Dynamics 365 License Management

Use this license cleanup guide to prepare for changes to Dynamics 365 license enforcement

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Microsoft is introducing new tools to monitor and manage D365 licenses

Microsoft is cracking down on Dynamics 365 license enforcement. New tools and reports promise to make managing users easier, but on January 15, 2026, users who haven’t been assigned a license will lose access to their Finance and Operations production environments.

Don’t get caught by surprise! Below is a step-by-step guide on how to reconcile system users with your current licenses and subscriptions, assign named users to licenses, and ensure you’re compliant with Microsoft’s requirements.

Contents

Key dates to remember

September 1, 2025

  • Users who haven’t been assigned a license will see a notification when they log in to Dynamics 365 Finance & Operations, prompting them to contact their administrator.

November 1, 2025

  • Users who haven’t been assigned a license will lose access to their Dynamics 365 Finance & Operations production environments.

Part 1. Log in to Power Platform Admin Center (PPAC) license reporting

Find your current license utilization report here:

  1. Go to https://admin.powerplatform.microsoft.com.
  2. Make sure to toggle on the “New Admin center” look in the upper right-hand corner.
  3. Go to Licensing > Finance and Operations. By default, the form filters to your production environment.
  4. Screenshot the page for easy reference. You should have a report that looks like this:
    A screenshot of the licenses summary page in Power Platform Admin Center (PPAC), showing an overview of user licenses in Finance and Operations.
  5. Look at the License Utilization Status column and refer to the chart below for what to do for each scenario:
ScenarioWhat it meansNext action
No Issues:

 

Available Seats ≥ Required Seats and all are Assigned

Utilization Status: “All licenses are assigned.”

You’re good to go! All available seats cover your user requirements, and every user has been assigned a license.No action required. Consider reducing your total licenses if excess capacity exists.
Fully licensed but need assignments:

 

Available Seats ≥ Required seats, but are not fully assigned

Utilization Status: “X licenses can be assigned.”

Sufficient licenses exist, but some users haven’t been assigned a license.Assign licenses to unlicensed users.
Under licensed:

 

Available Seats < Required Seats

Utilization Status: “You are using X more licenses.”

More users are triggering license requirements than you have seats for.Perform an audit: review security roles, reduce permissions or duties, or determine if more licenses are needed. Then assign licenses to users.

Note about Device licenses:

Device licenses and usage are not included in the PPAC license report. We recommend that you manually track physical device usage (such as warehouse scanners and POS terminals) and ensure purchased quantities match your needs.

What to do if you are under-licensed

Time for a true-up!

Export the PPAC license report to CSV for use in detailed analysis:

  • In the top right of the overview section, click Export to CSV.
  • The Download license information slider pop-up will appear. Click Start to generate the file and download.
  • This report will show all users and the associated license types being triggered as required.

Create a separate master list of all expected current F&O users:

  • To compare against the PPAC report, you’ll need to create a table of your current F&O users if you haven’t already. Exporting your F&O security roles can give you a base list to start. We recommend you include the following:
    • Email or user ID
    • Plain language job title and description (e.g., “Accounts Payable Clerk”)
    • Your expected license type for each user (Team Member, Operations Activity, Base Supply Chain, Base Finance, etc.)

Now you can compare the two lists:

  • Flag any specific users or roles that appear to be incorrectly assigned a higher-than-expected license.
    • For example, you might find a read-only user that shows up as requiring a full Base or Activity license. This is important because you will later investigate what F&O permissions are triggering the unnecessarily higher license.

Now that you’ve exported the PPAC license report and compared it against your list, it’s time to analyze user role permissions in Dynamics 365 Finance & Operations.

Part 2. Dynamics 365 license cleanup and reconciliation process

1. Analyze role permissions in F&O

In Finance & Operations, go to System Administration > Security Configuration. Select the user role in question, click “View Permissions” and review Duties/Privileges that are contributing to the license tier:

A screenshot of the Security configuration-Roles page in Dynamics 365 Finance and Operations.

A screenshot of Finance and Operations, showing the user permissions for an Accountant role.

2. Optimize custom roles

If using custom roles, consider duplicating and modifying them to remove non-essential privileges or duties. Ensure the new role supports business needs while minimizing license impact.

3. Submit licensing disputes

If specific privileges are still triggering higher licenses and you believe they shouldn’t, document them and escalate with your partner and/or Microsoft.

Types of Dynamics 365 licenses

Below is a simplified summary of the different Dynamics 365 F&O user-based license types. For the full description of each license, refer to the latest edition of the Microsoft Dynamics 365 licensing guide: link

(Note: the above is a link to the May 2025 licensing guide. To find the latest Dynamics 365 licensing guide at any time, visit the Microsoft resource site: Licensing Documents.

License TypeDescription
Team MemberMostly read-only users. Can view data and reports. Limited transactional rights.
Activity

Approvers, warehouse, or shop floor users who interact via shared terminals or perform confirmations. Depending on access requirements, Activity license holders can also include customer service and order entry personnel.

