of the company to be one of the most relevant criteria. At least not in the first place. Our experience shows that even for small companies with fewer than 100 full users, Finance and Supply Chain Management can be the only right ERP system. And there are companies with well over 300 employees that have been getting along brilliantly with Business Central for many years – and here the ERP system has been keeping pace with growth for years.

So if you find this criterion in other comparisons – or older comparisons on our blog – please do not overestimate it. What remains of company size are two facts, which are:

• To use Business Central, you only need a single license for a full version.
• To use Finance and Supply Chain Management, you need (and pay for) at least 20 licenses for a full version.

As a result, if you have fewer than 20 full users, you will pay a lot of money each month for licenses that you don't even need for Finance and Supply Chain Management – and that is generally not a wise move. However, this minimum license purchase requirement does not necessarily mean that Finance and Supply Chain Management might not be the better ERP system for you and your company, even if you have fewer than 20 full users.

The Business Central ERP system in particular traditionally relies heavily on third-party extensions. This is not unusual, but it can drive up the overall costs. The more additional solutions are required, the more attractive Finance & Supply Chain Management becomes in terms of price, because it already offers many functions as standard.

This is where it pays to take a closer look: Which functions are included in the standard version and where are additional extensions required?

Project costs also vary greatly:

• Business Central can be implemented quickly, efficiently, and with relatively little consulting effort—including the option of carrying out many implementation steps independently with the help of workshops  and targeted “help for self-help.” We have already mentioned the example of our customer Avantyard. 
• Finance & Supply Chain Management, on the other hand, requires more planning, customization, and consulting. This makes projects more extensive and expensive, but also provides the necessary depth and stability for complex scenarios.

Both ERP systems cover many industries – either through standard functions or through extensions:

• Business Central is industry-neutral in its standard version, but can be adapted to industry-specific requirements through add-ons or partner solutions.
• Finance & Supply Chain Management offers many industry-specific functions in addition to industry-neutral ones as standard – for example, for discrete manufacturing, process manufacturing, wholesale and retail, (project) services, or public administration.

The comparison made in this blog post shows that the main issue between Business Central and Finance & Supply Chain Management is not which system is “better” – it's which system better suits your requirements. There is no clear winner.  

To sum it up again:

• Finance & Supply Chain Management impresses with its depth, international orientation, and integrated group and industry functions. For companies with complex processes, international expansion, or high demands on intercompany workflows, it is the clear choice – even if the implementation takes longer and requires more investment.
• Business Central scores with its speed, clarity, and the ability to be productive after just a few weeks. It is ideal for small and medium-sized companies that are looking for a lean, flexible solution – and want the freedom to implement processes on their own.