New Licensing Rules for Dynamics 365 F&SCM: Preparing for the deadline and beyond

This article is sponsored by XPLUS.

Later in 2025, Microsoft is introducing strict changes to the licensing model of Dynamics 365 

Finance & Supply Chain Management (F&SCM). Until now, an honor-based system allowed organizations to use more user accounts than they had licenses for, without technical restrictions. This will change starting November 1, 2025. Each D365 F&SCM user will need to have a properly assigned license, otherwise access will be blocked. These new rules will be rolled out in stages:

• September 1, 2025 – “Soft block” phase. Users without valid licenses will see in-app warnings about non-compliance but will still be able to access the system. This allows early identification of issues without immediate disruption.
• November 1, 2025 – Full enforcement (“hard block”). Users without assigned licenses will be permanently blocked from accessing the system. This applies to all D365 F&SCM modules (Finance, Supply Chain Management, Commerce, Project Operations, Human Resources, etc.). The grace period ends — no more leniency.

Risks and Consequences for Customers

Failure to comply with the new technical enforcement may lead to serious consequences:

• Loss of system access: From November 1, 2025, unlicensed users will be blocked, potentially paralyzing core financial and operational processes.
• Unexpected costs: Companies may be forced to urgently purchase large numbers of licenses. Misconfigured security roles can trigger the need for thousands of extra licenses. Microsoft may also audit compliance and impose penalties.
• Compliance risks: Violation of the new licensing rules can damage customer relationships with Microsoft, especially during Enterprise Agreement renewals.
• Operational disruption: The loss of access to key applications by employees could cause halted payments, supply chain delays, or missing data. Emergency reconfiguration of roles adds stress and risk of error.

Meeting the New Challenges

To comply, customers must take several specific steps and prepare for possible outcomes of this change. We are recommending that organizations prepare to address the following factors:

• Audit licenses and user roles: Understand which users lack licenses and whether role assignments match license requirements. Misconfigured roles must be corrected.
• Budget for additional licenses: Estimate what and how many licenses are needed. Use actual system usage data to optimize costs (e.g., using Team Member licenses where possible).
• Ensure business continuity: Establish internal processes and monitoring tools to verify all active users are licensed by November 1. This requires tight cooperation between IT, HR, and Finance.
• Use new Microsoft tools: Microsoft offers support via license reports in Power Platform Admin Center and in-app alerts. We at XPLUS authored the new user security governance (USG) functionality in Dynamics 365 (Microsoft acquired our IP), which solves many security, SOX and licensing problems. Customers must learn to use these tools to manage users transparently. Some may need partner support to interpret reports and implement corrective actions.

If your team is unsure how to interpret these requirements, or if your role structure is overly complex, we invite you to explore our free educational series: Dynamics 365 F&SCM Security Masterclasses. It provides practical sessions focused on user access, licensing logic, and security best practices, designed to help your organization stay compliant. 

As the November 2025 deadline approaches, keep in mind that preparation is key. Start by establishing your initial compliance status and identifying your true license needs. Then create a plan to clean up security roles, remove inactive accounts, and fine-tune license-to-role mapping. Finally, define an ongoing set of tools and processes that will ensure your organization’s compliance for the future. 

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Photo by Estée Janssens on Unsplash