Business Central Posting Groups Explained: Setup, Risks, and Best Practices

Demystifying Posting Groups in Business Central: A Beginner’s Guide

If you’re new to Dynamics 365 Business Central and come from a finance background, you may have heard about Posting Groups but aren’t quite sure what they are.

Fear not, this blog will explain what posting groups are, why they’re important, how to set them up (with step-by-step guidance and examples), the risks of not configuring them early, best practices, and how different business sizes might approach posting groups.

We’ll keep it simple and jargon-free, with clear headers and even a few tables to illustrate key concepts.

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What Are Posting Groups in Business Central?

Posting Groups in Business Central are essentially mapping codes that link the different parts of the system (like sales, purchases, inventory, etc.) to the right general ledger accounts in your finance module.

In other words, posting groups tell Business Central which accounts to use when you post various transactions, so you don’t have to manually choose G/L accounts each time.

For example, you can create a sales invoice for an item without knowing the specific revenue or cost accounts – Business Central will use the posting groups assigned to the customer and the item to post the amounts to the correct accounts behind the scenes. This means even users who aren’t accounting experts can record transactions safely, and the system will still hit the proper accounts.

Posting groups are a key concept in Business Central – a lot of the system’s automation and accuracy in financial postings depend on understanding and setting up posting groups correctly.

There are three main categories of posting groups in Business Central:

General Posting Groups

Used to map income and expense accounts for sales and purchase transactions. General posting groups are further split into General Business Posting Groups and General Product Posting Groups (more on these below).

Specific Posting Groups

Used to map specific balance sheet accounts for certain entities or sub-ledgers. These include posting groups for customers (accounts receivable), vendors (accounts payable), inventory items (inventory asset accounts), fixed assets, bank accounts, etc.. Each specific posting group links a group of similar entities to a particular control account.

VAT (Tax) Posting Groups

Used to map how taxes (especially VAT, if applicable) are calculated and posted. They are also divided into VAT Business Posting Groups (for customers/vendors based on tax requirements) and VAT Product Posting Groups (for items/services). These work together in a matrix to determine tax percentages and tax accounts for transactions.

In summary, posting groups act as the bridge between the operational side of the system and the accounting side. By assigning the appropriate posting group codes to customers, vendors, items, etc., Business Central knows who is involved in a transaction and what is being transacted – and from that, it determines where to post the amounts in the general ledger.

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Why Are Posting Groups Important?

Posting groups might sound technical, but they are hugely important for several reasons:

Automating Account Mapping

Posting groups save time and improve accuracy by automating which G/L accounts are used for each transaction. This means users don’t need to memorise account numbers or manually select accounts for each sale or purchase. The system does it for you, reducing errors and speeding up data entry.

Ensuring Correct Accounting

Because posting groups map transactions to the proper accounts, they help ensure sales, costs, payables, receivables, and other amounts always hit the right spot in your financial statements.

Non-accountants can record invoices, orders, and journals without fear, as Business Central will post the entries correctly “behind the scenes” using the rules you set up.

Consistency and Control

Posting groups enforce business rules about what kinds of transactions are allowed. The system will prevent postings that don’t have a valid posting group setup (for example, if a certain combination of customer type and product type isn’t defined, the transaction won’t post).

This consistency means you won’t accidentally post something to a wrong or non-existent account – if the setup is missing, Business Central alerts you so you can fix it before posting.

Streamlined Chart of Accounts

By using posting groups, you can avoid overloading your chart of accounts with a lot of extra detail accounts.

For instance, you might have one general “Domestic Sales” account that all local sales post to, rather than needing separate accounts for each customer or product.

The analytics (like breaking down sales by customer type or product type) can be handled by posting group reports, rather than by creating dozens of G/L accounts. This keeps your chart of accounts cleaner.

Better Reporting and Analysis

All standard reports in Business Central allow filtering by posting groups. This means you can run financial reports (income statements, balance sheets, sales analyses, etc.) filtered by a posting group to see, for example, revenue just for a certain product group or balances just for a certain customer group. Posting groups give you flexibility to analyse your financial data in ways that make sense for your business.

