← All articles · Treasury Documents · 2026-10-12 · 1815 words · by Salman Ahmad

Treasury Documents in Dynamics 365 Finance — Chapter 3: Bank Facilities

A bank does not issue guarantees and letters of credit one by one on a blank sheet. It first grants the company a facility: a credit line with a limit for each kind of document – say SAR 5 million for performance bonds and SAR 2 million for bid bonds – valid for a period, with agreed commissions and cash margins. Every LG or LC the bank issues uses part of that limit until the document expires, is cancelled or is paid. The treasurer's daily question is therefore not only "how much cash do we have?" but also "how much room is left on our facilities?".

Dynamics 365 Finance models this with facility groups, facility types and facility agreements. In this chapter, we set up the two facilities that the rest of the book uses.

In this chapter, we will cover the following topics:

• Facility groups and facility types, and the facility nature
• Facility agreements per bank account: period, revolving or non-revolving, limits
• The letter of guarantee calculation rules on an agreement line
• How documents use and release a facility, and how to read the balance

Facility groups and facility types

A facility group is a broad class of facility (LC, LG, IC); a facility type is the kind of document that a bank limit is granted for (bid bond, performance bond, irrevocable LC, sight LC). Both tables are shared by all companies – a type created in one company is visible in every company – while agreements and posting profiles are per company.

Navigation: Cash and bank management > Setup > Bank facilities

Facility type / Description – Text

The code and name of the bank line. The facility type is also what you see in the LG and LC forms, so choose names the treasury team uses with the bank.

Example: ImpColl – Import documentary collection.

Facility group – Lookup

The group the type belongs to. The bank documents posting profile can be defined per group, so all LG types can share one set of accounts.

Example: IC.

Facility nature – Letter of credit, Import collection, Letter of guarantee

The kind of bank document the type can be used for. An import LC can only use a type whose nature is Letter of credit (or Import collection for a collection); an LG can only use a Letter of guarantee type. Once a type is used on an agreement, its nature cannot be changed.

Example: Import collection.

The demo data already contains the LC types BBLC (back-to-back LC), IrrLC (irrevocable LC) and SLC (sight LC), and the LG types BidB (bid bond), PerfB (performance bond), AdvB (advance payment bond), RetM (retention money) and PayG (payment guarantee). There was no type with nature Import collection, so we added ImpColl.

Facility agreements

A facility agreement is the sanction letter of one bank for one company bank account, for one period. Its currency is the currency of the bank account. The agreement lines hold the limit per facility type.

Navigation: Cash and bank management > Letters of guarantee > Bank facility agreements

Agreement number – Text, mandatory

The bank's reference of the sanction letter.

Example: SAMF/2026/LG01.

Bank account – Company bank account, mandatory

The account the facility belongs to. Every LG posting (margin, commission, liquidation) is offset against this bank account, and the agreement currency is the account currency.

Example: SAUBank (SAR).

Start date / End date – Date and time

The validity period. A bank account can have only one agreement for a given period – agreements on the same account cannot overlap. The period also limits documents: an LG can only be submitted to an agreement line whose period contains the LG expiration date.

Example: 1/1/2026 – 12/31/2027.

Agreement type – Revolving, Non-revolving

Revolving means that a limit used by a document becomes free again when the document is paid or closed. With Non-revolving, the amount stays used. In the code, the agreement type is read by import letters of credit when a shipment is paid; for letters of guarantee it has no effect – cancel and liquidate always release the limit.

Example: Non-revolving for LG01, Revolving for TF01.

Lines: Facility type / Limit / Amount used – Lookup / Amount / system-maintained

One line per type of document. Amount used is increased when an LG is submitted to the bank or an LC is confirmed, and decreased when it is released. The balance (limit minus amount used) is what the treasurer can still use.

Example: BidB 2,000,000; PerfB 5,000,000; RetM 1,000,000; AdvB 3,000,000.

Letter of guarantee calculation rules

When an agreement line has a facility type of nature Letter of guarantee, the Letter of guarantee FastTab shows five calculation rules. They are the commission and margin terms of the sanction letter, and they become the default amounts in the LG execution dialogs. The user can still overwrite the defaults in each dialog.

Cash margin – Percentage or Fixed value

The share of the guarantee that the bank blocks in cash. It is calculated at Receive from bank on the guarantee value, and on increase or decrease on the difference. A fixed-value margin is charged only at issuance.

Example: PerfB 10 %.

Issuance commission – Percentage or Fixed value

Charged when the bank issues the guarantee (Receive from bank), on the guarantee value.

Example: PerfB 1 %.

Extension commission – Percentage or Fixed value

Charged when the expiry date is extended, on the current value.

Example: PerfB 0.5 %.

Increase value commission – Percentage or Fixed value

Charged when the value is increased – on the new total value, not on the increase.

Example: PerfB 1 %.

Decrease value commission – Percentage or Fixed value

Charged when the value is reduced – on the new (lower) total value.

Example: PerfB fixed 250.00.

NOTE: The grid of agreement lines reorders itself after a save (it is sorted by the order of creation in the database, not by the order you see). When you maintain the calculation rules, select the line by its facility type, not by its position – we set the rules on the wrong lines the first time and had to correct them.

The trade finance facility

For letters of credit and collections, SAMF has a revolving USD facility with Gulf Trade Bank on bank account TRS-GTB-US. Letter of credit lines have no calculation rules: LC margins and charges are posted with journals (Chapter 8).

NOTE: Currency matters. An LG can only be submitted to an agreement line in the currency of its origin document, and an import LC finds its agreement line by the purchase order currency. A USD purchase order therefore needs a facility on a USD bank account – that is why we created TRS-GTB-US.

How documents use and release the facility

At the end of the examples in this book, the facilities looked as follows: all LG lines back at 0 (the bid bond was cancelled, the performance bond liquidated), and IrrLC on TF01 at 20,000.00 – the second shipment of the import LC is still open.

Extend – Action on the agreement

Creates a new agreement for the next period on the same bank account with the same lines and calculation rules and Amount used = 0. Documents that are still open stay on the old agreement line.

Example: Not used in the book.

For management reporting, Cash and bank management > Inquiries and reports > Letters of credit or guarantee > Bank facilities and utilization report lists limit, used amount and balance per agreement line. In our one-box environment the report did not render ("Something went wrong while generating the report."), so the form above is the reference; Chapter 15 covers the inquiries.

Business cases

Summary

Facility types say what a bank limit is for, facility agreements say how much each bank granted for which period on which account, and the LG calculation rules carry the commission and margin terms. SAMF now has a non-revolving SAR guarantee facility and a revolving USD trade facility. With the foundation complete, Part II starts with the first bank document: the letter of guarantee.