With Microsoft introducing significant updates to its licensing model, a proactive approach to
dynamics 365 user license validation is now essential for every organization using Finance and Operations applications.
Here at DynaOps365, we know that understanding these changes is the first step to ensuring compliance and preventing any disruption to your business. This guide provides a clear, step-by-step approach to prepare your organization for the new enforcement rules.
The 2025 License Enforcement Timeline: Key Dates to Know
Understanding the timeline for these changes is vital for a smooth transition. Mark your calendar for these key dates:
Starting April 30, 2025
Enhanced license reporting capabilities became available in the Power Platform admin center, offering comprehensive insights into license usage across all security roles.
Administrators gained access to reports showing available and assigned seats.
Starting September 1, 2025
Users who have not yet been assigned a license will begin to see in-product notifications prompting them to contact their administrator for license assignment. System administrators will also receive email alerts.
Beginning November 1, 2025
All Dynamics 365 Finance and Operations customers will be required to assign user licenses directly through the Microsoft 365 admin center.
Users without an assigned license will lose access to the applications and will be prompted to request the appropriate licenses from their administrator.
How the Dynamics 365 Grace Period Affects Compliance
Microsoft is providing a grace period to support a smooth transition and reduce the administrative burden.
This period is a transitional timeframe between the introduction of new in-product compliance notifications and license enforcement policies, and the date these policies become mandatory.
It commences on the effective date of a customer’s Dynamics 365 Finance and Operations subscription renewal in FY25 Q4 or FY26 Q1, lasting for 12 months from that renewal date.
While this period delays enforcement, it’s crucial to understand that all licensing obligations remain in effect, and Microsoft reserves the right to back-bill for unlicensed usage discovered during compliance audits.
Tools for License Usage Reporting: PPAC, LCS, and In-Product Reports
To properly audit user access, you need to use the improved reporting capabilities across three main platforms.
Power Platform Admin Center (PPAC)
This is a primary tool for administrators, providing comprehensive license reporting for required seats.
It reflects the number of assigned seats from the Microsoft 365 admin center and offers recommended actions to address assignment gaps.
Dynamics Lifecycle Services (LCS)
For consistency, LCS now integrates the same license usage reporting information available in PPAC, ensuring that both customer and system implementation partners have access to identical reporting details and actions.
In-Product Reporting (User Security Governance)
Now generally available, this workspace lets admins review licensing requirements based on actual security configuration.
Its ‘License Usage Summary Report’ helps pinpoint which objects increase a user’s license tier and identify unexpected assignments.
Your Action Plan for User License Validation and Compliance
To ensure a smooth transition and maintain continuous access to your Dynamics 365 Finance and Operations applications, follow these steps:
Proactively Assign Licenses
It is now mandatory for all users to have license assignments in the Microsoft 365 admin center.
This is the primary portal for assigning licenses. 20As a best practice, assign licenses at least 24 hours before a user requires access
Understand User and Role Types
Remember that if a user has multiple security roles, the highest license requirement among those roles will apply.
The system evaluates custom roles based on the highest-classified securable object they contain.
Act on Notifications
Beginning September 1, 2025, users and admins will receive alerts about non-compliance.
Use the user license level reporting in Power Platform admin center and Dynamics Lifecycle Services to identify users who need licenses assigned and ensure these are completed before November 1, 2025.
Conclusion and Your Next Step
Microsoft’s updates to Dynamics 365 license management underscore a commitment to simplifying administrative processes and enhancing visibility for organizations.
By following this step-by-step guide and proactively managing your user licenses, you can ensure a smooth transition, maintain compliance, and empower your team to continue leveraging the full potential of Dynamics 365 Finance and Operations applications without interruption.
For a more exhaustive breakdown of every license type and user scenario, you can review our comprehensive Dynamics 365 License-Compliance Handbook.