Chapter 4.1

Customer Configuration

Customers are at the heart of your revenue cycle. Proper customer configuration ensures accurate invoicing, correct tax calculation, appropriate credit management, and meaningful sales analytics.

Customer Record Fundamentals

The customer record in NetSuite serves multiple purposes: it's the bill-to entity for invoices, the anchor for sales history, the target for marketing campaigns, and the subject of credit decisions.

Lists › Relationships › Customers

Key Customer Fields

  • Company Name: The legal entity name—used on invoices and legal documents
  • Customer ID: Auto-generated or custom format; consider using legacy system IDs during migration
  • Category: High-level customer classification (Enterprise, SMB, Government, etc.)
  • Status: Customer lifecycle stage (Lead, Prospect, Customer, Inactive)
  • Subsidiary: Which company entity owns this customer relationship (OneWorld only)
  • Currency: Primary transaction currency for this customer
  • Price Level: Default pricing tier (Base Price, Wholesale, VIP, etc.)
  • Payment Terms: Default terms applied to invoices (Net 30, Net 60, etc.)
  • Credit Limit: Maximum allowed open balance before holds apply
  • Tax Item/Tax Exempt: How tax is calculated on sales to this customer

Customer Hierarchy Design

Many businesses need to track relationships between customers—parent companies and their divisions, franchisors and franchisees, or buying groups and their members.

⚖️ Key Decision

Customer Hierarchy Approach

🎯 Consultant Insight
The most common mistake I see is over-engineering customer hierarchies. Start simple—you can always add complexity later. If you're unsure whether two locations need separate records, ask: "Do they ever pay separately?" If yes, separate records. If no, use addresses on a single record.

Customer Addresses

NetSuite distinguishes between billing addresses (where invoices go) and shipping addresses (where goods are delivered). A customer can have multiple of each.

Address Type Purpose Drives
Default Billing Primary invoice address AR correspondence, dunning letters
Default Shipping Primary delivery location Tax nexus, shipping cost calculation
Additional Shipping Alternate delivery locations Drop ship destinations, branch offices
⚠️ Tax Nexus Warning
In the US, the shipping address determines sales tax nexus, not the billing address. This is critical for companies shipping across state lines. Ensure shipping addresses are complete and accurate, including ZIP+4 where possible.

Credit Management Configuration

NetSuite's credit management features help control customer risk exposure.

1

Set Credit Limit

Establish the maximum open balance allowed for the customer based on credit analysis or corporate policy.

2

Configure Hold Rules

Enable credit hold preferences at Setup → Accounting → Accounting Preferences. Choose whether holds apply to sales orders, fulfillments, or both.

3

Define Override Roles

Specify which roles can override credit holds. Typically limited to credit managers or finance directors.

4

Set Up Alerts

Configure workflow alerts when customers approach or exceed credit limits. Consider alerts at 80% and 100% of limit.

👔 Professional Services
Professional Services Consideration
Wholesalers often extend significant credit to retailers. Consider implementing tiered credit limits based on payment history, with automatic limit increases after 6-12 months of on-time payments. Use the Credit Limit Hold feature aggressively—it's easier to approve an override than to chase a bad debt.

Customer Categories & Custom Fields

Beyond standard fields, you'll likely need custom fields to capture business-specific customer attributes.

Common Custom Fields for Customers

  • Account Manager: Employee field linking customers to their sales rep (if not using standard Sales Rep)
  • Industry Vertical: Custom list for more granular industry classification
  • Customer Tier: Strategic classification (Platinum, Gold, Silver)
  • Acquisition Source: How the customer was acquired (Trade Show, Referral, Website)
  • Contract Expiration: Date field for subscription/contract customers
  • NDA on File: Checkbox for compliance tracking
  • EDI Capable: Checkbox flagging customers set up for electronic transactions
💡 Best Practice
Create a "Customer Profile" custom record type if you need to track complex, multi-value attributes that don't fit well as fields on the customer record itself. This keeps the customer record clean while allowing rich data capture.

Duplicate Prevention

Duplicate customer records are a data quality nightmare. They fragment sales history, complicate collections, and produce misleading reports.

Native Duplicate Detection

NetSuite offers built-in duplicate detection based on configurable criteria. Enable at Setup → Company → Duplicate Detection Rules.

  • Exact Match: Flags identical company names or emails
  • Fuzzy Match: Catches near-duplicates like "ABC Corp" vs "ABC Corporation"
  • Phone Number Match: Useful for catching duplicates entered with different name variations
⚠️ Common Mistake
Duplicate detection only works on new record creation—it doesn't clean up existing duplicates. If migrating from a legacy system with known duplicates, clean them before import or plan for a post-migration deduplication project.

Pre-Go-Live Customer Configuration

Chapter 4.2

Vendor Configuration

Vendors are your supply chain partners. Proper vendor configuration ensures smooth purchasing, accurate AP aging, proper tax reporting (1099s), and effective spend analysis.

Vendor Record Fundamentals

The vendor record in NetSuite manages your relationships with suppliers, service providers, and contractors. It drives purchasing workflows, payment processing, and regulatory compliance like 1099 reporting.

Lists › Relationships › Vendors

Key Vendor Fields

  • Company Name: Legal name as it appears on invoices and 1099s
  • Vendor ID: Unique identifier—consider matching legacy system IDs during migration
  • Category: Vendor classification (Raw Materials, Services, Utilities, etc.)
  • Subsidiary: Which company entity purchases from this vendor (OneWorld)
  • Currency: Transaction currency for purchases
  • Payment Terms: Default terms (Net 30, Net 45, 2% 10 Net 30)
  • Tax ID: Federal EIN or SSN for 1099 reporting
  • 1099 Eligible: Flag for US tax reporting requirements
  • Default Expense Account: GL account for non-inventory purchases

Vendor Categories

Categorizing vendors enables meaningful spend analysis and helps route approvals appropriately.

