Financial Tags

I. Financial tags

A. What is financial tags

After transactions are posted, it's common for organizations to require visibility into subledger data, so that the accounting entries that are generated from those transactions can be analyzed. Today, organizations use fields such as the document number, description, or financial dimensions to track subledger data in the general ledger, because it's difficult to navigate the data model to the subledger data. The types of subledger data that are often tracked include sales order or purchase order numbers, vendor or customer names, payment references, invoice numbers, or reference numbers from external transactions that are imported into Microsoft Dynamics 365 Finance. In addition to being used for analytics, the subledger data is used for processes such as ledger settlement.

The Financial tags (tags) feature eliminates the need to use document numbers, descriptions, or financial dimensions by letting an organization create and enter up to 20 user-defined fields on transactions. Those fields are then stored on the accounting entries that are created for the transactions. Tag values aren't stored in any subledger tables, the Customer transactions or Vendor transactions table.

Tags were introduced in the 10.0.32 release of Dynamics 365 Finance. In each new release, tags will be implemented in additional journals, documents, and processes.

B. Difference between financial tags and financial dimension

Financial dimensions are used to code accounting entries for reporting (for example, to identify sales per department or expenses per cost center). Financial tags (tags) are an alternative to financial dimensions. An organization can create up to 20 user-defined financial tags and enter values for them on transactions. Like financial dimension values, tag values are stored on the accounting entries that are created for the transactions. However, tag values aren't stored in any subledger tables, such as the Customer transactions or Vendor transactions table. Both financial dimensions and financial tags can be used for analytical reporting and also for some processes, such as ledger settlement.

Functionality	Financial dimensions	Financial tags
Account structures	Dimensions must be included in an account structure before they can be used in a legal entity. The account structure determines the dimensions that are required for the main account and the valid combinations.	Tags aren't part of the account structure.
Validations	Dimension values on the ledger account are validated against the account structures to determine whether the dimension values are active, the dimension combinations are valid, and the values exist.	Tag values aren't validated during transaction entry or posting. Any value can be entered, even if the tag is defined as a tag of the List or Custom list type. A value doesn't have to be selected in the list. There's no way to require a tag value.
Defaulting	Default dimension values are entered from master data, such as customers, vendors, products, or projects. They're also entered from the header of a document to the lines. For journals, they're entered from the journal header to the account, and from the account to the offset account.	Default tag values aren't entered from master data. However, they're entered from the header of a document to the lines. For journals, they're entered from the journal header to the account, and from the account to the offset account.
Reporting	Dimension values can be used for reporting in multiple ways. Dimensions can be included in a dimension set, which is used to calculate totals for the ledger account. Dimension values can also be viewed on each detailed transaction. The segments can be parsed out, and then used to sort and filter the detailed transactions.	Tag values aren't included in dimension sets. In Microsoft Dynamics 365 Finance, you can't generate a trial balance to view balances for tag values. When you drill down from the balances on the trial balance, tag values are shown on each detailed transaction. The tag values are in separate columns. Therefore, it's easy to sort and filter on transactions in the Voucher transactions or Transactions for main account inquiry. The detailed transactions can be exported to Excel or Power BI.
Impact on General ledger processes	Although dimensions are considered unlimited, the more dimensions that are created and used in a dimension set, the slower transaction entry, import, and processes will become.	Because tags have no structure or validation, there's minimal impact when they're used on transactions or imported via an entity.
Non-resusable values	Dimensions should never be used to track non-reusable values, such as document numbers or reference numbers. This type of data will cause your chart of accounts to explode, because of the uniqueness of so many ledger accounts. Therefore, performance will be negatively affected, especially around the year-end close and during foreign currency revaluation and consolidations.	Tags should be used to track non-reusable values, such as document numbers or reference numbers.
Ability to activate or deactivate	New financial dimensions can be activated, but the system must be in maintenance mode. Financial dimensions can't be deactivated. Instead, they can be removed from an account structure, so that they're no longer used by any legal entities that use that account structure.	Tags can be activated or deactivated at any time.
Ability to delete	Dimensions can't be deleted if they're referenced anywhere, such as on a posted transaction. If the dimension references an entity, the entity and entity values can't be deleted. This restriction helps maintain referential integrity.	Tags can't be deleted. This restriction helps maintain the tag values that have been entered on posted transactions. However, tags can be deactivated at any time. If a tag references an entity for a list, no reference to that entity is maintained. For example, if the tag is mapped to the Customer name entity, customers can be deleted, because the tag values hold no reference to the customer. In addition, if a customer name is changed, the customer name isn't updated in the tag values.
Ability to edit after posting	Dimension values can't be edited on posted transactions, because any change to the ledger account will directly affect financial statements.	Tag values are used only for internal analysis and processing. Therefore, they can be added, removed, or edited on posted transactions by using the Edit internal voucher data feature. An audit trail is maintained for all edits that are made to the tag values after posting.
Global or legal entity specific?	Dimensions are set up globally, and they are "assigned" to each legal entity through the account structures. Dimensions also have legal entity overrides, so that the same dimension can be active in one legal entity but inactive in another legal entity.	Tags are set up at the legal entity level. They can be shared by using the Shared data feature. The tags and custom tag values can be copied to each legal entity by using the data management entities.

