Section G.1
GL Design & Segmentation
Strategic framework for designing a Chart of Accounts and segmentation structure that supports financial reporting, operational analysis, and future growth.
Understanding NetSuite's GL Architecture
NetSuite's GL architecture combines a traditional Chart of Accounts with dimensional segmentation. Unlike legacy systems that embed all classifications in the account number itself, NetSuite separates the "what" (account) from the "who/where/why" (segments).
The Account + Segment Model
Traditional GL (Embedded): 4100-01-NYC-MFG
â â â âââ Department
â â âââââââ Location
â âââââââââââ Division
ââââââââââââââââ Account
NetSuite GL (Dimensional):
âââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
â Account: 4100 - Product Revenue â
â + Subsidiary: US Operations â
â + Department: Sales â
â + Class: Hardware â
â + Location: New York â
â + Custom Segment: Region = Northeast â
âââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Result: Single account, infinitely sliceable by any dimension
No account explosion, simpler maintenance Benefits of Dimensional Segmentation
| Benefit | Description | Example |
|---|---|---|
| Reduced Account Count | Fewer accounts to maintain | 1 revenue account vs 50 per product line |
| Flexible Reporting | Slice data any way needed | P&L by department, by class, or both |
| Future-Proof | Add new dimensions without COA changes | New location = new segment value, not new accounts |
| Consistent Entry | Users select segments on transactions | Dropdown selection vs memorizing account numbers |
NetSuite's Standard Segments
NetSuite provides four standard classification segments, each with specific characteristics and use cases.
Subsidiary (OneWorld)
| Characteristic | Description |
|---|---|
| Purpose | Legal entity identification |
| Hierarchy | Parent-child for consolidation |
| Currency | Base currency per subsidiary |
| Required | Always required on transactions |
| Typical Use | Legal entities, business units for statutory reporting |
Department
| Characteristic | Description |
|---|---|
| Purpose | Organizational unit classification |
| Hierarchy | Supports parent-child nesting |
| Restrictions | Can be restricted to subsidiaries |
| Typical Use | Cost centers, organizational units, functional areas |
Class
| Characteristic | Description |
|---|---|
| Purpose | Business categorization |
| Hierarchy | Supports parent-child nesting |
| Flexibility | Most flexible segment |
| Typical Use | Product lines, business lines, service types, projects |
Location
| Characteristic | Description |
|---|---|
| Purpose | Physical or logical location |
| Inventory Link | Tied to inventory tracking |
| Required | Required for inventory transactions |
| Typical Use | Warehouses, stores, offices, regions |
Segment Restriction to Subsidiary
In OneWorld, Department, Class, and Location can be restricted to specific subsidiaries. This controls which segment values appear based on the selected subsidiary, preventing invalid combinations like a "Paris Office" location appearing for a US subsidiary.
Custom Segments
When four standard segments aren't enough, NetSuite supports custom segments for additional classification dimensions.
Custom Segment Types
| Type | Values Source | Use Case |
|---|---|---|
| Custom List | Static list of values | Region, Channel, Brand |
| Custom Record | Custom record instances | Projects, Grants, Contracts |
| Standard Record | Existing NetSuite records | Customer, Employee, Item |
Creating Custom Segments
Key Configuration: âââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ â Label: Region â â ID: _region (system prefixes with cseg) â â Record Type: Custom List â â Description: Geographic region for sales analysis â â â â Filtering: â â â Filter By: Subsidiary â â â Filter By: Location â â â â Apply To: â â â GL Impact Transactions â â â Non-GL Transactions (quotes, opportunities) â â â â Reporting: â â â Show in Financial Statements â â â Include in Saved Searches â âââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Custom Segment Limits
NetSuite limits the number of custom segments. Check your account's limit (typically 5-15 depending on edition). Plan segment usage carefully - once created and used, custom segments cannot be deleted.
Segmentation Design Principles
1. Start with Reporting Requirements
Design segments based on how management needs to view financial data:
- What dimensions do executives need for decision-making?
- What statutory/regulatory reports are required?
- What operational metrics need tracking?
- What budget structures exist?
