Dynamics 365 Business Central 2026 release wave 1

Explore the latest innovations shaping smarter business operations

Microsoft is continuing to invest heavily in Business Central with another strong set of updates. The Business Central 2026 release wave 1 introduces improvements across AI, e-commerce, financial management, reporting, supply chain, and sustainability. It is one of the more substantial release waves in recent memory, with meaningful additions that touch nearly every area of the platform.

This blog breaks down the key updates by section. Whether you use Business Central for financials, operations, or reporting, there is something in this release worth knowing about.

Copilot and AI agents enhancements

AI continues to be a major investment area for Microsoft. The Business Central 2026 release wave 1 reflects that clearly. The updates in this section make Copilot and agents more visible, more manageable, and more useful. From a centralized task pane to a full agent designer, these changes are aimed at making AI a natural part of everyday work in Business Central.

• One place to manage every agent task: Previously, agent-generated tasks were scattered across different pages. There was no central view. Now, Business Central introduces a dedicated task pane that consolidates everything in one place. Users can open it from anywhere in the system. It displays suggestions, follow-ups, draft documents, and action items across finance, sales, and operations. All of this is visible without navigating away from the current page.
• Reviewing agent output without leaving the page: Users no longer need to navigate to a separate panel to review agent output. Suggestions such as field-level updates, text proposals, and document content now appear inline on the page where the user is already working. Users can review, edit, or dismiss suggestions in context. This keeps the workflow intact and reduces unnecessary clicks.
• Tracking which vendor emails the Payables agent has already handled: When the Payables agent processes an email from a shared mailbox, it stamps that email with an Outlook category. The category reads “Processed by Payables agent.” Any team member in the same mailbox can immediately see which emails the agent has already handled. This reduces the risk of double-handling and makes it easier to share a mailbox between humans and the agent.

Build your own custom AI agents inside Business Central

This is one of the most significant additions in the Business Central 2026 release wave 1. Business Central now includes a built-in agent designer. It lets users, consultants, and partners create custom AI agents. These agents are tailored to specific business scenarios. Organizations are no longer limited to out-of-the-box agents like the Sales Order Agent or Payables Agent. They can now design agents that reflect their own processes and workflows. The experience is built for a wide range of users. Developers are not the only ones who can use it.

• Writing agent instructions in natural language: Every agent is defined by goals and instructions written in plain language. The designer includes a simple editor. Users can define, refine, and test instructions directly inside it. Copilot can also help optimize prompts before the agent is deployed.
• Testing and diagnosing agent behavior in a sandbox: Agents can be tested in a sandbox environment before going to production. Detailed diagnostic views show what the agent did at each step. This includes its inputs, reasoning, and outputs. Users can pinpoint where adjustments are needed and tune the instructions accordingly.
• Starting an agent with a manual task trigger: Custom agents are started by manually creating a task. Users can include additional context or instructions alongside the agent’s core setup. This lets teams simulate event-based or email-triggered scenarios while the feature matures.
• Moving agent definitions between environments: Agent definitions can be exported as JSON files. They can then be imported into other sandbox environments. Microsoft recommends storing these files in source control such as GitHub. This helps track changes and maintain version history.
• Copilot credit consumption and billing: Custom agents consume Copilot credits as they complete each step. Credits can be provisioned through prepaid or pay-as-you-go models. This gives organizations flexibility as their AI usage grows.

Shopify connector gets stronger

Business Central’s Shopify integration continues to improve with each release, and this wave is no exception. In the Business Central 2026 release wave 1, the connector is updated to align with Shopify’s January 2026 API, and several practical improvements have been added based on user feedback. For businesses that depend on a tight connection between their ERP and their online storefront, these changes reduce manual work, improve data accuracy, and help keep the two systems in sync as Shopify’s platform evolves.

• Staying current with Shopify’s January 2026 API: The connector now runs on Shopify’s January 2026 API. This matters because Shopify only supports each API version for 12 months. Customers running the October 2025 version of Business Central should plan to upgrade soon. The API that version relies on will eventually reach end of support. Beyond the version update, inventory exports are now more reliable. The connector uses updated batch logic to stay within Shopify’s limits. It automatically retries failed operations. Any skipped records are logged so teams can review and take corrective action.
• Organizing exported products into custom Shopify collections: Items exported from Business Central can now be assigned to custom collections in Shopify. This happens during the export process. Merchants get more control over how products are grouped and displayed in their storefront. There is no need to manually organize them after export.
• Pushing item attributes to Shopify as product options: Business Central can now map item attributes to Shopify product options during export. Attributes like size or color defined in Business Central will appear as selectable options in Shopify. They are structured the way the platform expects. No manual rework in the Shopify admin is required.
• Matching sales documents to the currency the customer used at checkout: When a customer completes a Shopify order in a different currency, Business Central can now use that checkout currency on the sales document. This reduces discrepancies between what the customer was charged and what appears in Business Central. Reconciliation becomes more accurate as a result.
• Syncing variant images between both platforms: Images assigned to item variants in Business Central can now be synced to Shopify, and vice versa. This is useful for retailers selling products with multiple options such as colors, styles, or finishes. The correct image appears for each variant in Shopify. No manual uploads on the Shopify side are needed.