II. Enable Financial Tags Feature

Navigate to Feature Management and enable 'Financial tags' functionality as shown below,

II. Setup financial tags

1. Navigate to General ledger > Chart of accounts > Financial tags > Financial tags.

2. Select New to create a financial tag.

3. Enter a label for the tag. The label must start with a letter or underscore, and it can contain only letters, numbers, and underscores. No special characters, including spaces, are permitted.

4. In the Value type field, select Text, List, or Custom list.

5. If you selected List in the Value type field, select the value source in the Use values from field. The field contains a list of entities that the tag values can be selected from during transaction entry.

6. If you selected Custom list in the Value type field, select Tag values to create the custom list of tag values that will be available for selection during transaction entry.

7. Select Activate to activate the tag.

III. Entering financial tag values on transaction

After one financial tag is activated, tags will be available for entry on each transaction that supports the feature.

A. Journals and lines -

When you enter journals, you can define tag values on the journal batch header. Those values will then be used as default values for the lines in the journal. As for other default values in the journal, they'll automatically be entered on new lines that are added to the journal. However, they won't be entered on lines that already exist when you define the values on the header.

Tag values got defaulted on journa line,

B. Default values for journals-

Tag values that you enter in a journal are entered as default values in the following way:

Single-line voucher:

- Tag values that you add to the journal batch header are entered as default values on the account.

- Tag values that you add to the account are entered as default values on the offset account.

- If the offset account already exists when you add tag values to the account, those tag values aren't entered as default values on the offset account.

- If tag values exist on both the account and the offset account, changes to the tag values in one place don't cause the values in the other place to be updated. For example, if you change the tag values on the account, the tag values on the offset account aren't updated. This behavior helps prevent loss of data if a user manually overrides the default values.

- When you add a new line, if you assign a new voucher number (which represents a new transaction), the defaulting behavior starts over. Tag values from the lines of one voucher are never entered as default values on the lines of a different voucher.

Multiline voucher:

- Tag values that you add to the journal batch header are entered as default values on the account of each line that's added to the voucher.

- The tag values that you add to the account on the first line aren't entered as default values on the account of the next line of the voucher, and so on.

Note:

Default tag values don't exist on master data and aren't available as default values. For example, there's no capability to define default tag values on customers or vendors. In addition, properties of a transaction itself aren't automatically entered as default values. For example, a tag was created to track the customer name. If a transaction contains a customer, the customer's name isn't used as the customer tag value by default. The value must be manually entered or imported.

C. Validation -

When tag values are entered on transactions, no validation occurs during either transaction entry or posting. Even if a tag of the List or Custom list value type is defined, the tag values aren't validated to ensure that they exist in the list. For example, a tag of the List value type is created, and the purchase order number is selected as the source of the list. Although a list of purchase order numbers will be presented, the user can enter a purchase order number that doesn't exist in the list.

D. Posting transactions that have tag values -

After a transaction is posted, the financial tags are available on the lines of the general ledger account entry. They're shown on the Voucher transactions and Transactions for main account pages. The financial tags are shown in separate columns, so that they're easier to sort and filter.

For reporting, the tags aren't part of the dimension sets. Therefore, you can't get a summarized balance of transactions for a specific tag value. For example, when you're looking at the trial balance, you can't get balances per tag value. However, when you drill down into the balances from the trial balance, the tag values will be shown on the detailed transactions. The detailed transactions, including the tag values in separate columns, can be exported to Excel, where they can be summarized if balances are required.

If a tag is deactivated, the tag values remain on the posted transactions. By default, deactivated tags aren't shown on inquiry pages. However, you can add the columns by selecting Show inactive financial tags.

E. Correct tag values after posting -

Although financial tags are available for reporting, they aren't part of the ledger account and have no impact on financial statements. Because tags are used only for internal analysis, edits to the tag values are permitted after transactions are posted.

- In the Feature management workspace, enable the feature that's named Allow edits to internal data on general ledger vouchers. This feature enables some roles to modify the Description field of posted accounting entries. If the Financial tags feature is also enabled, this feature is enhanced to enable edits to the tag values.

- After the feature is enabled, go to Voucher transactions.

- Use the query to find the transactions that you want to edit.

- Select the lines in Voucher transactions, and then select Edit internal voucher data. You can edit only lines that are selected.

- Click ok