Category Description Examples
Raw Materials Components used in manufacturing Steel suppliers, chemical vendors
Finished Goods Resale inventory suppliers Product distributors, dropship vendors
Services Professional and consulting services Law firms, accountants, consultants
Utilities Infrastructure services Electric, water, internet providers
MRO Maintenance, repair, operations Office supplies, janitorial, equipment maintenance
Contractors 1099 independent contractors Freelancers, temp agencies

1099 Configuration

US companies must issue 1099 forms to vendors who receive over $600 in non-employee compensation during a tax year.

1

Enable 1099 Features

Go to Setup → Company → Enable Features → Accounting tab. Enable "1099 Tracking" feature.

2

Configure 1099 Accounts

Mark expense accounts that typically involve 1099-reportable payments (professional services, rent, legal fees).

3

Set Vendor 1099 Flag

On each eligible vendor, check "1099 Eligible" and enter their Tax ID. Select appropriate 1099 type (NEC, MISC, etc.).

4

Verify Address Information

1099s are mailed to vendors—ensure mailing addresses are complete and current.

⚠️ W-9 Collection
Before paying any new vendor, collect a W-9 form to verify their Tax ID and legal name. Mismatched information causes IRS notices. Many companies use the vendor onboarding workflow to require W-9 upload before a vendor can be approved.

Three-Way Matching Setup

Three-way matching compares PO, receipt, and vendor bill to ensure you only pay for what was ordered and received.

Purchase Order
→
Item Receipt
→
Vendor Bill
→
Match & Pay
⚖️ Key Decision

Matching Level

👔 Professional Services
Professional Services Consideration
Manufacturers often receive raw materials with slight quantity variances due to weight-based pricing or material characteristics. Set reasonable tolerances (typically 2-5%) to avoid constant exception handling while maintaining control.

Payment Terms Configuration

Payment terms define when vendor bills are due. Standard terms should be created before vendor records are imported.

Setup › Accounting › Accounting Lists › Terms
Term Description Discount
Net 30Due 30 days from invoice dateNone
Net 45Due 45 days from invoice dateNone
Net 60Due 60 days from invoice dateNone
2% 10 Net 302% discount if paid in 10 days, otherwise due in 302%
Due on ReceiptPayment due immediatelyNone
PrepaidPayment required before goods/servicesNone
🎯 Consultant Insight
Early payment discounts like "2% 10 Net 30" represent a 36% annualized return on cash. If your company has adequate cash flow, always take these discounts. Configure workflow alerts to flag bills with available discounts approaching their discount date.

Vendor Approval Workflow

New vendors should go through an approval process before they can be used in transactions. This prevents unauthorized spend and ensures proper due diligence.

Typical Vendor Approval Workflow

  1. Requestor submits: Employee creates vendor record with basic information
  2. Procurement review: Purchasing validates vendor legitimacy and negotiates terms
  3. Finance review: AP verifies tax information, bank details for ACH
  4. Compliance check: Verify against denied party lists, check for conflicts of interest
  5. Final approval: Manager or director approves based on spend threshold
💡 Best Practice
Use a vendor status field (Pending, Approved, On Hold, Inactive) and configure role permissions so only Approved vendors can be selected on purchase orders. This enforces the approval workflow.

Vendor Banking for ACH Payments

If you pay vendors via ACH/EFT, their banking information must be stored securely on the vendor record.

Banking Fields

  • Bank Name: Name of vendor's financial institution
  • Account Number: Vendor's bank account number
  • Routing Number: ABA routing number for US banks
  • Account Type: Checking or Savings
  • IBAN/SWIFT: For international vendors
🚨 Security Critical
Vendor bank account fraud is a growing threat. Implement these controls:
  • Require dual approval for any bank account changes
  • Verify changes via phone call to a known number (not from the change request)
  • Send confirmation to vendor's registered email when banking changes
  • Review all banking changes in weekly AP meeting

Pre-Go-Live Vendor Configuration

Chapter 4.3

Employee Configuration

Employees are system users, approval participants, and cost centers. Proper employee configuration enables expense management, time tracking, project costing, and organizational reporting.

Employee Record Overview

The employee record in NetSuite serves dual purposes: it's both an HR record containing personal and organizational information, and a system identity that can be granted login access.

Lists › Employees › Employees

Core Employee Fields

  • Name: Legal first and last name
  • Employee ID: Unique identifier, often matching HRIS system
  • Email: Required for system access—typically corporate email
  • Subsidiary: Which entity employs this person (OneWorld)
  • Department: Organizational department for reporting
  • Location: Physical work location
  • Supervisor: Reporting manager—drives approval routing
  • Hire Date: Employment start date
  • Job Title: Current position title

Employee vs. User Access

A critical distinction in NetSuite: every user is an employee, but not every employee is a user.

Type Has Employee Record Has Login Access License Impact
Full User Yes Yes (Full Access) Consumes full user license
Employee Self-Service Yes Yes (Limited) Free (limited to employee center)
No Access Employee Yes No None—reference only
💡 License Optimization
Not everyone needs a full NetSuite license. Employees who only need to submit expenses, view pay stubs, or request time off can use free Employee Self-Service access. Reserve full licenses for users who need transaction entry or reporting.

Organizational Hierarchy

The supervisor field creates organizational hierarchy used for approval routing and organizational reports.

⚖️ Key Decision

Approval Hierarchy

Role Assignment

Employee access is controlled through role assignment. Roles determine what an employee can see and do in NetSuite.

1

Identify Required Roles

Map employee job functions to NetSuite roles. A single employee may need multiple roles for different functions.