Compliance with Tax and Regulations

Through VAT posting groups (if applicable), the system can automatically apply the correct tax percentages and post taxes to the right accounts based on customer location or item type.

This is crucial for compliance in environments with VAT or sales tax – you define the tax rules once in the posting groups, and then every transaction follows those rules.

In short, posting groups are important because they enable Business Central to work smarter and safer. They save you time, reduce errors, and ensure your financial data is organized properly. Now, let’s look at how you actually set them up.

How to Set Up Posting Groups (Step-by-Step)

Setting up posting groups may seem daunting, but we’ll break it down into manageable steps. By following these steps, you’ll configure Business Central to handle your transactions correctly from the start. We’ll also include examples and tables to illustrate the setup.

Prerequisite: Before configuring posting groups, it’s important to have your Chart of Accounts in place. You need the relevant G/L accounts created so you can assign them in the posting group setup. (Business Central comes with a standard chart of accounts, which you can customise, or you can create your own accounts as needed.)

Now, on to the posting group setup:

1. Define General Business Posting Groups.

General Business Posting Groups represent the types of customers or vendors your company deals with. Think about how you might categorise your customers or vendors from a financial perspective. Common ways to define business groups include by geography, customer segment, or business type.

For example, you might have one group for Domestic customers (local sales) and another for International customers (exports), or perhaps groups for Retail customers versus Wholesale customers.

In Business Central, you would go to the General Business Posting Groups page and create a code for each category, along with a clear description (e.g., Code: DOMESTIC, Description: “Domestic Customers”). The general business posting group code will later be assigned to each customer and vendor.

Examples of General Business Posting Group codes and their usage:

General Business PG Code	Description (Who)
DOMESTIC	Domestic customers/vendors (local market sales and purchases)
INTERNATIONAL	Foreign customers/vendors (export sales or import purchases)
RETAIL	Retail customers (B2C direct consumers)
WHOLESALE	Wholesale customers or distributors (B2B trade sales)

(In practice, you would choose classifications that make sense for your business – these are just illustrative examples.)

2. Define General Product Posting Groups.

General Product Posting Groups represent the types of items or services your company sells or buys. Essentially, you categorise what is being transacted. Think about grouping your products or services by their nature or by how you want to track revenue and costs.

For example, you might separate Goods versus Services, or group items into categories like Raw Materials, Finished Goods, Services, etc., depending on your industry.

On the General Product Posting Groups page, create a code for each product category. For instance, you could have GOODS for physical inventory items and SERVICES for service items you sell.

Each item, resource, or even G/L account that you use on sales/purchase lines will get one of these product posting group codes assigned to indicate what type of product it is.

Examples of General Product Posting Group codes and their usage:

General Product PG Code	Description (What)
GOODS	Physical goods or inventory items (tangible products)
SERVICES	Services or non-inventory items (intangible, labour, etc.)
RAWMAT	Raw materials (items used in production)
FINISHED	Finished goods (manufactured products)

(Again, your codes should reflect your own products and reporting needs. A consulting analysis during implementation often helps decide these groups.)

3. Set Up the General Posting Setup (Matrix).

Once you have your General Business and General Product Posting Group codes, the next step is to map these groups to the appropriate G/L accounts. This is done in the General Posting Setup page, which has a matrix layout.

In this matrix, each line is a combination of a Gen. Business Posting Group and a Gen. Product Posting Group, and across the columns you specify which G/L accounts to use for various scenarios (like Sales, Cost of Goods Sold, Sales Discounts, Purchases, Inventory adjustments, etc.) for that combination.

Essentially, you are telling Business Central: “When a transaction involves this type of customer/vendor and this type of item, use these accounts.”

