Hi All,
Do you know about application of entries in business central?
Have you ever opened a drawer full of socks and wondered where all the matching pairs went?
Now imagine your business transactions facing the same problem.
In Microsoft Dynamics 365 Business Central, this exact situation happens when invoices, payments, or shipments are not properly matched. That matching process is called Application of Entries—and while it is critical for accurate accounting, it often feels confusing.
In a recent video, I tried to explain this concept using a simple, unforgettable analogy: matching socks. Let’s break it down.
What Is an “Entry” in Business Central?
Every time you perform a transaction in Business Central—such as posting an invoice, receiving a payment, or shipping goods—the system creates an entry.
Think of an entry as a note that says:
“Something happened.”
Some entries are complete immediately. Others remain open, waiting to be connected to another entry.
What Does “Open Entry” Mean?
An open entry is like a lonely sock.
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A sales invoice is open until payment is received
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A payment is open until it is matched to an invoice
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A shipment is open until it is invoiced
Until these entries are paired, Business Central cannot accurately determine what is paid, what is pending, and what is overdue.
The goal of application is simple:
Pair the right socks. Close the loop.
Why Application of Entries Is Critical
Application of entries is not optional—it is fundamental to reliable financial data.
When entries are applied correctly, Business Central can:
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Show accurate outstanding balances
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Identify due and overdue invoices
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Prevent double counting of payments
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Keep customer and vendor ledgers clean
Without proper application, reports become misleading and decision-making suffers.
How Application of Entries Works (Step by Step)
The video explains two main ways entries are applied in Business Central.
1. Manual Application of Entries
Manual application is commonly used when:
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Payments are partial
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One payment covers multiple invoices
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You need precise control over matching
You select an open entry (for example, an invoice) and apply one or more payment entries against it. Business Central tracks:
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Original amount
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Applied amount
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Remaining amount
Once fully matched, the entry moves from Open to Closed.
2. Applying Entries During Payment or Receipt
Business Central also allows application directly from:
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Payment Journals
Using Apply Entries, you can:
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See all open invoices
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Select the correct ones
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Automatically apply amounts upon posting
This approach is faster and reduces manual follow-up later.
Auto-Application and Item Ledger Entries
For Item Ledger Entries, application often happens automatically.
When items are sold, Business Central intelligently links:
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Sales entries
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Purchase or receipt entries
This determines which quantities were consumed to fulfill the sale.
Customer and vendor ledgers are different. Because of credit terms, partial payments, and adjustments, manual application is often required—though auto-apply rules can be configured if appropriate.
Key Takeaways
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What is an open entry?
An invoice or payment not yet matched to another entry. -
Why is application important?
It ensures accurate balances and correct overdue calculations. -
Are entries applied automatically?
Sometimes. Item entries often are; customer and vendor entries may require manual application. -
Where can you see applied vs open entries?
Customer Ledger Entries, Vendor Ledger Entries, Item Ledger Entries—look for the Open flag.
Final Thought: Remember the Socks
Application of entries doesn’t need to be intimidating.
If you remember just one thing, remember this:
No lonely socks. No lonely invoices.
By applying entries correctly, you ensure your books are clean, your balances are accurate, and your reports tell the truth.
🎥 Watch the Full Explanation on YouTube
This blog summarizes the concept—but seeing it explained visually, with real Business Central screens, makes it click instantly.
👉 Watch the full video on YouTube for a step-by-step walkthrough and live examples.
If this helped, consider subscribing to Saurav Dhyani YouTube Channel for more Business Central concepts explained clearly and practically.
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