2

Assign Primary Role

Set the default role the employee sees at login. This should be their most-used role.

3

Add Secondary Roles

Assign additional roles the employee can switch to. Employees can change roles via the role dropdown.

4

Test Access

Log in as the employee (if administrator) or have them verify they can access required features.

⚠️ Role Sprawl Warning
Avoid creating unique roles for individual employees. This makes maintenance impossible. Instead, create function-based roles (AP Clerk, Sales Rep, Warehouse Staff) and assign the appropriate role to each employee. One role should serve many employees.

Employee Defaults

Default values on the employee record streamline transaction entry by auto-populating fields.

Key Default Fields

  • Default Expense Account: Account used when employee submits expenses
  • Default Subsidiary: Pre-selected subsidiary on transactions
  • Default Location: Pre-selected location on transactions
  • Default Department: Pre-selected department on transactions
  • Default Class: Pre-selected class on transactions
  • Currency: Employee's preferred transaction currency

Time and Expense Configuration

If using NetSuite for time tracking or expense management, additional employee configuration is required.

Time Tracking Setup

  • Time Approver: Who approves this employee's timesheets
  • Labor Cost: Internal cost rate for project costing
  • Billable Rate: Rate charged to customers for this employee's time
  • Work Calendar: Which calendar defines their work schedule
  • Overtime Eligible: Whether overtime rules apply

Expense Setup

  • Expense Approver: Who approves expense reports
  • Expense Limit: Maximum single expense without additional approval
  • Corporate Card: Link to corporate credit card for statement reconciliation
  • Reimbursement Method: How employee receives reimbursement (check, ACH, payroll)
ℹ️ SuitePeople Integration
If using SuitePeople HCM, employee records are managed more extensively with payroll, benefits, and HR workflows. The employee record becomes the central HR hub rather than just a system access mechanism.

Sales Rep Configuration

Employees involved in sales need additional configuration to track commissions and sales credit.

Sales Rep Fields

  • Is Sales Rep: Checkbox enabling sales rep functionality
  • Sales Territory: Assigned territory for territory management
  • Commission Plan: Which commission plan applies to this rep
  • Sales Target: Quota for reporting and dashboards
  • Give Access to All Customers: Whether rep can see customers outside their territory
⚠️ Sales Rep vs. Supervisor
The Sales Rep field on transactions is independent of the employee hierarchy. A junior rep might have a sales manager as their supervisor but still be the Sales Rep on their own deals. Configure workflows to handle situations where both roles need visibility.

Employee Lifecycle

Onboarding
→
Active
→
Leave (Optional)
→
Terminated
🚨 Termination Security
When an employee leaves, immediately:
  • Remove all roles (revokes access)
  • Set "Give Access" to No
  • Set Release Date/Termination Date
  • Update supervisor for their direct reports
  • Reassign any open transactions, opportunities, or cases
Never delete employee records—set to Inactive to preserve historical data and audit trails.
👔 Professional Services
Professional Services Consideration
For consulting and professional services firms, employees are your inventory. Set up project-related defaults carefully—billable rate, cost rate, and default billing class should be configured on each employee record to ensure accurate project profitability calculations.

Pre-Go-Live Employee Configuration

Chapter 4.4

Contact Strategy

Contacts are the people at customer, vendor, and partner organizations. A well-designed contact strategy enables effective communication, proper transaction routing, and comprehensive relationship management.

Understanding Contacts in NetSuite

Contacts are individual people associated with entity records (customers, vendors, partners). Unlike the entity itself, which represents the company or organization, contacts represent the humans you interact with.

Lists › Relationships › Contacts

Contact vs. Entity

  • Entity (Customer/Vendor): The company you do business with—bills, pays, and has a balance
  • Contact: A person at that company—receives emails, makes decisions, attends meetings
💡 Key Principle
A single contact can be associated with multiple companies (e.g., a consultant working with several clients), and a single company can have many contacts (e.g., different departments). This many-to-many relationship is fundamental to contact strategy.

Contact Roles

Contact roles define the function a contact plays at their company. Roles enable targeted communication and workflow automation.

Role Typical Use Transaction Association
Primary Contact Main point of contact for general business Default on most communications
Billing Contact Receives invoices and billing inquiries Invoice emails, AR statements
Shipping Contact Coordinates deliveries Fulfillment notifications, tracking info
Purchasing Contact Places orders, negotiates pricing Order confirmations, quotes
Technical Contact Handles technical issues and support Support cases, product updates
Executive Sponsor Senior decision maker Escalations, strategic communications
🎯 Consultant Insight
Don't over-complicate contact roles. Start with 4-6 core roles that match your actual communication patterns. You can always add more later, but removing roles after data exists is painful.

Contact Creation Strategy

There are multiple ways contacts enter NetSuite. Your strategy should define which methods are appropriate for your organization.

⚖️ Key Decision

Contact Creation Approach

Contact Fields Configuration

Configure contact fields to capture information relevant to your business communication needs.

Standard Contact Fields

  • Name: First name, middle name, last name, salutation
  • Company: Associated customer, vendor, or partner record
  • Email: Primary email address for communications
  • Phone: Office phone, mobile phone, fax
  • Title: Job title at their company
  • Role: Contact role (from your configured list)
  • Subsidiary: For multi-subsidiary filtering

Common Custom Fields

  • Preferred Communication: Email, phone, or text preference
  • LinkedIn URL: Professional profile link
  • Last Contact Date: Track engagement recency
  • Marketing Opt-In: Email marketing consent status
  • Decision Authority: Budget owner, influencer, end user
  • Birthday: For personalized outreach
⚠️ Privacy Consideration
Be mindful of data privacy regulations (GDPR, CCPA) when capturing contact information. Ensure you have appropriate consent for marketing communications and honor opt-out requests promptly. Consider adding consent tracking fields.