For each unique combination of your business and product groups, create a line and fill in the relevant accounts. At minimum, you’ll typically specify a Sales Account (revenue) for sales transactions and a Purchases Account (expense or inventory account) for purchase transactions for that combo.

If you sell inventory items, you’ll also specify a COGS (Cost of Goods Sold) Account to capture the cost when items are sold.

There are additional fields for things like sales/purchase discounts and prepayments – you only need to fill those if you plan to use those features (leaving them blank can help catch errors if someone tries to use an unconfigured scenario).

To illustrate, let’s say we have two General Business Posting Groups (DOMESTIC and INTERNATIONAL) and two General Product Posting Groups (GOODS and SERVICES).

We might set up the general posting setup matrix like this:

Gen. Business PG	Gen. Product PG	Sales Account	COGS Account	Purchases Account
DOMESTIC	GOODS	40100 Domestic Sales – Goods	50100 Domestic COGS – Goods	30100 Domestic Purchases – Goods
DOMESTIC	SERVICES	40200 Domestic Sales – Services	(N/A – service, no inventory)	30200 Domestic Purchases – Services
INTERNATIONAL	GOODS	41100 International Sales – Goods	51100 International COGS – Goods	31100 International Purchases – Goods
INTERNATIONAL	SERVICES	41200 International Sales – Services	(N/A)	31200 International Purchases – Services

In the above example, a sale to a domestic customer for a goods item would post revenue to G/L account 40100 and post the cost of the item to 50100.

But a sale of the same item to an international customer would use a different revenue account 41100 (and COGS 51100), as per the setup.

This flexibility means you can recognise revenue differently based on customer type if needed. On the other hand, selling a service doesn’t involve inventory, so we might not use a COGS account for service transactions in this scenario. (Your specific account numbers and structure may differ, but the concept is to map each combination to the correct accounts.)

Keep in mind that you should create a line for every possible combination of business and product posting group that you plan to use. If a combination is missing, Business Central will throw an error when you try to post a transaction with that combination.

Tip: Also include a line in General Posting Setup for each General Product Posting Group with a blank Business Posting Group (i.e. no specific customer/vendor type).

This “catch-all” line is used when you post transactions that aren’t tied to a customer or vendor (for example, item journals or adjustments).

On those lines, you typically only need to fill the Inventory Adjustment account. This ensures that inventory or other adjustments can be posted without a customer/vendor context.

4. Set Up Specific Posting Groups (Customer, Vendor, etc.).

Next, configure the specific posting groups which tie your sub-ledger accounts (like receivables, payables, inventory balances) to the G/L. These are generally simpler to set up than the general posting matrix, because each specific posting group usually maps directly to one G/L account.

You’ll set these up in their respective pages (Customer Posting Groups, Vendor Posting Groups, Inventory Posting Groups, etc.), and on each page you define codes and the accounts they correspond to.

The main posting groups are:

Customer Posting Groups

Each customer posting group is linked to an Accounts Receivable G/L account (and possibly other sales-related accounts like payment discount accounts).

For example, you might have a DOMESTIC_CUST group that points to your domestic A/R account, and an INT_CUST group for an international A/R account, if you want to separate receivables by region.

Vendor Posting Groups

Each vendor posting group is linked to an Accounts Payable G/L account (and related purchase discount accounts, etc.). Similar to customers, you could separate payables for different types of vendors if needed (e.g., trade vendors vs. expense vendors).

Inventory Posting Groups

These groups link inventory items to the proper inventory asset accounts on the balance sheet. For instance, you might have an RAW inventory posting group for raw materials linked to a “Raw Materials Inventory” account, and a FG group for finished goods linked to a “Finished Goods Inventory” account.

Inventory posting setup is actually done on a separate Inventory Posting Setup matrix, where each Inventory Posting Group can be combined with locations (if you use multiple warehouses) to map to accounts.

Don’t forget to include a line with a blank location for each inventory group to handle adjustments without a location.

