TL;DR:

The video walks through new non-inventory subscription billing features in Dynamics 365 Business Central (2025 Release Wave 2). It covers setting up subscription contracts, creating upfront invoices, managing and posting deferrals, and highlights five new Power BI reports for tracking subscription KPIs, revenue growth, churn, and recurring revenue. These tools help businesses better manage subscription-based operations and share insights without requiring ERP access.

In this video, we explore new subscription billing functionality in Dynamics 365 Business Central. Previously, we looked at subscription billing with service commitments, but this time the focus is on a non-inventory subscription billing scenario. We will walk through setting up subscription contracts, creating a contract invoice, setting up and recognizing deferrals, and reviewing new Power BI reports that provide valuable subscription KPIs and business insights.

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Setting Up Subscription Contracts

We begin with a view of all subscription contracts. After opening one, we see the contract details and the individual contract lines.

Using Non-Inventory Items

In this example, the lines are set up using non-inventory items. While inventory items are also available in the system, using non-inventory items with clear descriptions can be an effective way to track products and services in reporting. This particular subscription covers a number of legal services, with visible quantities, pricing, and contract terms.

One-Year Upfront Billing

The contracts shown are one-year terms billed upfront. This billing approach triggers the creation of deferrals, which we will examine shortly.

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Creating a Contract Invoice

The contract invoice is the document sent to the customer, and creating it is straightforward. We generate it as of the first day of the contract term and bill it immediately.

When the invoice is created, a sales invoice form appears automatically, displaying the header information and line items. In this example, the invoice totals $497.00 for the year. Once posted, it can be accessed directly from the contract under “Posted Sales Invoices.”

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Managing Deferrals

Viewing Deferrals

From the contract, we open the Customer Subscription Contract Deferrals page, which presents an analysis of the deferral schedule. Here, each product in the contract has a deferral entry for every month of the contract period. Since this is a one-year contract billed upfront, there are twelve months of deferrals.

Posting Deferrals

To post the deferrals, we release them into the system. In this case, we post them as of the end of the month. The deferral analysis updates to show which entries have been posted and which remain pending.

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New Features in 2025 Release Wave 2

The subscription billing functionality demonstrated here is part of Microsoft’s 2025 Release Wave 2 for Business Central. It introduces enhanced capabilities for managing subscription-based contracts, particularly beneficial for businesses with a dedicated subscription component.

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Exploring New Power BI Reports

Microsoft has released several new Power BI reports specifically for subscription billing in Dynamics 365 Business Central. These reports are available for free from Microsoft AppSource and can be accessed via PowerBI.com.

Overview Report

The overview report provides a comprehensive look at subscription billing activity, with KPIs at the top and interactive graphs. Selecting a customer in one graph filters all the other graphs to show only that customer’s data.

Revenue Growth Report

This report displays year-over-year revenue growth, covering about a year and a half of data. Built-in filters make it easy to narrow results by customer group or product.

Churn Analysis Report

The churn analysis report is particularly useful for subscription businesses. It shows churn KPIs and helps identify which customers are contributing most to subscription turnover.

Monthly Recurring Revenue Report

This report focuses on monthly recurring revenue by customer and allows you to drill into each customer to see which contract items they are billed for. This provides valuable detail for understanding the revenue base.

Billing by Contract Length Report

This report breaks down upcoming billing by contract length, such as one-month or twelve-month terms, and lets you drill into individual contracts for more details, including contract numbers.

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Benefits of the New Power BI Reports

One of the biggest advantages of these reports is that they can be easily shared with colleagues who do not have direct access to the ERP system. This enables broader access to subscription metrics while maintaining security. Filters allow users to quickly locate the exact information they need.

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Conclusion

In summary, this walkthrough demonstrated the new non-inventory subscription billing functionality in Dynamics 365 Business Central as part of the 2025 Release Wave 2. We covered:

• Setting up subscription contracts with non-inventory items
• Creating contract invoices
• Viewing and posting deferrals
• Reviewing five key new Power BI reports

While there are about ten Power BI reports for subscription billing, the five highlighted here offer the most immediate value for monitoring KPIs, revenue, and churn.

If you’re ready to deploy Copilot in Microsoft 365, download the free guide linked in the video description.