Contact Access Control

By default, contacts are visible to anyone with access to the parent entity. Configure access controls based on your security requirements.

Access Options

  • Global Access: All employees can view all contacts
  • Role-Based: Contacts visible based on user's role permissions
  • Sales Rep Restricted: Contacts visible only to assigned sales rep
  • Subsidiary Restricted: Contacts visible only within subsidiary
👔 Professional Services
Professional Services Consideration
SaaS companies often need to track user-level contacts for each customer account—the people who actually use the product. Consider a custom contact role or separate "User" record type to distinguish decision makers from end users for targeted renewal and expansion communications.

Transaction Contact Assignment

Contacts can be assigned to transactions to specify who should receive communications about that transaction.

Transaction Type Contact Use Email Trigger
Quote/EstimatePurchasing or Decision MakerQuote PDF email
Sales OrderPurchasing ContactOrder confirmation
Item FulfillmentShipping ContactTracking notification
InvoiceBilling ContactInvoice email
Support CaseTechnical ContactCase updates
💡 Best Practice
Configure default contact assignment based on role. When a billing contact exists, automatically populate them on invoices. This reduces manual entry and ensures communications reach the right person.

Customer Portal Access (Contact Login)

Contacts can be granted access to the Customer Center portal to view invoices, track orders, and submit support cases.

1

Enable Web Access

On the contact record, check "Give Access" and assign a Customer Center role.

2

Set Login Credentials

Enter email and password, or enable password reset email for the contact to set their own.

3

Configure Access Level

Determine what the contact can see—their own orders only, or all orders for their company.

4

Send Welcome Email

Trigger onboarding email with login instructions and portal URL.

ℹ️ Portal Access Licensing
Customer Center access for contacts is typically included at no additional license cost. This makes it an economical way to provide self-service capabilities. Vendor Center access follows similar patterns for vendor contacts.

Duplicate Contact Prevention

Contact duplication is common, especially when multiple teams create contacts. Implement controls to minimize duplicates.

Prevention Strategies

  • Email Uniqueness: Configure duplicate detection to flag matching emails
  • Search Before Create: Train users to search for existing contacts first
  • Workflow Validation: Check for duplicates on save and alert user
  • Regular Cleanup: Schedule periodic duplicate review and merge
⚠️ Merge Carefully
When merging duplicate contacts, all transaction history and communications move to the surviving record. Verify you're keeping the correct record (usually the one with more complete data and longer history) before merging.

Pre-Go-Live Contact Configuration

Chapter 4.5

Partner & Competitor Records

Partners and competitors round out NetSuite's relationship management capabilities. Partner records track referral relationships and commissions, while competitor records support competitive intelligence in sales cycles.

Partner Records Overview

Partner records represent organizations or individuals who refer business to you, resell your products, or collaborate with you in delivering solutions.

Lists › Relationships › Partners

Common Partner Types

  • Referral Partners: Introduce leads and earn referral fees
  • Resellers: Purchase and resell your products (may also be vendors)
  • Implementation Partners: Deliver services using your platform
  • Technology Partners: Integrate complementary solutions
  • Affiliates: Promote products through online channels

Partner Commission Tracking

NetSuite can track partner commissions on transactions they influence or refer.

Commission Model Description Configuration
Flat Percentage Fixed % of deal value Set default rate on partner record
Tiered Rate varies by volume or product Custom commission schedules
Revenue Share Ongoing % of recurring revenue Workflow calculation on renewals
Fixed Fee Set amount per referral Custom field calculation

Partner Portal Access

Partners can be granted portal access to view leads, register deals, track commissions, and access marketing materials.

Partner Center Capabilities

  • Lead Registration: Partners submit leads for approval
  • Deal Registration: Protect partner opportunities from channel conflict
  • Commission Statements: View earned and pending commissions
  • Marketing Resources: Download approved collateral and campaigns
  • Training Materials: Access product and sales training
⚠️ Portal Scope
Partner Center provides basic functionality. Evaluate whether it meets your partner program needs before committing. Many mature partner programs outgrow native capabilities and require SuiteCommerce or third-party PRM integration.

Competitor Records

Competitor records track companies you compete against in sales situations. They support sales intelligence and win/loss analysis.

Lists › Relationships › Competitors

Key Competitor Fields

  • Name: Competitor company name
  • URL: Competitor website for quick reference
  • Strengths: What they do well—inform sales strategy
  • Weaknesses: Where you can differentiate
  • Strategies: How to compete against them
  • Win Rate: Calculated from opportunities

Using Competitors in Sales

Link competitors to opportunities to track competitive situations and analyze win/loss patterns.

⚖️ Key Decision

Competitor Tracking Depth

👔 Professional Services
Professional Services Consideration
In competitive software markets, win/loss analysis against specific competitors is crucial for product positioning. Track competitors on every lost opportunity and conduct win/loss interviews. The pattern data drives product roadmap and sales enablement priorities.

Partner & Competitor Reporting

Both partners and competitors enable valuable reporting when used consistently.

Partner Reports

  • Partner Performance: Revenue generated per partner
  • Commission Accrual: Outstanding commission obligations
  • Partner Pipeline: Opportunities by partner
  • Lead Conversion: Partner lead to customer conversion rate

Competitor Reports

  • Win Rate by Competitor: How often you win against each competitor
  • Competitor Frequency: Which competitors appear most often
  • Loss Reasons: Why you lose to specific competitors
  • Deal Size Impact: How competitor presence affects deal size
💡 Data Quality
Competitor tracking is only valuable if sales reps consistently record the information. Make competitor field required on lost opportunities to ensure data capture. Review competitor data in pipeline meetings to reinforce adoption.