Bank Account Posting Groups

These link your bank accounts (in the Bank Account card) to the correct G/L account for the bank’s ledger. Usually, each bank account has its own posting group that points to its unique G/L account (e.g., your main current (checking) account, savings account, etc.).

Fixed Asset Posting Groups

These define the accounts for various fixed asset transactions (acquisition cost, depreciation, disposal, gain/loss, etc.). You might have different posting groups for different categories of assets if they use different depreciation accounts, for example.

You set up the codes on the FA Posting Groups page and assign the relevant G/L accounts for each type of fixed asset entry (depreciation expense, accumulated depreciation, maintenance expense, etc.).

 

Each of these specific posting group pages will have fields to assign one or more G/L accounts relevant to that entity type. For example, on Customer Posting Groups you typically assign the Receivables Account (the G/L account that tracks what customers owe you) for each group.

On Vendor Posting Groups you assign the Payables Account (what you owe vendors).

On Inventory Posting Groups, you assign the Inventory Account (asset) and perhaps Inventory Adjustments or COGS Interim accounts, depending on your configuration.

The key is to ensure these posting groups point to the correct control accounts on your balance sheet, so that when transactions post, your sub-ledger (like the list of customers and what they owe) always ties to the G/L account balance.

Best Practice: For accounts that are controlled by specific posting groups (like the A/R account, A/P account, inventory assets), it’s recommended to disable direct posting on those G/L accounts.

This ensures all entries to, say, the Accounts Receivable account come from the sub-ledger (sales transactions via posting groups) and not from random journal entries. It keeps your balances consistent (sub-ledger vs G/L) because users won’t be able to post manually to those accounts.

5. Set Up VAT (Tax) Posting Groups (if applicable).

If your business needs to handle Value-Added Tax (VAT) or sales taxes through Business Central, you should configure the VAT posting groups.

VAT posting groups work much like the general posting groups: you’ll define VAT Business Posting Groups (to categorise customers/vendors by tax requirement, such as Domestic, EU, Exempt, etc.) and VAT Product Posting Groups (to categorise items or resources by tax category, such as Taxable, NonTaxable, ReducedRate, etc.).

Then, you use the VAT Posting Setup page (another matrix) to map each combination of VAT Business + VAT Product group to the appropriate tax % and the G/L accounts for sales VAT, purchase VAT, and possibly tax discounts or rounding.

For example, a Domestic+Taxable combination might be set to 20% VAT and linked to a “VAT Output” account for sales VAT, whereas an International+Taxable combination might be 0% (export zero-rated) and linked to a different account.

Setting these up correctly ensures that when you create sales or purchase documents, the tax is calculated and posted correctly according to who the customer/vendor is and what you’re selling.

(Note: If you operate in a region like the United States that uses sales tax differently, you might not use VAT posting groups at all – Business Central’s tax engine would handle taxes differently. VAT posting groups are more common in VAT-based taxation systems. Consult with your Business Central partner if you’re unsure, as tax setup can be complex.)

6. Assign Posting Groups to Customers, Vendors, Items, etc.

After setting up all the posting group codes and their mappings to accounts, the final step is to assign these groups to your master data. This step is crucial: it’s how Business Central knows which codes apply to each transaction.

• For customers: open each Customer Card and set the Gen. Business Posting Group (who the customer is, e.g. Domestic/International) and the Customer Posting Group (which A/R account/control group to use) for that customer. Now this customer is linked to those posting group rules.
• For vendors: on each Vendor Card, set the Gen. Business Posting Group (e.g. Domestic/International vendor) and the Vendor Posting Group (which A/P account to use).
• For items: on each Item Card, set the Gen. Product Posting Group (what type of item it is, e.g. Goods/Services category) and the Inventory Posting Group (which inventory asset category it belongs to).
• For resources, fixed assets, bank accounts and other entities: assign the relevant posting group fields as needed (e.g. Fixed Asset Posting Group on a FA card, Bank Account Posting Group on a Bank account card, etc.).

