Late payment prediction in Business Central: guide, setup, and benefits

Managing accounts receivable is one of the most challenging aspects of financial operations. Even the most profitable businesses can face liquidity issues when customers delay their payments. That’s where late payment prediction in Business Central comes in.

This AI-driven feature of Microsoft Dynamics 365 Business Centralempowers finance teams to anticipate which invoices are likely to be paid late, allowing them to take proactive steps to safeguard cash flow. In this guide, we’ll walk you through what late payment prediction is, how it works, how to set it up, why it’s beneficial, and how Gestisoft can help you make the most of it.

What is late payment prediction in Business Central?

Late payment prediction is a built-in AI extension in Business Central that forecasts whether customer invoices will be paid on time or overdue. Using machine learning models trained on invoice history, payment terms, and customer behavior, the system highlights potential late payments before they become an issue.

Unlike generic credit management tools, late payment prediction in Business Central adapts to the specific data of your company. This makes predictions more relevant and actionable, particularly for SMBs that can’t afford surprises in their receivables.

The functionality is seamlessly integrated into the platform. Once enabled, you’ll see predictive insights directly in your Business Manager dashboard, sales invoices list, and customer ledger entries.

Why late payment prediction matters for your business?

Every finance team knows the frustration of chasing overdue invoices. Late payments don’t just disrupt operations—they directly impact cash flow, growth, and profitability.

The cost of late payments

• A 2023 surveyrevealed that almost 60% of small businesses experience late payments.
• U.S. small businesses are typically paid 8 days late on average, and nearly half of all B2B invoices in North America are currently overdue.
• For growing businesses, even one large late payment can create cash flow bottlenecks that limit investment, payroll, or vendor payments.

Business impact

Here’s why late payment prediction in Business Central is a game-changer:

• Cash flow stability: By knowing in advance which payments are likely to be delayed, you can plan liquidity more effectively.
• Proactive collections: Instead of waiting until invoices are overdue, your team can engage customers earlier.
• Reduced risk exposure: Businesses can adjust terms or request deposits from customers flagged as high risk.
• Better decision-making: Finance leaders gain actionable insights to guide receivables strategies and forecast working capital needs.

In short, late payment prediction transforms the way businesses manage accounts receivable, turning reactive processes into proactive strategies.

How late payment prediction works in Business Central?

The predictive model explained

At its core, late payment prediction uses machine learning models to analyze multiple factors:

• Invoice amount and due date.
• Payment terms (in days).
• Customer’s historical payment behavior (on-time, late, partial).
• Whether credit memos were applied.
• Aggregated customer data, such as total outstanding invoices and ratio of late payments.

The output is a prediction column attached to invoices, indicating whether the payment is expected to be late. Alongside it, Business Central provides a prediction confidence rating:

• High: At least 90% sure.
• Medium: Between 80% and 90%.
• Low: Below 80%.

This helps finance teams assess how much weight to give to the prediction.

Standard model vs. My model

Business Central offers two models:

• Standard model: Pre-trained on data from small and medium-sized businesses across industries.
• My model: A custom model trained on your own company’s financial data.

While the standard model works out-of-the-box, the “My model” option is strongly recommended. It tailors predictions to your unique business processes, making results more reliable.

Advanced option – custom Azure predictive service

For companies with specific requirements, Business Central supports integration with Azure Machine Learning. This allows organizations to connect their own predictive web services by supplying an API URL and key.

This flexibility makes late payment prediction in Business Central scalable, whether you’re a small business or a larger enterprise with complex financial needs.

How to set up late payment prediction in Business Central?

Setting up late payment prediction is straightforward. Here’s a step-by-step process:

Step 1: Search for Late Payment Prediction Setup on the search bar in Business Central.

Step 2: Open the related link.

Step 3: Choose the “My model” option. If you do not currently have one, you can click on “Create My Model” to set up your own late payment prediction model.

Once enabled, the system starts evaluating your invoices. You can adjust thresholds, retrain the model, and personalize your workspace to add relevant prediction fields.

Tip: Many businesses retrain their models quarterly to capture seasonal variations in payment behavior.

Where to view late payment predictions in Business Central?

Once set up, late payment predictions appear in multiple places:

Business Manager Role Centre

The homepage includes a Payments Predicted to be Late tile. Clicking it reveals a list of invoices with predicted outcomes.

Sales invoices list

When browsing open invoices, you’ll see which ones are predicted to be overdue, alongside the confidence rating.

Customer ledger entries

Here, payment predictions are displayed for individual customer invoices. The FactBox also provides customer details, allowing you to take immediate action, such as blocking the customer for future sales if they frequently pay late.

This visibility ensures that finance and sales teams are aligned on customer payment risks.

Practical business use cases of late payment prediction

The true value of late payment prediction lies in how businesses use the insights.

• Proactive collections: Finance teams can contact customers before payments are due, reducing the risk of overdue accounts.
• Customer segmentation: Identify chronic late payers and adjust credit policies accordingly.
• Credit policy adjustment: Modify terms (shorter payment periods, advance deposits) for high-risk clients.
• Cash flow forecasting: Improve accuracy of short-term liquidity planning by factoring in predicted late payments.
• Sales strategy alignment: Inform sales teams of customer payment risks, ensuring they balance sales opportunities with financial realities.

Benefits of using late payment prediction in Business Central

The advantages go beyond avoiding late payments. Companies using this feature experience:

• Improved cash flow management: More predictable income streams.
• Reduced manual work: Less time spent analyzing payment histories manually.
• Smarter forecasting: Better insight into short-term liquidity and capital requirements.
• Enhanced financial health: Fewer surprises in receivables and improved working capital.
• Cross-team efficiency: Finance and sales collaborate more effectively with shared data.

Limitations and best practices of late payment prediction in Business Central

Like any predictive tool, late payment prediction has its boundaries.

Limitations

• Requires sufficient historical data to be reliable.
• Accuracy improves over time as the system retrains itself.
• Cannot account for sudden external factors (economic crises, customer bankruptcies).
• Not designed to replace collections staff, but to support them.

Best practices

• Always use My model instead of relying solely on the standard one.
• Regularly review model quality and retrain when necessary.
• Set realistic confidence thresholds (e.g., only act on predictions rated Medium or High).
• Combine predictions with Analysis Mode in Business Central for deeper insights.
• Integrate with Power BI for advanced receivables dashboards.

How Gestisoft helps you maximize Business Central AI?

At Gestisoft, we specialize in helping businesses unlock the full potential of Microsoft Dynamics 365 Business Central. Our experts can:

• Configure and train late payment prediction models tailored to your data.
• Design customized workflows to act on payment insights.
• Train your finance and sales teams to make the most of AI-driven receivables management.
• Advise on advanced Azure ML integrations for organizations with unique requirements.
• Provide ongoing support to ensure predictions remain accurate as your business evolves.

Whether you’re just starting with Business Central or looking to enhance your AI capabilities, Gestisoft can help you turn predictions into actionable financial strategies.

Late payment prediction in Business Central is more than a feature—it’s a strategic tool for businesses aiming to strengthen financial health. By anticipating overdue invoices, companies can safeguard cash flow, reduce manual work, and take proactive steps to engage customers.

With Gestisoft as your partner, you can go beyond the basics and build a receivables strategy powered by AI insights.

Ready to optimize your cash flow with Business Central? Talk to Gestisoft today and discover how we can help you maximize the value of late payment prediction.