27
Aug
How AI Builder and Dynamics 365 Invoice Capture Streamline F&O and Project Operations
How AI Builder and Dynamics 365 Invoice Capture Streamline F&O and Project Operations
Manual Accounts Payable (AP) processing remains one of the most resource-intensive operational bottlenecks for mid-market and enterprise organizations. From lost documents and manual data entry errors to slow invoice routing across project managers, traditional AP workflows lag behind modern digital transformation goals.
Microsoft addresses this challenge head-on with Dynamics 365 Invoice Capture—a solution native to the Power Platform ecosystem that bridges AI Builder with Dynamics 365 Finance & Operations (F&O) and Dynamics 365 Project Operations.
Here is a practical look at how the technology works under the hood and how to set up an automated, intelligent AP pipeline across your core enterprise platforms.
1. The Core Engine: How AI Builder Scans and Extracts Data
At the heart of Invoice Capture is AI Builder Document Processing (powered by Azure Applied AI Services). Unlike legacy Optical Character Recognition (OCR) systems that depend on rigid, manual templates for every single vendor layout, AI Builder uses deep-learning models trained on millions of business documents out of the box.
[Inbound Email / PDF]
│
▼
[AI Builder Engine] ──► Extracts Layout, Headers & Lines
│
▼
[Confidence Scoring] ──► High Confidence? ──► Touchless Transfer to D365
│
└─────────────► Low Confidence? ──► Side-by-Side Review Queue
Key Capabilities of the Scanning Engine
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Layout-Agnostic Extraction: Automatically identifies essential fields—including Vendor Name, Invoice ID, Purchase Order (PO) numbers, line-item descriptions, line totals, and tax—regardless of where they sit on the page.
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Dynamic Confidence Scoring: Every extracted field receives a confidence score ($0\text{–}100\%$). You can set operational thresholds (e.g., auto-process anything above $85\%$, flag lower scores for human review).
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Continuous Learning Loops: When an AP clerk corrects a misread value in the validation interface, the system records the visual-to-field relationship in Dataverse. Over time, the model automatically learns non-standard vendor formats without custom code.
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Custom AI Extensions: For specialized industry requirements (such as pulling specific project task codes, vessel numbers, or custom tax attributes), standard pre-built models can easily be extended using AI Builder studio.
2. Ingestion & Visual Exception Review
Before an invoice reaches your ERP ledger, it flows through an automated capture and review queue hosted on Dataverse.
+-----------------------------------------------------------------------+
| SIDE-BY-SIDE REVIEW QUEUE |
| |
| +---------------------------------+ +----------------------------+ |
| | RAW PDF DOCUMENT | | EXTRACTED DATAVERSE FIELDS | |
| | | | | |
| | INVOICE #: INV-90210 | | Invoice ID: [ INV-90210 ] | |
| | PO #: PO-2026-881 | | PO Number: [ PO-2026-881 ] | |
| | Total: $14,500.00 | | Total Amt: [ 14500.00 ] | |
| | | | | |
| | Line 1: Civil Design Work | | Task ID: [ 1.2.B ] | |
| +---------------------------------+ +----------------------------+ |
+-----------------------------------------------------------------------+
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Multi-Channel Ingestion: Automated Power Automate flows continuously monitor incoming Exchange/Outlook mailboxes, SharePoint libraries, or direct file drops for incoming invoice attachments (PDF, PNG, JPEG up to 20 MB).
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Classification: AI Builder instantly categorizes documents into PO-Based Invoices, Header-Only Invoices, or Cost/Non-PO Invoices.
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Side-by-Side Review Interface: If an invoice falls below your established confidence score or triggers a validation discrepancy, it routes to a web-based Side-by-Side viewer. AP processors can visually inspect bounded key-value pairs directly against the original file and make corrections in seconds.
3. Integrating with Dynamics 365 Finance (F&O)
Once AI Builder verifies the document payload, it moves seamlessly into D365 Finance to execute core accounting rules:
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Vendor & Legal Entity Matching: Derives legal entities and maps vendor records using synchronized master data between D365 Finance and Dataverse.
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Automated Matching Rules: Runs automated 2-way (PO-to-Invoice) or 3-way (PO-to-Receipt-to-Invoice) matching checks against open Purchase Orders.
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Straight-Through Processing (STP): High-confidence invoices that pass all matching rules bypass human interaction completely, creating Pending Vendor Invoices or Vendor Invoice Journals automatically.
4. Connecting the Dots with D365 Project Operations
For project-driven organizations—such as construction, professional services, or IT consulting—invoices frequently tie to subcontracts, project tasks, and billable categories. Here is how Invoice Capture bridges accounting with project execution:
[Invoice Capture Ingestion]
│
▼
[AI Builder] ──► Scans Project ID, Subcontract #, Line Items
│
▼
[D365 F&O] ────► Creates Pending Vendor Invoice
│
▼ (Dual-Write / Dataverse Sync)
[D365 Project Operations]
│
▼
[Project Manager Review] ──► Checks against Deliverables / Budget
│
▼
[Approval] ────────────────► Generates Project Actuals & Updates Ledger
Practical Project Workflow
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Metadata Scanning: AI Builder extracts project-specific header and line data, including Project ID, Task ID, Category, and Subcontract Reference Numbers.
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PM Verification in Project Operations: When synced from F&O to Project Operations via Dual-Write, sub-contract invoices enter a Draft state. This triggers an automated notification for the assigned Project Manager.
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Budget & Deliverable Audit: The PM reviews invoice lines against recorded time entries, milestone completion, or physical materials logged on the project site.
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Actuals & Ledger Settlement: Upon PM sign-off, the record updates project financial actuals in D365 Finance, adjusting project margins, budget consumption, and vendor subcontract balances in real time.
Key Business Outcomes
Implementing AI-driven invoice capture across F&O and Project Operations transforms AP from a manual data-entry function into an exception-driven review process:
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Up to 80% Reduction in Processing Time: Touchless processing accelerates invoice execution cycles from days to minutes.
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Project Cost Accuracy: Eliminates cost leakage by ensuring project-related vendor expenses are approved by PMs before posting to project ledgers.
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Early Payment Discounts: Faster processing cycles allow finance teams to consistently capture early-settlement vendor discounts and avoid late-payment fees.
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