Once these are assigned, whenever you create a transaction (like a sales invoice, purchase order, etc.), Business Central will automatically pull these codes in.

The sales header on a document knows the customer’s posting groups, and each sales line knows the item’s posting groups. When you post the transaction, the system combines that information to determine the G/L postings.

For example, in a sales invoice scenario:

• The revenue (income) account used is determined by the combination of the customer’s General Business Posting Group and the item’s General Product Posting Group.
• The accounts receivable (A/R) posting goes to the account linked to the Customer Posting Group on the customer.
• The inventory adjustment (if an inventory item is sold) goes to the account linked to the item’s Inventory Posting Group (this reduces inventory on the balance sheet).
• The cost of goods sold (expense) for that sale is determined by the combination of the General Business + General Product Posting Group (usually mapped in the COGS account in the general posting setup).

To put it simply: if you’ve done steps 1–6 correctly, posting a document in Business Central will create all the necessary G/L entries automatically in the right places.

Your sales, cost, inventory, receivables, payables, and taxes will all be properly recorded according to the rules you defined. You won’t have to manually adjust entries later because the system will get it right at the time of posting.

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Risks of Not Setting Up Posting Groups Early or Properly

What if posting groups are not set up correctly, or not set up at all, when you start using Business Central? Here are some risks and problems you could encounter:

Posting Errors and Blocked Transactions

If you haven’t configured the required posting groups (or if something is mis-configured), Business Central will simply not allow you to post certain transactions. You might encounter error messages like “Gen. Posting Setup is missing” or “posting group not found” when trying to post a document or journal.

In fact, if posting groups are not set up correctly, it’s common to get errors when posting documents or journal lines. The system is essentially telling you, “I don’t know what account to use for this situation,” and it will stop the posting.

This can delay your work and be frustrating if it happens during a time-critical process (like month-end closing or invoicing runs). Setting up all needed posting group mappings in advance prevents these disruptive errors.

Misposted or Inaccurate Financials

Worse than an error is a silent misposting. If a posting group is set up but points to the wrong account (for example, you accidentally pointed your domestic sales to a discount account, or your inventory posting group is linked to the wrong asset account), then transactions will post but to incorrect accounts.

This can skew your financial statements! Income might be understated or overstated, costs might not match, or balances might end up in odd places. Identifying and correcting these after the fact can be time-consuming.

Moreover, once transactions are posted with a certain posting group, you can’t simply delete that posting group from the system because it’s now tied to G/L entries. You would have to fix the setup and perhaps reclassify entries via general journal adjustments, which is extra work.

Difficulty in Reconfiguration

If you postpone setting up proper posting groups and just use a “quick and dirty” approach (for example, using one generic posting group for everything initially), you may later realise you need more granularity.

Changing or adding posting groups mid-stream can be challenging, especially if you already have transactions in the system.

You’d need to update master data with new groups and possibly adjust historical entries if you want comparative reports. There’s also a risk of data inconsistencies if changes are not implemented carefully.

It’s much better to plan and configure a sensible posting group structure from the start than to overhaul it once you’ve gone live.

Compliance and Audit Issues

If posting groups related to taxes (VAT) or specific accounts aren’t set up properly, you might post transactions that don’t comply with tax rules or internal controls.

For example, misconfigured VAT posting groups could lead to incorrect tax reporting. Similarly, if users bypass the intended accounts due to posting group issues (say, they start using a workaround account to get a transaction posted), it can lead to audit trails that are hard to follow. An early, proper setup avoids these headaches.

Operational Delays

Simply put, not having posting groups in place can bring your operations to a halt. Imagine trying to invoice customers on go-live day and every invoice errors out because “Posting Group X is missing.” It’s a scenario best avoided by setting up and testing your posting groups early in the implementation.

Bottom line:

Not setting up posting groups correctly is like not laying the tracks before running a train. The train either won’t move, or it’ll go off track. It’s crucial to invest time upfront to configure posting groups properly so that your daily work in Business Central runs smoothly and your financial data stays accurate.

