# Line item coding in Dynamics 365 Finance for builders

Dynamics 365 Finance has line item coding built in. A builder's job cost report is only right if every vendor invoice reaches the correct project and financial dimension. One wrong job code moves cost from one project to another and hides a loss.

## Why it matters for builders

- One supplier invoice often covers several jobs. A hardware or hire statement may carry 15 lines for 6 different projects.
- Subcontractor claims mix labour, materials, variations and retention. Each part needs its own code and GST treatment.

## For builders in Dynamics 365 Finance

- Put the Project on the vendor invoice line. If the line references a purchase order line, the accounting distribution of that PO line is used.
- On the Project groups page, the Post costs - item setting (Balance or Profit and loss) decides where item costs land. With Balance, the Main account field for Cost on the Ledger posting setup page is used.
- On a vendor invoice that references a PO you can split and change accounting distributions for lines with a non-stocked item. You cannot split or delete charge lines, tax lines or line discounts. You can only change their ledger account.

## What Dynamics 365 Finance does on its own

Accounting distributions with split by percent, amount or quantity and financial dimensions.

Distribute equally spreads an amount evenly.

What you need and the setup steps: https://www.pulsify.tech/line-item-coding-for-dynamics-365-finance/

## Example

Example Hire Co sends one invoice for plant hire used on two jobs.

- Excavator 5 tonne, job 214, 4 days: $2,000.00 (Coded to job 214, cost code 3100 plant hire)
- Scissor lift, job 188, 2 days: $900.00 (Coded to job 188, cost code 3100 plant hire)
- Fuel and cleaning fee, job 214: $180.00 (Coded to job 214, cost code 3190 sundries)

Each line is coded to its own job and cost code, so job 214 shows $2,180 of cost and job 188 shows $900 before GST.

## Common mistakes

- Coding a whole invoice to one job to save time, then correcting it at month end.
- Using different cost codes for the same type of cost on different jobs, so job reports cannot be compared.

## Step-by-step guides for Dynamics 365 Finance

- How to enter a vendor invoice with line items in Dynamics 365 Finance: https://www.pulsify.tech/how-to/enter-a-supplier-bill-with-line-items-in-dynamics-365-finance/
- How to code one vendor invoice to several main account codes in Dynamics 365 Finance: https://www.pulsify.tech/how-to/code-one-bill-to-several-accounts-in-dynamics-365-finance/
- How to set a default main account for each vendor in Dynamics 365 Finance: https://www.pulsify.tech/how-to/set-a-default-account-for-each-supplier-in-dynamics-365-finance/
- How to code a vendor invoice with mixed GST lines in Dynamics 365 Finance: https://www.pulsify.tech/how-to/code-a-bill-with-mixed-gst-lines-in-dynamics-365-finance/

## What Pulsify adds

Pulsify reads each line and suggests its main account and sales tax code from how that vendor was coded before. Pulsify connects to Dynamics 365 Finance. We set up the connection for you. More: https://www.pulsify.tech/automated-line-item-coding/

## Common questions

### How do I code a subcontractor invoice line to a project in Finance?

Enter the project on the invoice line. Where the line follows a purchase order line, Finance reuses that line's accounting distribution. The project group setting Post costs - item decides whether the cost goes to the balance sheet or profit and loss.

### Should retention be coded separately?

Yes. Keep retention held on its own line or account so you can see how much you owe each subcontractor and release it at practical completion. Mixing it into the cost line hides the balance.

### Can Finance split an invoice line by percentage?

Yes. Open the accounting distribution and use Split by percentage, amount or quantity. Set the main account and financial dimensions on each part. Distribute equally spreads an amount evenly.

## Sources

- https://learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/accounting-distributions-subledger-journal-entries-vendor-invoices
- https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/building-and-construction-services

Source: https://www.pulsify.tech/line-item-coding-in-dynamics-365-finance-for-builders/ (last checked 2026-10-19)