License Validation in Dynamics 365 Finance & Supply Chain Management: What You Need to Know

Microsoft is rolling out a new license validation mechanism for Dynamics 365 Finance & SCM that will directly impact how users access the system. Starting January 15, 2026, licenses must be explicitly assigned via the Microsoft 365 Admin Center, or users will be blocked from entry. This change aims to strengthen compliance by linking security roles to valid licenses. Organizations will need to prepare ahead of their contract renewal dates, with enforcement following a phased timeline. To support this transition, Microsoft is introducing new reporting tools in PPAC, LCS, and the USG workspace to help identify gaps and optimize license usage. Now is the time to review your license assignments and user roles to avoid disruption and reduce unnecessary costs.

What is license validation and why should I care? 

Microsoft is introducing a new license validation mechanism for Dynamics 365 Finance & SCM applications to ensure that users are properly licensed based on their assigned security roles. Moving forward, all licenses must be explicitly assigned to users through the Microsoft 365 Admin Center. This change will have a significant impact on how end users access the system and how organizations manage compliance. If users are not assigned the correct licenses, they will be blocked from accessing the Dynamics 365 Finance & SCM applications.

When will this validation happen?

The rollout of license validation will begin on January 15, 2026, and will follow a staged approach aligned with each customer’s contract renewal or anniversary date. This phased implementation is designed to give organizations sufficient time to assess their current license assignments and make necessary adjustments.
 
There are three key milestones in the enforcement timeline. At T-90 (90 days before the contract renewal or anniversary), customers are expected to begin preparing for the transition, supported by their Microsoft seller or partner. At T-30, users who do not have a valid license assigned will begin receiving in-app notifications alerting them to the issue. Finally, at T+15, license validation will be enforced, and users without the appropriate license will be blocked from accessing the system.
 
 
For customers whose renewal date falls before January 15, 2026, enforcement will not take effect immediately. Instead, the next renewal or anniversary date will determine when validation begins.

For example, if a customer’s renewal date is April 1, 2026, in-app notifications will start on March 1, 2026, and license enforcement will begin on April 15, 2026. Conversely, if the renewal date is August 1, 2025, the enforcement timeline will shift accordingly, with notifications starting only on July 1, 2026, and enforcement beginning on August 15, 2026.

How do I identify the required licenses? 

To support this transition, Microsoft is providing enhanced tools and reporting capabilities. In the Power Platform Admin Center (PPAC), a license consumption report will be available to help organizations identify the required license for each user and assign them accordingly. A similar report will also be accessible through Lifecycle Services (LCS).

Within Dynamics 365 Finance & SCM itself, the User Security Governance (USG) workspace will include a “License Usage Summary” report. This report offers detailed insights into license requirements per role and per securable object, enabling organizations to fine-tune their security roles and optimize license usage.

To ensure a smooth transition and avoid service disruptions, organizations should begin reviewing their license assignments immediately. It is essential to verify that all users who require access to the system have the appropriate licenses assigned. The available reports can assist in identifying gaps and ensuring compliance. Additionally, this is an excellent opportunity to review user roles and remove any outdated or unnecessary access, which can help streamline operations and reduce licensing costs.

Join our upcoming webinar on October 14th

Ready to dive deeper into Microsoft’s new license validation for Dynamics 365 Finance & SCM?

We’ll walk you through the enforcement timeline, show you how to use the new reporting tools, and share best practices to stay compliant. Got questions? This is your chance to ask them live and get expert answers.

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