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Best Practices for Setting Up Posting Groups

To get the most out of posting groups and avoid the pitfalls, consider these best practices when setting them up:

Plan Your Groups Based on Business Needs

Before diving into Business Central’s setup windows, take the time to analyse your business. What categories of customers and vendors matter for your reporting (region, type, market)?

What categories of products/services do you sell or purchase?

Identify the distinct groups that make sense to you.

Typically, this planning is done during pre-implementation workshops, ensuring the posting groups align with your company’s operations and industry. Don’t over-complicate it – start with the key distinctions that affect financial reporting or account mapping.

Keep It As Simple As Possible (But No Simpler)

Aim to use the minimum number of posting groups needed to achieve your accounting and reporting goals. Every additional group means more lines in your setup matrix and more maintenance.

For a small business, it might be perfectly fine to have one “ALL” customers group and one “ALL” products group if you don’t need distinction. You can always add more groups later if required.

However, don’t go too simple such that you lose important distinctions (e.g., if you operate in multiple countries, you’ll likely need separate groups for domestic vs. foreign to handle taxes). Strike a balance that gives you useful data without excessive complexity.

Use Clear Naming Conventions

Name your posting groups in a way that anyone can understand. Good names make it easier for users to pick the right groups and for others to read reports.

For example, DOMESTIC, INTL, EU, NAFTA for region-based business groups, or RETAIL, WHOLESALE, SERVICES for customer types.

For product groups, use self-explanatory names like ITEM, SERVICE, RAWMAT, FINISHED. You can also use the Description field for more detail. Clarity reduces the chance of misassignment.

Configure All Necessary Combinations

When setting up the General Posting Setup matrix, make sure to create a line for every combination of General Business and General Product Posting Group that will occur in your transactions. If a possible combination is missing, it will cause an error at posting time.

It’s a good practice to systematically go through each business group and pair it with each product group and fill in the accounts.

If certain combinations use the same accounts as others, you can use the copy feature in the General Posting Setup to duplicate lines and then just change the group code. This saves time and ensures consistency.

Don’t Forget “Blank” or Default Lines

As mentioned earlier, include posting setup lines for cases where a transaction isn’t linked to a customer or vendor (blank Gen. Business Posting Group), and similarly blank Location for inventory if applicable.

These act as default mappings for general journal entries, adjustments, or internal movements. Typically, only certain fields (like an inventory adjustment account or direct cost applied account) are filled in those lines.

This will prevent errors when posting those types of entries.

Fill Only What You Need in Setup

In the posting setup windows (General Posting Setup, VAT Posting Setup, etc.), you’ll see many columns for different accounts (e.g., sales account, sales discounts, cost of goods sold, purchase account, purchase prepayment, etc.).

Only fill in the accounts that you know you will use, and leave irrelevant ones blank.

For example, if you don’t deal with prepayments, leave the “Prepayment” account fields empty. This way, if someone accidentally tries to post a prepayment, the system will throw an error (alerting you that something’s wrong) rather than quietly posting to a wrong account.

It’s easier to catch configuration gaps or user mistakes when unnecessary fields are left blank.

Test Your Posting Setup

Before going live or before using a new posting group, test it out. You can do a dry run by creating a small transaction (say, a sales invoice for a minimal amount) using the new posting groups and preview the posting (Business Central has a Preview Posting function).

Check that the G/L entries that would be created go to the intended accounts. This helps verify that your configuration is working as expected. If something doesn’t look right, adjust the posting group setup accordingly.

Block Instead of Deleting Unused Groups

Over time, you might find that some posting groups or combinations are no longer needed (maybe you phased out a product line or stopped selling in a certain region).

It’s recommended not to delete posting groups or setup lines that have been used, for audit and traceability reasons. Deleting can also be disallowed if there are historical entries.

Instead, use the “Blocked” checkbox or field (available on posting group setup pages) to prevent new transactions from using that group or combination. This way, you retain the history of that code for old entries, but no one can accidentally use it going forward.