Pre-Go-Live Configuration

Chapter 4.6

Item Types Deep Dive

Items are what you sell, buy, and track. NetSuite provides numerous item types, each with specific behaviors. Choosing the right item type is critical—changing later often requires recreating the item.

Item Type Overview

NetSuite's item types determine how an item behaves in transactions, inventory tracking, GL posting, and reporting.

Lists › Accounting › Items
🚨 Critical Decision
Item type cannot be changed after creation (with very limited exceptions). If you create an inventory item and realize it should be a service item, you must create a new item and migrate transaction history. Plan carefully before creating items.

Core Item Types

Item Type Tracks Inventory Typical Use
Inventory Item Yes Physical goods you stock and ship
Non-Inventory Item No Physical goods you don't track (office supplies, low-value items)
Service Item No Labor, consulting, professional services
Other Charge Item No Freight, handling, fees, miscellaneous charges
Discount Item No Line-level discounts (%, $, or formula)
Markup Item No Line-level surcharges
Payment Item No Customer payments applied to invoices
Subtotal Item No Subtotals within transactions

Inventory Items

Inventory items are physical products you purchase, stock, and sell. They drive perpetual inventory tracking, costing, and valuation.

Key Configuration Fields

  • Costing Method: FIFO, LIFO, Average, or Standard (set at subsidiary level)
  • Track Landed Cost: Include freight and duties in item cost
  • Lot Numbered: Track items by lot for traceability
  • Serialized: Track individual serial numbers
  • Location Inventory: Track quantity by location
  • Reorder Point: Trigger purchase orders when stock falls below threshold
  • Preferred Vendor: Default vendor for purchasing
⚖️ Key Decision

Costing Method

👔 Professional Services
Professional Services Consideration
Manufacturers typically use Standard Cost to set predetermined costs for raw materials and finished goods. Variances (purchase price, production efficiency) are tracked separately. This enables better cost control and margin analysis.

Service Items

Service items represent labor or professional services. They don't track inventory but do track revenue and may track time.

Service Item Subtypes

  • For Sale: Services you sell to customers (consulting, support)
  • For Purchase: Services you buy from vendors (contractors, outsourced work)
  • For Resale: Services you buy and resell (subcontracted services)
💡 Time Tracking Integration
Service items can be linked to time tracking. When employees log time against a project, the service item determines the billing rate and revenue account. Configure "Price/Rate" for billing and "Cost" for internal costing.
👔 Professional Services
Professional Services Consideration
Services firms often create service items for each billing rate tier (Partner, Senior Consultant, Analyst) and service type (Advisory, Implementation, Support). This enables detailed revenue analysis by service line while simplifying time entry.

Non-Inventory Items

Non-inventory items represent physical goods you don't track in inventory—either because they're low-value, consumed immediately, or fulfilled via drop ship.

Common Uses

  • Office Supplies: Pens, paper, toner—not worth tracking individually
  • Drop Ship Items: Products shipped directly from vendor to customer
  • Special Orders: One-time items ordered specifically for a customer
  • Consumables: Items used internally (cleaning supplies, break room items)
⚠️ Drop Ship Configuration
For drop ship items, enable "Drop Ship" and "Special Order" checkboxes. This allows creating POs directly from sales orders and routing shipments from vendor to customer without touching your warehouse.

Other Charge Items

Other Charge items capture miscellaneous fees and charges that aren't products or services.

Common Uses

  • Freight: Shipping charges billed to customers
  • Handling: Packaging and handling fees
  • Setup Fees: One-time configuration charges
  • Restocking Fees: Charges for returned items
  • Rush Charges: Expedited processing fees
🎯 Consultant Insight
Create separate Other Charge items for each fee type rather than using one generic "Fee" item. This enables accurate reporting on fee revenue by type. You'll thank yourself during annual planning when asked "how much did we collect in shipping charges?"

Discount and Markup Items

These items modify line amounts within transactions.

Discount Items

  • Percentage: Reduce by % of subtotal above discount line
  • Fixed Amount: Reduce by flat dollar amount
  • Rate: Apply discount based on item-level calculation

Markup Items

  • Same options as Discount: Increase rather than decrease amounts
  • Use for surcharges: Fuel surcharges, expedited handling
ℹ️ Line Position Matters
Discount and Markup items apply to the subtotal of lines above them. A discount in the middle of an order only discounts items listed above it. Use Subtotal items to control which lines are discounted.

Item GL Impact

Each item type has default accounts that control GL posting. Understanding this is essential for accurate financial reporting.

Item Type Key Accounts
Inventory ItemAsset (Inventory), COGS, Income (Revenue), Expense
Service ItemIncome (Revenue), Expense (if purchased)
Non-InventoryIncome, COGS or Expense
Other ChargeIncome or Expense
DiscountContra-revenue or expense
💡 Account Assignment Strategy
Set up item categories/classes that auto-populate default accounts. This ensures consistent GL posting and reduces errors. Use account validation rules to prevent incorrect account selection on items.

Special Item Types

Type Purpose Common Use
Kit/Package Bundle items for sale as a single unit Product bundles, starter kits
Assembly/BOM Items manufactured from components Manufactured products
Group Item Group items for entry convenience Standard order templates
Description Item Add text to transactions Special instructions, notes
Gift Certificate Store credit instruments Retail gift cards
Download Item Digital products Software, digital content

Before Creating Items

Chapter 4.7

Assembly & BOM Items

Assembly items represent products manufactured from component parts. The Bill of Materials (BOM) defines the recipe, and assembly builds consume components to produce finished goods.

Understanding Assembly Items

Assembly items are central to manufacturing in NetSuite. When you build an assembly, the system consumes the component items and adds the finished product to inventory—all with proper GL entries.