Financial management updates

Managing finances inside Business Central becomes more capable in this release. The Business Central 2026 release wave 1 adds several tools that have traditionally required third-party apps or custom development. Finance teams now have more to work with natively.

• Generating invoices on behalf of vendors with self-billed invoices: Self-billing allows a buyer to create an invoice on behalf of a supplier. This is useful when waiting on a supplier-issued invoice would delay payment processing. Business Central now supports this natively. A new toggle on the vendor card enables the agreement. Invoices are automatically flagged as self-billed and can be assigned a dedicated number series. A formatted report layout is also included.
• A native expense management module for employee reimbursements: Business Central is introducing built-in expense reports. This is a capability that has long required a third-party application. Employees can log costs, calculate per diem, and record mileage. Managers approve or reject submissions. Accountants post reimbursements using configurable expense categories and posting groups. Everything feeds directly into standard financial reporting.
• Automating withholding tax calculations on vendor payments: For organizations in regions where withholding tax applies to vendor payments, Business Central now handles this natively. Tax codes, posting groups, and revenue types are configured once. When a vendor invoice is paid or posted, Business Central calculates the withheld amount automatically. It reduces the vendor payment accordingly and posts the tax entry.
• A configurable framework for calculating excise taxes: Businesses dealing in goods subject to excise duties can now configure excise tax calculations inside Business Central. This applies to products like fuel, alcohol, and tobacco. The framework supports multiple tax bases. These include weight, volume, quantity, and sugar content.

Reporting and data analysis improvements

Business Central’s reporting capabilities continue to grow in the 2026 release wave 1. Microsoft is updating several areas to make data more accessible, more modern, and easier to govern. These improvements span subscription billing analytics, financial report design, inventory analysis, and report layout management.

• Deeper analytics for subscription billing in Power BI: The Subscription Billing Power BI app receives new enhancements designed to give businesses better visibility into recurring revenue. Updated dashboards and metrics make it easier to monitor subscription performance, identify trends, and support revenue reporting for organizations using Business Central’s subscription billing capabilities.
• Expanded capabilities for building financial reports: Financial reports inside Business Central gain additional flexibility in this release. Finance teams can expect improvements to how financial data is structured and presented, making it easier to design accurate statements for internal review, management reporting, and external use — without relying on exports to Excel or external tools.
• Modernized inventory analytics for operations teams: Inventory analytical reports are being refreshed to align with more modern reporting standards. The goal is to give operations and finance teams clearer, more actionable visibility into stock levels, inventory movement, and valuation — replacing older report designs with layouts that are easier to navigate and interpret.
• Governance tools for managing the full lifecycle of report layouts: Administrators can now manage the full lifecycle of report layouts directly inside Business Central. This includes activating, retiring, and updating layouts through a structured process rather than ad hoc changes. For organizations with multiple report layouts in use across departments, this adds a layer of governance that reduces confusion and helps ensure the right layouts are always in use.

Supply chain and manufacturing updates

The Business Central 2026 release wave 1 includes a wide range of improvements across purchasing, inventory, drop shipments, and production. The updates are designed to reduce friction in day-to-day operations, give teams more flexibility in how they manage documents and processes, and bring new capabilities to manufacturing and product data management.

Procurement and purchasing optimization

The purchasing workflow receives several practical updates in this release. Each one targets a specific friction point that teams commonly run into when processing purchase documents.

• Matching one invoice to multiple orders and receipts: Users can now match a single purchase invoice to multiple purchase orders and receipt lines at the same time. This is especially useful when a supplier consolidates charges from several deliveries into one invoice. Previously, users had to split the process manually or post invoices that didn’t match cleanly.
• Creating purchase quotes for contacts before a vendor is set up: Purchase quotes can now be created for contacts, not just existing vendors. As a result, teams evaluating potential suppliers can draft and share quotes before a full vendor record needs to be created.
• Adding an approval step for requisition worksheets and item journals: Requisition worksheets and item journals can now be routed through a formal approval workflow. This means purchase orders and inventory movements require sign-off before they are generated. Organizations get better control over purchasing decisions and internal authorization requirements.
• Filtering receipt and shipment lines to speed up invoicing: When creating invoices from receipts or shipments, users can now filter available lines to find the exact documents they need. This is particularly helpful in high-volume environments where list pages can run into hundreds of lines. Overall, it significantly reduces the time spent locating the right records.