Disable Direct Posting on Control Accounts

As noted, for any G/L account that is used in a posting group (like your Receivables, Payables, Inventory, or Bank accounts), it’s wise to mark them as “No Direct Posting” in the G/L Account card.

This ensures all postings to those accounts come through the proper sub-ledger process (customers, vendors, items) and you maintain one version of the truth.

It prevents, for example, a user from manually journaling an entry to the Inventory account, which could throw off the reconciliation between inventory valuation and the G/L.

Review and Evolve Your Posting Groups

Businesses change – you might enter new markets, launch new product lines, or reorganise. It’s okay to add or change posting groups as needed, but do so thoughtfully.

Make sure to update the General Posting Setup matrix and any affected G/L account mappings when you introduce a new group.

And be cautious: changing a posting group on a customer or item will affect how future transactions post, so communicate with your finance team when making changes. It’s often useful to involve your Business Central partner or consultant when making significant changes to posting groups, to ensure consistency and to avoid data inconsistencies.

Document Your Setup

Finally, keep a reference of what posting groups you have and what each one means. This could be a simple document or spreadsheet listing each code, its description, and the associated accounts. This documentation helps onboard new finance team members and serves as a reference during audits or when doing financial analysis. It also forces you to think through the design, which can reveal any gaps or unnecessary complexity.

By following these best practices, you’ll create a robust posting group setup that serves your company’s financial processes well and can scale as you grow.

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Posting Groups for Different Business Sizes (Startups, Small Businesses, Mid-Sized Enterprises)

Every business is unique, and the way you configure posting groups can vary based on the size and complexity of your organization. Here’s a look at how startups, small businesses, and mid-sized companies might approach posting groups differently:

Startups and Very Small Businesses

If you are a startup or very small business with straightforward operations, you can keep posting groups extremely simple. The goal at this stage is to get the system up and running without unnecessary complexity.

You might define just one General Business Posting Group and one General Product Posting Group to start with, especially if all your sales are similar in nature.

For example, a small online retail startup selling one type of product domestically might use a single business posting group (e.g., ALLCUST for all customers) and a single product posting group (ALLITEM for all items). All sales could post to one sales account, and all purchases to one expense or inventory account.

Specific posting groups (one for all customers, one for all vendors, etc.) might all point to one common receivable or payable account respectively.

This minimal setup ensures you don’t spend too much time on configuration, and it reduces confusion for new users. The system will still enforce discipline (you can’t post without the groups), but you won’t be segmenting financial data too finely yet.

Tip: Even if you keep groups simple, choose names that won’t box you in (for instance, use generic names like ALL or DEFAULT that make sense as catch-alls). As a startup, you should also focus on learning how transactions flow with posting groups – once you see a few sales and purchases go through, you’ll understand the value, and you can refine setup later if needed.

Small Businesses (Growing Operations)

As your business grows into a small-to-medium operation, you might start needing more nuance in your posting groups. Small businesses often expand their product lines or customer base, and their financial reporting needs become more sophisticated. At this stage, you might introduce a few additional posting groups to get better insights.

For example, you could split your customers into DOMESTIC and INTERNATIONAL groups if you start selling abroad, so that you can track domestic sales vs. export sales separately (and map them to different revenue accounts or tax treatments).

You might also separate product lines – e.g., if you now offer Services in addition to Goods, you’ll want a product posting group for services so that those sales can be directed to a “Service Revenue” account, distinct from product sales. In the General Posting Setup, you’ll add lines for the new combinations.

The number of posting groups is still manageable (maybe a handful in each category), but they give you clearer financial visibility.

For instance, a small manufacturing company might have one business group for customers, but multiple product groups like RAWMAT, PRODUCTION, and SPAREPARTS to differentiate types of items sold or used. They might also use multiple inventory posting groups to differentiate raw material inventory vs. finished goods in the accounts.

