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In a globalized, cost-conscious business landscape, every detail in supply chain finance matters, including how charges are applied at the line level. Microsoft Dynamics 365 Finance and Operations continues to evolve with real-world business needs in mind. One such enhancement is assigning Units of Measure (UOM) to line-level charges.
This seemingly minor feature offers significant flexibility and control over how additional costs are distributed and calculated on purchase or sales documents.
Explore the purpose and benefits of the Unit of Measure in Dynamics 365 F&O and learn how to configure it for accurate and streamlined operations.
What is the “Unit of Measure for line-level charges” feature?
Previously, in Dynamics 365, line-level charges (such as handling fees, container surcharges, environmental taxes, etc.) were often calculated using fixed or percentage-based values. But businesses that offer bulk, volume, or per-unit-based services need more granular control.
In Dynamics 365, a Unit of Measure (UOM) defines how quantities of products or services are tracked, sold, purchased, or stored. It’s a foundational concept across modules like Finance and Operations, Sales, Commerce, and Supply Chain.
With this feature, users can now apply charges based on a specific unit of measure (UOM) such as:
- Per unit
- Per kilogram
- Per pallet
- Per liter, etc.
This makes the charges more dynamic, scalable, and aligned with real-world logistics and procurement costs.
Application of Unit of measure: A business use case
Let’s say your company imports chemicals in bulk:
- You ordered 10,000 liters of solvent from a supplier.
- The supplier charges a hazard handling fee of $0.50 per liter.
Without UOM-based charges: You must manually calculate and enter a total fixed charge (e.g., $5,000) for the handling fee.
With a UOM-based charge: You can define a charge code like “Hazard Handling” with a UOM = Liter and rate = $0.50.
D365 will now:
- Automatically multiply the charge per UOM by the ordered quantity.
- Apply it as a line-level charge.
- Recalculate the charge dynamically with quantity changes
Examples of unit-based charges by industry
| Industry | Use Case |
| Retail and FMCG | Packaging surcharge per unit or box |
| Manufacturing | Environmental fees per KG of raw material |
| Logistics | Handling charge per pallet or container |
| Pharma & Chemicals | Hazard fees per liter or bottle |
| Food & Beverage | Refrigeration surcharge per case |
Benefits of UOM-based charges
Using Units of Measure (UOM) in Dynamics 365 brings many practical benefits across inventory, sales, purchasing, and production. Here’s how they make life easier:
- Automation and accuracy
No more manual charge calculations or spreadsheets—D365 handles it automatically based on item quantity and UOM.
- Improved cost tracking
Helps ensure that true landed or operational costs are applied accurately, making profitability and pricing analysis more reliable.
- Compliance and transparency
Supports UOM-based tax, environmental, or regulatory fees, aiding compliance and audit readiness.
- Dynamic charge application
Charges are recalculated automatically when quantities or UOMs are updated, maintaining financial accuracy.
How to set up Unit of Measure in Dynamics 365 (An overview)
Setting up Units of Measure (UOM) in Dynamics 365 Finance & Operations ensures accurate inventory, pricing, and transaction handling across your supply chain. Here’s how to do it:
- Navigate to: Procurement and Sourcing > Setup > Charges > Auto Charges (for Purchase Order)
- Click on the level dropdown and select Line.
3. Create New Auto Charges.
4. Select a Category.
Specific Unit / Specific Unit Match
Unit of measure: Select the desired UOM (e.g., kgs or liters)
Charge value: e.g., 2.00 per item
When this charge is applied to a PO or SO line, D365 will use the quantity × rate logic using the selected UOM.
Once you have created a PO and selected the item to procure, enter the quantity and amount (if needed) and select the unit of measure.
Then, click on the “Purchase Order” fast tab on the ‘View’ tab, click on total, and see the charges for the purchase order.
The charges will be the Auto charges set for the procurement and sourcing of Auto Charges.
Here, the charges: $20 are calculated as: Quantity Procured x Charges Value = 10 x 2 = $20
These charges will automatically be added to the PO Invoice at the time of the invoice.
Note: For SO, set up the auto charges for the accounts receivable.
Tips to follow
- Use consistent naming for clarity across teams.
- You can also use the Unit creation wizard to auto-generate common UOMs and conversions.
- For multilingual environments, add translations for UOMs under the “Translations” tab.
Final thoughts
The “Unit of Measure for Line-Level Charges” feature may look like a small configuration option, but it reflects D365’s power to adapt to real-world financial, logistical, and compliance challenges. For businesses dealing with volume-based pricing or import/export complexities, this capability can drive cost accuracy, automation, and reporting clarity.
Want to explore how to tailor Dynamics 365 Finance and Operations to your unique business needs?
Get in touch with our experts at marketing@confiz.com.