2. Assign Purpose to Each Segment
Recommended Segment Assignment: Subsidiary â Legal Entity "Who is the legal party to this transaction?" Example: US Inc., UK Ltd., Canada Corp. Department â Cost Center / Organizational Unit "Who is responsible for this cost/revenue?" Example: Sales, Marketing, Engineering, Finance Class â Product Line / Service Line "What product or service is this related to?" Example: Hardware, Software, Services, Support Location â Physical/Operational Location "Where did this transaction occur?" Example: NYC Warehouse, London Office, Online Custom Segment â Any Other Dimension "What else do we need to track?" Example: Region, Channel, Project, Grant
3. Design for Hierarchy
Department Hierarchy Example:
Department
âââ Operations
â âââ Manufacturing
â â âââ Assembly
â â âââ Quality Control
â âââ Warehouse
â âââ Receiving
â âââ Shipping
âââ Sales
â âââ Direct Sales
â â âââ Enterprise
â â âââ SMB
â âââ Channel Sales
âââ G&A
âââ Finance
âââ HR
âââ IT
Benefit: Report at any level (Operations total, or drill to Assembly) Common Segmentation Patterns by Industry
Manufacturing
Subsidiary: Legal entities Department: Production, Quality, Engineering, Sales, G&A Class: Product family (Widgets, Gadgets, Components) Location: Plants, Distribution centers Custom: Production Line, Shift
Software/SaaS
Subsidiary: Legal entities Department: R&D, Sales, Customer Success, G&A Class: Product (Platform, Add-ons, Services) Location: Office locations (often minimal) Custom: ARR Segment, Customer Tier
Professional Services
Subsidiary: Legal entities, Practice groups Department: Service line (Consulting, Audit, Tax) Class: Industry vertical (Healthcare, Tech, Financial) Location: Office locations Custom: Project, Engagement Partner
Nonprofit
Subsidiary: Legal entities, Chapters Department: Programs, Fundraising, G&A Class: Program/Fund (restricted vs unrestricted) Location: Service locations Custom: Grant, Campaign, Donor restriction
Segmentation Design Checklist
Section G.2
Chart of Accounts
Account types, numbering conventions, hierarchies, and best practices for COA design in NetSuite.
NetSuite Account Types
NetSuite provides predefined account types that control behavior on financial statements and transactions.
Balance Sheet Accounts
| Type | Normal Balance | Financial Statement | Examples |
|---|---|---|---|
| Bank | Debit | Assets (Current) | Operating Checking, Payroll Account |
| Accounts Receivable | Debit | Assets (Current) | Trade AR (system-controlled) |
| Other Current Asset | Debit | Assets (Current) | Prepaid Expenses, Deposits |
| Fixed Asset | Debit | Assets (Non-Current) | Equipment, Vehicles, Buildings |
| Accumulated Depreciation | Credit | Assets (Contra) | Accum Depr - Equipment |
| Accounts Payable | Credit | Liabilities (Current) | Trade AP (system-controlled) |
| Credit Card | Credit | Liabilities (Current) | Corporate Amex, Visa |
| Other Current Liability | Credit | Liabilities (Current) | Accrued Expenses, Sales Tax Payable |
| Long Term Liability | Credit | Liabilities (Non-Current) | Notes Payable, Mortgage |
| Equity | Credit | Equity | Common Stock, Retained Earnings |
Income Statement Accounts
| Type | Normal Balance | Financial Statement | Examples |
|---|---|---|---|
| Income | Credit | Revenue | Product Sales, Service Revenue |
| Other Income | Credit | Other Income | Interest Income, Gain on Sale |
| Cost of Goods Sold | Debit | COGS | Product COGS, Direct Labor |
| Expense | Debit | Operating Expenses | Rent, Utilities, Salaries |
| Other Expense | Debit | Other Expenses | Interest Expense, Loss on Disposal |
Account Numbering Best Practices
Standard Numbering Scheme
Common 4-5 Digit Numbering: 1XXX - Assets 1000-1099: Cash & Bank 1100-1199: Accounts Receivable 1200-1299: Other Current Assets 1300-1499: Fixed Assets 1500-1999: Other Assets 2XXX - Liabilities 2000-2099: Accounts Payable 2100-2299: Other Current Liabilities 2300-2999: Long Term Liabilities 3XXX - Equity 3000-3099: Capital Stock 3100-3199: Retained Earnings 3200-3999: Other Equity 4XXX - Revenue 4000-4099: Product Revenue 4100-4199: Service Revenue 4200-4999: Other Revenue 5XXX - Cost of Goods Sold 5000-5099: Product COGS 5100-5199: Direct Labor 5200-5999: Other Direct Costs 6XXX-8XXX - Operating Expenses 6000-6999: Selling Expenses 7000-7999: G&A Expenses 8000-8999: Other Operating 9XXX - Other Income/Expense 9000-9099: Interest Income/Expense 9100-9199: Gains/Losses 9200-9999: Tax/Extraordinary
Leave Gaps for Growth
Leave numbering gaps between accounts (e.g., 1000, 1010, 1020) to allow insertion of new accounts while maintaining logical ordering.