The key for small businesses is to add posting groups gradually in line with actual needs – each new group should serve a purpose (accounting treatment or reporting separation) that justifies the added complexity.

Mid-Sized Enterprises

For a mid-sized enterprise, operations are usually more complex: multiple revenue streams, diverse customer types, perhaps multiple locations or divisions. Posting groups for a mid-sized company will likely be more granular to mirror this complexity.

It’s not unusual for a mid-sized business to have several General Business Posting Groups (e.g., by region, by customer category such as RETAIL, WHOLESALE, GOVERNMENT clients, etc.) and several General Product Posting Groups (for various product categories or departments).

The General Posting Setup matrix in such cases can become quite large – dozens of combinations – but this allows very fine control of accounting.

For example, a mid-sized enterprise might route sales of Product Line A to a different revenue account than Product Line B, or use different COGS accounts for each product group, to easily see profitability by line.

They might have separate business groups for each continent or country, if they need to segregate financial results or comply with different tax accounting (e.g., UK,  EU, NAFTA, APAC groups mapping to region-specific sales accounts). On the specific posting group side, mid-sized firms might maintain multiple customer posting groups (e.g., segregating trade customers vs. end consumers if they post to different A/R accounts or if they want to age receivables separately).

Similarly, they might have multiple vendor posting groups (to separate trade payables for inventory vs. payables for expenses or employee reimbursements) which can be useful for filtering AP reports or processing payments. While a small business might be fine with one “Accounts Receivable” account for all customers, a larger one might have a few (like Domestic Receivables, Foreign Receivables).

The challenge for mid-sized businesses is to maintain the posting group structure as it grows. It’s important to govern the creation of new posting groups with clear policies. For example, if a new product line is launched, decide if it truly needs a new product posting group or if it fits an existing one.

Mid-sized companies should also regularly review their posting groups and possibly consolidate if some are no longer needed (using the “Blocked” feature to phase out groups).

Training is also key: ensure the finance team and key users understand the posting groups so that they assign the correct ones to new customers, items, etc., and interpret the financial reports correctly. In a mid-sized environment, you might also have multiple people responsible for different parts of the setup (one for tax, one for inventory, etc.), so coordination is crucial.

Common Thread Across Sizes

No matter the size of the business, the fundamental purpose of posting groups remains the same: to map transactions to the right accounts automatically and consistently. What changes with size is how many of these mappings you need and how detailed they get.

A startup might treat the whole business as one bucket in terms of posting groups, whereas a mid-sized enterprise might have many buckets. The good news is Business Central’s posting group system is flexible and scalable. It works for a one-person shop and for a multi-entity company alike. You can start simple and expand the complexity as your operations require, all the while maintaining financial integrity.

Related Article: Why BC Works For SME’s

Conclusion

Posting groups in Business Central might feel a bit abstract at first, but hopefully this guide has helped demystify them. To recap:

• Posting Groups are the mechanism Business Central uses to automatically route transactions to the correct G/L accounts, sparing users from manual accounting and preventing mistakes.
• They are important because they ensure accuracy, consistency, and efficiency in financial postings, and they provide flexibility for reporting.
• Setting them up involves defining your categories (general business, general product, specific, VAT) and mapping every needed combination to accounts – a step-by-step process that, once done, makes daily work much smoother.
• Neglecting posting groups or configuring them poorly can lead to posting errors, incorrect financial data, and headaches down the road.
• Following best practices – planning thoughtfully, keeping it simple, covering all bases, and maintaining the setup – will pay off in reliable financials.
• Finally, adapt your posting groups to the scale of your business: start with what you need, and grow the configuration as your business grows.

By understanding and using posting groups effectively, finance users and newcomers to Business Central can gain confidence the system is handling transactions correctly. You’ll be able to focus on analysing the numbers, rather than worrying about how to get them in the right place.

Posting groups truly empower you to leverage Business Central’s strengths – linking the busy world of daily operations with the structured world of accounting – all in the background, so you can get on with managing your business.

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