Components
→
Assembly Build
→
Finished Good

Assembly vs. Kit

Feature Assembly Item Kit/Package
Components consumed? Yes, during assembly build No, consumed at sale
Finished item tracked? Yes, as separate inventory No, components tracked
Build transaction? Yes, required No
Typical use Manufacturing Product bundles, combos
💡 When to Use Assembly
Use assembly items when you physically transform components into a new product before sale. Use kit items when you simply bundle existing products together at time of sale without pre-building.

Bill of Materials (BOM)

The BOM defines what components make up an assembly and in what quantities. This is the recipe for your manufactured product.

BOM Configuration

  • Component Item: The raw material or sub-assembly used
  • Quantity: Amount of component per unit of assembly
  • Item Source: Stock (from inventory), Work Order, or Phantom
  • Component Yield: Expected yield percentage (for loss/scrap)
  • BOM Revision: Version control for BOM changes
ℹ️ Multi-Level BOMs
Assemblies can contain other assemblies as components (sub-assemblies). This creates multi-level BOMs. When building the parent, NetSuite can automatically build sub-assemblies or consume them from stock.

Work Orders

For more complex manufacturing, Work Orders provide additional control over the build process.

Transactions › Manufacturing › Create Work Orders

Work Order Features

  • Planned vs. Released: Stage builds through planning approval
  • Component Issuance: Track when components are issued to production
  • Labor Tracking: Record labor time against production
  • Routing: Define production steps and operations
  • Partial Completions: Complete builds in stages
  • Scrap Tracking: Record and account for production scrap
👔 Professional Services
Professional Services Consideration
Use Work Orders instead of simple Assembly Builds when you need: production scheduling, labor tracking, operation routing, WIP inventory accounting, or detailed variance analysis. Simple builds work for light assembly; Work Orders are essential for production floor control.

Assembly Build Process

Assembly builds are transactions that consume components and create finished goods.

1

Create Assembly Build

Navigate to Transactions → Manufacturing → Build Assemblies. Select the assembly item and quantity to build.

2

Verify Components

System displays required components based on BOM. Verify availability. Adjust quantities if actual usage differs.

3

Execute Build

Save the assembly build. Components are consumed from inventory, finished goods added.

4

Review GL Impact

Verify proper COGS/inventory entries. WIP (Work in Progress) account used if applicable.

⚖️ Key Decision

Build Location

Assembly Costing

Assembly item costs roll up from components. Understanding how cost flows is essential for accurate product costing.

Cost Components

  • Material Cost: Sum of component item costs × quantities
  • Labor Cost: Direct labor applied to production
  • Machine Cost: Equipment/overhead applied to production
  • Overhead: Indirect costs allocated to production
🎯 Consultant Insight
For Standard Cost assemblies, set the standard cost equal to the sum of component standards plus labor/overhead. Run cost rollups regularly to identify when actual costs deviate from standards. Large variances indicate pricing issues or process inefficiencies.

Phantom Items

Phantom items are sub-assemblies that exist in the BOM but aren't stocked as separate inventory items.

Phantom Item Behavior

  • Components "pass through" to parent assembly build
  • No separate inventory tracking for the phantom itself
  • Useful for logical groupings of components
  • Simplifies BOM management for common sub-assemblies
💡 When to Use Phantoms
Use phantom items when a sub-assembly is always immediately consumed into a parent and never stocked or sold independently. This simplifies inventory without losing BOM structure.

BOM Revisions

As products evolve, BOMs change. BOM revisions track these changes and maintain history.

Revision Management

  • Effective Dates: When each revision becomes active
  • Reason Codes: Why the BOM changed (engineering change, cost reduction)
  • Component Substitution: Replace one component with another
  • Quantity Changes: Adjust component quantities
  • Historical Builds: Builds reference the BOM revision active at build time
⚠️ Revision Planning
Plan BOM revisions carefully. Once a revision is used in production, it cannot be deleted. Use effective dates to schedule changes without disrupting current production. Test new revisions in sandbox first.

Pre-Go-Live Assembly Configuration

Chapter 4.8

Matrix Items

Matrix items manage products with variations like size, color, or style. They simplify management of variant products while maintaining separate SKUs for inventory tracking and order fulfillment.

Understanding Matrix Items

Matrix items solve the challenge of managing products that come in multiple variations. Instead of creating hundreds of individual items, you create one matrix parent with options that generate child items automatically.

Matrix Structure

  • Matrix Parent: The template item defining common attributes
  • Matrix Options: The variation dimensions (Size, Color, etc.)
  • Matrix Children: Individual SKUs for each combination (Small/Red, Large/Blue, etc.)
💡 When to Use Matrix Items
Use matrix items when products share the same core attributes (description, vendor, category) but vary in specific dimensions. Classic examples: apparel (size/color), electronics (capacity/color), furniture (size/material).

Matrix Options Configuration

Matrix options define the variation dimensions. Each option creates a level in the matrix.

Setup › Items › Matrix Item Options

Common Matrix Options

Option Example Values Industry Use
Size XS, S, M, L, XL, XXL Apparel, footwear
Color Black, White, Navy, Red Apparel, consumer goods
Width Narrow, Regular, Wide Footwear
Capacity 64GB, 128GB, 256GB Electronics
Material Cotton, Polyester, Silk Textiles, furniture
⚠️ Option Limits
Matrix items support up to 3 option dimensions. Plan carefully—the number of children equals Option1 values × Option2 values × Option3 values. A 10×10×5 matrix creates 500 child items!

Matrix Item Pricing

Matrix items support flexible pricing at both parent and child levels.