Section G.3
GL Impact by Transaction
Understanding how each transaction type affects the General Ledger.
Sales Cycle GL Impact
Invoice
Transaction: Invoice for $1,000 product sale + $80 tax ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ â DR: Accounts Receivable $1,080 â â CR: Product Revenue $1,000 â â CR: Sales Tax Payable $80 â â â â If inventory item: â â DR: Cost of Goods Sold $600 â â CR: Inventory $600 â ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Customer Payment
Transaction: Payment received $1,080 ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ â DR: Undeposited Funds $1,080 â â CR: Accounts Receivable $1,080 â â â â After Bank Deposit: â â DR: Bank Account $1,080 â â CR: Undeposited Funds $1,080 â ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Purchase Cycle GL Impact
Vendor Bill
Transaction: Bill for $500 office supplies ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ â DR: Office Supplies Expense $500 â â CR: Accounts Payable $500 â ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Bill Payment
Transaction: Pay vendor $500 ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ â DR: Accounts Payable $500 â â CR: Bank Account $500 â ââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ
Section G.4
Journal Entries
Creating and managing manual journal entries in NetSuite.
Journal Entry Types
| Type | Use Case | Access Path |
|---|---|---|
| Journal Entry | Standard manual entries | |
| Intercompany JE | Cross-subsidiary entries | |
| Statistical JE | Non-monetary tracking | Requires Statistical Accounts feature |
| Advanced Intercompany JE | Multi-subsidiary with auto-elimination | Requires AIJE feature |
Avoid Excessive Manual JEs
If you find yourself making the same journal entry monthly, consider automating it with a Memorized Transaction or investigating why the source transaction isn't posting correctly.
Section G.5
Multi-Book Accounting
Managing multiple accounting books for different reporting standards (GAAP, IFRS, statutory).
Multi-Book Accounting allows you to maintain parallel sets of books with different accounting treatments. Common use cases include GAAP vs IFRS reporting, or statutory vs management books.
Feature Required
Multi-Book Accounting requires the Multi-Book Accounting feature to be enabled. Contact your NetSuite administrator or account manager.
Section G.6
Currency & Revaluation
Managing foreign currency transactions and period-end revaluation processes.
Foreign currency revaluation adjusts the base currency value of open foreign currency balances at period end using current exchange rates.
Section G.7
Consolidation
Consolidating financial statements across subsidiaries.
NetSuite OneWorld provides real-time consolidation of subsidiary financials with automatic currency translation and elimination entries.
Section G.8
Period Close
Month-end and year-end close processes in NetSuite.
Period Close Checklist
Section G.9
Financial Reporting
Standard financial statements and custom reporting options.
Standard Financial Reports
- Balance Sheet - Point-in-time view of assets, liabilities, equity
- Income Statement - Period revenue and expenses
- Cash Flow Statement - Cash movements by activity
- Trial Balance - All account balances for verification
Access via:
Section G.10
GL for Specific Modules
How different NetSuite modules interact with the General Ledger.
Each NetSuite module (Inventory, Manufacturing, Projects, etc.) has specific GL posting rules and account assignments. Understanding these ensures accurate financial reporting.
Section G.11
Amortization Schedules
Automating expense and revenue recognition over time.
Amortization schedules automatically spread expenses (like prepaid insurance) or revenue (like deferred revenue) over multiple periods.
Section G.12
Budgeting
Creating and managing budgets in NetSuite.
NetSuite supports budget creation at various levels (account, department, class) with variance reporting against actuals.
Section G.13
Troubleshooting
Common GL issues and how to resolve them.
Common GL Issues
| Issue | Cause | Solution |
|---|---|---|
| Out of Balance | Currency rounding, deleted transactions | Run GL Balance Report, review rounding entries |
| Missing Segments | Segments not required on form | Update form preferences, review transactions |
| Wrong Period | Transaction date vs posting period mismatch | Verify accounting period settings |