Operations–Activity users generally are allowed to:

  • Create and edit items related to
    • Orders (sales and purchase orders)
    • Vendor maintenance
    • Warehousing (receiving and shipping)
    • Budgets
  • Record and approve:
  • Operate POS devices (depending on their role and if licensed accordingly)

Examples of allowed tasks:

  • Entering or editing sales or purchase orders
  • Modifying basic vendor or inventory details associated with an order
  • Participating in approval workflows related to order entries (within their permission scope)
  • Updating order line items under specific constraints
BaseFull or transactional access. Includes finance, inventory, or production responsibilities. Attach-type licenses are required when using multiple Base functionality areas (e.g., Finance, Supply Chain, Commerce, Project Operations, etc.).

Tips for managing your Dynamics 356 licenses

We have found the following simple tips greatly helpful:

  • Create one parent role per user job type, where possible, to simplify future license analysis.
  • Use naming conventions for custom roles that reflect the job title or team.
  • Perform all edits in a sandbox environment first, then promote to production.

Part 3. Ongoing maintenance: Review Dynamics licensing assignments in Power Platform Admin Center

Starting in 2025, Microsoft requires that all D365 Finance & Operations users be explicitly assigned a license through the Power Platform Admin Center. This ensures correct access and avoids unexpected license errors. To look up users that need to be assigned a license, follow these steps:

1. Go to https://admin.powerplatform.microsoft.com
2. Make sure to toggle on the “New Admin center” look in the upper right-hand corner.
3. Go to Licensing > Finance and Operations. By default, the form auto-filters to the production environment.
4. Review the list of users to identify those who are unassigned or incorrectly assigned.
5. To assign users, continue to the next step.

Part 4. Assign users to licenses in Microsoft 365 Admin Center

If you identify a user or group in PPAC that needs a license assigned, you’ll make the assignment in the Microsoft 365 Admin Center. Here’s how:

1. Go to the Microsoft 365 Admin Center (https://admin.microsoft.com) > Billing > Licenses.
2. Select the desired license name, such as Dynamics 365 Finance.
3. Select Assign licenses > add the desired user(s) to assign > click Assign.

Tip: You may want to create and then assign Entra groups for sets of users requiring the same license type.

A screenshot of the Microsoft 365 Admin Center, where users can be assigned Dynamics 365 licenses.

A screenshot of the Microsoft 365 Admin Center and screen where you assign licenses to users,

Frequently asked questions

Yes, we have seen recent inaccuracy issues with reporting in PPAC as Microsoft releases new features. The Microsoft product team is actively working on resolutions.

Microsoft is refining and restructuring PPAC and making significant changes to its layout and functionality. In the future, PPAC will be a centralized hub for managing both licenses and environments.

In the meantime, it’s critical to assign licenses to users. We recommend you independently track your expected user counts, actual system users, and assigned security roles to establish a reliable baseline to compare against PPAC’s data.

It’s important to independently track your expected user counts, actual system users, and assigned security roles to establish your license baseline for comparison against PPAC’s reports. This blog post contains detailed instructions for comparing your license actuals against what’s in PPAC. Here’s a summary of the process:

  • Create a master list of all current Dynamics users.
  • Clean up current licenses: Assign purchased licenses to your users in the Microsoft 365 Admin Center and delete expired users from the system.
  • Export the report of Dynamics users from PPAC (note: this report only refreshes every 72 hours).
  • Compare your expected users versus the list in PPAC.
  • Note and investigate any discrepancies.
  • Analyze security roles and role permissions in F&O to identify any permissions that may trigger a higher-level license (i.e., Base license versus Activity license).
  • Adjust permissions in each role as needed.
  • Re-run the PPAC report. Note: License assignments take place in real time in Microsoft 365 but it takes 72 hours for changes to be reflected in the PPAC report.

Microsoft has not yet released formal guidance on how it will check for compliance. However, at this point we recommend assuming that license validation will occur at the license type level. This is signaled by the PPAC report, which audits expected user counts by license type and outlines the number of users required per license category.

Microsoft is introducing significant enhancements to security governance in Dynamics 365 Finance and Operations, aiming to provide administrators with more robust tools for managing user roles, ensuring compliance, and optimizing licensing. These are currently in preview and expected to be released in July 2025 (Dynamics version 10.0.44). These features will greatly speed up security role creation, analysis, and adjustments.

As it specifically relates to licensing:

Microsoft 365 Admin Center:

  • Used for all licensing assignments.
  • View available licenses vs. assigned licenses.

Power Platform Admin Center (PPAC):

  • View F&O license utilization status. PPAC shows not only your available and assigned licenses, but also required licenses and suggested actions.
    • Don’t forget: Reports refresh once every 72 hours.
  • Download detailed user/role/license information.
  • View storage utilization status.

Lifecycle Services (LCS):

  • Features will be released to show license reporting from PPAC. This feature is being added to LCS because Microsoft understands that F&O customers and partners often use LCS, whereas PPAC access is often more restricted.
  • Note that in time, LCS is planned for deprecation.

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Contact us to speak with a licensing expert today. We can help you prepare for Microsoft’s upcoming license enforcement changes and optimize costs.

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