Drop shipment and order process improvements

Drop shipments get a focused set of improvements that give businesses more control over how related purchase and sales documents are managed and processed. These updates are especially relevant for distributors and wholesalers who rely on drop shipping as a primary fulfillment method.

• Posting purchase invoices for drop shipments independently of sales invoices: Purchase invoices for drop shipments can now be posted without waiting for the related sales invoice to be posted first. Previously, the two documents were coupled in a way that could delay posting when the timing of invoicing differed between the buyer and the supplier.
• Reversing drop shipments when documents have not yet been invoiced: If a drop shipment needs to be canceled or corrected before invoicing, users can now reverse it directly. This removes a previous limitation where teams had no clean way to undo a drop shipment without the related sales and purchase documents already being invoiced.
• Creating purchase orders directly from a drop shipment: Purchase orders can now be generated directly from a drop shipment record, rather than requiring users to create the purchase order first and then link it. This streamlines order creation for businesses that regularly initiate drop shipments after confirming customer demand.

Inventory and product data management

Item variants receive two meaningful upgrades that support more detailed product data and make it easier to differentiate options across the system — particularly useful for businesses with large or complex product catalogs.

• Attaching variant-specific images to tell product options apart visually: Users can now attach a unique image to each item variant. For businesses selling products that come in different colors, sizes, or configurations, this makes it easier to identify the right variant at a glance inside Business Central — rather than relying solely on codes or descriptions.
• Defining attributes at the variant level, not just the item level: Item attributes can now be assigned to individual variants, not just the parent item. This means a business can track specific characteristics — such as material, weight, or dimensions — separately for each variant of the same item, supporting more granular product data management and better filtering in sales and purchasing workflows.

Manufacturing and production enhancements

Manufacturing users receive several practical improvements in this release. These cover usability, production flexibility, and quality control. For organizations already using Business Central’s production order capabilities, these updates extend what is already available on the shop floor.

• Smoother navigation and workflows on the production floor: General usability within manufacturing processes has been improved. The changes reduce friction in day-to-day tasks. Specifically, users benefit from fewer unnecessary clicks, cleaner workflows, and a more consistent experience. This applies across orders, routings, and work centers.
• Managing outsourced production steps with subcontracting support: Subcontracting capabilities have been expanded in this release. As a result, manufacturers who send part of their production process to external vendors have more tools to work with. Users can now manage subcontracting work orders, vendor routing steps, and associated costs directly inside Business Central. There is no longer a need for a workaround or add-on to handle the scenario.
• Evaluating incoming goods and raw materials before they enter production: A new quality evaluation feature lets users inspect incoming goods and raw materials before they are consumed in production. Users can log quality results and flag materials that do not meet specifications. From there, they can decide whether items should proceed to the production floor. Importantly, all of this happens without leaving Business Central.

Sustainability management expansion

Sustainability reporting is no longer a niche requirement. More organizations are expected to track, report, and share their environmental impact as part of standard operations. In the Business Central 2026 release wave 1, Microsoft continues to build out its sustainability tools to meet this need. In this release, the focus is on connecting sustainability data with external systems and making it more visible in everyday business documents.

• Four new APIs to connect sustainability data with external systems: Four new APIs expand what can be done with Business Central’s sustainability data. The Goals API supports read, insert, and modify operations for sustainability targets. The ESG Reporting Staging API provides read-only access to staged ESG data. Additionally, the Emission Value Entry API allows retrieval of calculated emission records. Finally, the Purchase Lines with Sustainability Detail API enables access to purchase lines including their sustainability fields. Together, these APIs let organizations automate ESG reporting workflows and sync sustainability data with external tools without manual exports.
• Showing carbon footprint data on sales document reports: Sales document report layouts can now include carbon footprint information alongside standard invoice and order content. As a result, when a document is sent to a customer, it can display the emissions associated with the transaction. This makes sustainability data a visible part of the customer relationship rather than a back-office exercise.

Next steps

The Business Central 2026 release wave 1 represents one of the more substantial updates the platform has seen in recent memory. The AI and agent capabilities are the most visible shift. Beyond AI, the financial management additions address long-standing gaps. Native expense reports, withholding tax support, excise tax calculations, and self-billed invoices bring capabilities into the core product that many organizations have been sourcing from third-party solutions. The supply chain and manufacturing updates are more incremental, but they solve real friction points around drop shipments, purchasing workflows, and variant data management.

For organizations planning around this release, working with an experienced Dynamics 365 Business Central partner can help ensure new features are adopted in a way that aligns with existing processes and delivers measurable value. For a full list of what is planned, visit the Business Central 2026 release wave 1 documentation.