⚖️ Key Decision

Pricing Approach

👔 Professional Services
Professional Services Consideration
Retail apparel commonly uses option-based pricing surcharges for larger sizes (XL, XXL) to account for higher material costs. Set base price on standard sizes and add fixed surcharges for extended sizes. This is transparent to customers and easy to manage.

Creating Matrix Items

The matrix item creation process builds the parent and generates children in one workflow.

1

Create Matrix Parent

Start with a new Inventory Item. Check "Matrix Item" on the item record. Fill common fields (name, vendor, category).

2

Select Matrix Options

Choose which matrix options apply to this item. Select specific values available for each option.

3

Configure Combinations

Review the matrix grid showing all combinations. Deselect any invalid combinations (e.g., XXL not available in certain colors).

4

Set Pricing

Set base price on parent. Optionally set different prices for specific children (size surcharge, material upcharge).

5

Generate Children

Save the matrix item. NetSuite generates all child SKUs automatically based on your selections.

Child Item Naming

Child items need unique names/SKUs. NetSuite can auto-generate these based on configurable patterns.

Naming Pattern Options

  • Parent + Options: TSHIRT-001-RED-LARGE
  • Option Abbreviations: TSHIRT-001-R-L
  • Sequential Numbers: TSHIRT-001-001, TSHIRT-001-002
  • Custom Pattern: Configure via item preferences
🎯 Consultant Insight
Establish a consistent child naming convention before creating matrix items. The pattern should be human-readable for warehouse picking but also sortable for reporting.

Inventory Tracking

Matrix children are full inventory items—each tracks quantity separately. The parent doesn't hold inventory.

Inventory Considerations

  • Location Tracking: Each child tracks quantity by location independently
  • Lot/Serial: Children can be lot-numbered or serialized individually
  • Reorder Points: Set reorder points on children, not parent
  • Committed/Available: Standard inventory fields apply to children
ℹ️ Parent Item Display
The parent item shows aggregate inventory across all children for quick reference. Detailed inventory reports should query child items for accurate stock by variant.

Transaction Entry

When adding matrix items to transactions, users can select from the parent level or child level.

Entry Methods

  • Matrix Popup: Select parent item, popup shows grid of options to choose variant
  • Direct Child Entry: Type or scan child SKU directly
  • Barcode Scanning: Scan child item barcode for direct entry
💡 E-commerce Integration
For web stores, matrix items display as a single product with option dropdowns (Size, Color). When customer selects options, the system creates order lines for the specific child items.

Managing Matrix Changes

Products evolve—new colors launch, sizes discontinue. Matrix items handle this through adding and inactivating children.

Adding New Options

  1. Edit the matrix parent item
  2. Add new option values to the matrix grid
  3. Save to generate new child items
  4. Set pricing and configure new children as needed

Discontinuing Options

  1. Sell through remaining inventory
  2. Inactivate child items (don't delete—preserves history)
  3. Optionally remove from matrix grid display
⚠️ Don't Delete Children
Never delete child items with transaction history. Inactivate them instead. Deletion loses historical data and breaks reporting. Inactive items are hidden from selection but preserved for history.

Pre-Go-Live Matrix Configuration

Chapter 4.9

Pricing Configuration

Pricing determines profitability. NetSuite offers multiple pricing mechanisms from simple base prices to complex quantity schedules and customer-specific pricing.

Pricing Fundamentals

Every item needs a price, but how that price is determined varies significantly across business models.

Key Pricing Concepts

  • Base Price: The default price on the item record
  • Price Level: Named pricing tiers (Wholesale, Retail, VIP)
  • Quantity Pricing: Price varies by quantity ordered
  • Customer-Specific Pricing: Custom prices for individual customers
  • Promotional Pricing: Time-limited price changes

Price Levels

Price levels create named pricing tiers that can be assigned to customers. This is the most common approach for B2B pricing.

Setup › Accounting › Accounting Lists › Price Levels

Common Price Level Structures

Level Name Discount from Base Typical Use
Base Price 0% Walk-in customers, retail
Wholesale 20-30% Resellers, large buyers
Distributor 30-40% Distribution partners
VIP/Preferred 10-15% Long-term loyal customers
Employee 40-50% Internal employee purchases
⚖️ Key Decision

Price Level Approach

Quantity Pricing Schedules

Quantity pricing provides discounts based on order quantity, encouraging larger purchases.

Minimum Qty Maximum Qty Price Discount
1 9 $100.00 0%
10 49 $95.00 5%
50 99 $90.00 10%
100 ∞ $85.00 15%
👔 Professional Services
Professional Services Consideration
Distributors often combine price levels with quantity schedules. A wholesaler might get 25% off base price, plus additional quantity breaks within their tier. This rewards both customer loyalty (price level) and order size (quantity pricing).

Customer-Specific Pricing

Sometimes standard price levels aren't enough—specific customers need unique pricing for specific items.

Implementation Options

  • Item Pricing Subtab: On customer record, set specific prices for individual items
  • Group Pricing: Create pricing groups, assign customers, set item prices at group level
  • Custom Price Lists: Use custom records for complex pricing matrices
🎯 Consultant Insight
Customer-specific pricing quickly becomes unmanageable at scale. Before implementing, ask: "Can we achieve this with price levels or quantity schedules instead?" Reserve customer-specific pricing for truly exceptional cases—large accounts with negotiated contracts.

Promotional Pricing

Promotional pricing provides temporary price changes without modifying permanent item prices.

Promotion Methods

  • Sale Price: Set temporary sale price with date range on item
  • Promotion Codes: Customer enters code for discount
  • Automatic Discounts: Rules-based discounts applied at checkout
  • Bundle Pricing: Discount when buying items together
ℹ️ SuitePromotions
For sophisticated promotional capabilities, enable the SuitePromotions feature. This allows BOGO deals, tiered discounts, and complex promotional rules without custom development.

Multiple Currencies

For international sales, items need prices in multiple currencies. NetSuite handles this through multi-currency pricing.

Currency Pricing Options

  • Base + Exchange Rate: Set base price, system calculates foreign currency using exchange rates
  • Fixed Currency Prices: Set specific prices in each currency (e.g., $100 USD = €95 EUR)
  • Rounded Currency Prices: Auto-calculate but round to psychological price points
⚠️ Exchange Rate Considerations
If using base + exchange rate, price fluctuates with currency rates. For stable international pricing, set fixed currency prices and review quarterly. This provides predictability for customers and sales planning.

Pricing Hierarchy

When multiple pricing rules apply, NetSuite follows a hierarchy to determine which price wins.

1

Customer-Specific Price

If customer has a specific price for this item, use it.

2

Group Price

If customer belongs to a pricing group with item price, use it.

3

Customer Price Level

Apply customer's assigned price level to item's price matrix.

4

Quantity Schedule

Apply quantity-based pricing if configured.

5

Base Price

Fall back to item's base price.

💡 Test Your Pricing
Before go-live, create test orders for each customer type and verify correct prices appear. Pricing bugs are embarrassing and expensive—customers remember when they don't get their negotiated rate.

Pre-Go-Live Pricing Setup

Chapter 4.10

Industry Item Patterns

Different industries have distinct item requirements. This chapter provides industry-specific guidance on item structures, custom fields, and configuration patterns.

Manufacturing Item Patterns

👔 Professional Services
Professional Services Consideration
Manufacturers work with raw materials, work-in-process, and finished goods—each with distinct tracking needs.

Typical Item Structure

  • Raw Materials: Inventory items with vendor sourcing, landed cost tracking
  • Components: Inventory items or non-inventory (consumables like fasteners)
  • Sub-Assemblies: Assembly items built from components, sometimes phantoms
  • Finished Goods: Assembly items with full BOMs, serialized if required
  • MRO Supplies: Non-inventory items expensed when purchased

Key Custom Fields

  • Engineering Drawing Number: Link to CAD/engineering documentation
  • Revision Level: Track engineering changes
  • Lead Time (Days): Manufacturing or procurement lead time
  • Quality Hold: Flag for quarantine status
  • RoHS Compliant: Regulatory compliance checkbox
  • Shelf Life (Days): For perishable materials
💡 Manufacturing Best Practice
Use item categories that mirror your production flow: Raw → Component → Sub-Assembly → Finished Good. This enables inventory valuation reporting by production stage and simplifies WIP analysis.

Wholesale Distribution Item Patterns

👔 Professional Services
Professional Services Consideration
Distributors buy finished goods and resell them—focus is on purchasing, warehousing, and pricing.

Typical Item Structure

  • Stocked Items: Inventory items purchased and warehoused
  • Drop Ship Items: Non-inventory for resale, shipped direct from vendor
  • Special Order: Non-inventory ordered per customer request
  • Kits/Bundles: Kit items combining related products

Key Custom Fields

  • Manufacturer: Brand/manufacturer (if multi-brand distributor)
  • Manufacturer Part Number: MPN for cross-reference
  • UPC/EAN: Barcode for scanning
  • Hazmat Classification: For shipping compliance
  • Cube/Weight: Shipping dimensional data
  • Country of Origin: Import/tariff tracking
  • Min Order Qty: Vendor minimum order requirements
🎯 Consultant Insight
Distributors often carry thousands of SKUs. Invest in item categories and classes that enable meaningful analysis. "All Products" isn't a useful category—break down by product line, vendor, or customer segment for actionable reporting.

Retail Item Patterns

👔 Professional Services
Professional Services Consideration
Retailers sell to consumers—focus on matrix items, promotions, and omnichannel inventory.

Typical Item Structure

  • Matrix Items: Products with Size/Color variations
  • Simple Items: Non-variant products
  • Gift Cards: Gift certificate items
  • Services: Delivery, assembly, warranty services

Key Custom Fields

  • Season: Spring/Summer/Fall/Winter or Year
  • Style Number: Fashion industry style identifier
  • Web Enabled: Flag for e-commerce visibility
  • POS Category: Point-of-sale grouping
  • Markdown Eligible: For promotional planning
  • Display Location: Store merchandising placement
💡 Retail Best Practice
Plan for seasonal item management. Use custom lists for seasons and create saved searches that show items approaching end-of-season. This enables proactive markdown planning rather than reactive clearance.

Software/SaaS Item Patterns

👔 Professional Services
Professional Services Consideration
Software companies sell licenses, subscriptions, and services—no physical inventory but complex revenue recognition.

Typical Item Structure

  • Subscription Items: Recurring revenue products (monthly, annual)
  • License Items: Perpetual or term licenses
  • Implementation Services: Professional services items
  • Support/Maintenance: Ongoing support items
  • Usage Items: Consumption-based pricing (API calls, storage)

Key Custom Fields

  • Subscription Term: Monthly, Annual, Multi-Year
  • Revenue Recognition Rule: Ratable, milestone, etc.
  • Renewal Type: Auto-renew, opt-in, opt-out
  • Product Tier: Basic, Pro, Enterprise
  • User Count Basis: Named users, concurrent users
  • ARR/MRR Impact: For SaaS metrics tracking
ℹ️ Advanced Revenue Management
For SaaS companies with complex revenue recognition requirements (ASC 606), enable NetSuite's Advanced Revenue Management module. This handles deferred revenue, performance obligations, and complex allocation rules.

Professional Services Item Patterns

👔 Professional Services
Professional Services Consideration
Services firms sell expertise and time—items drive billing rates and project profitability.

Typical Item Structure

  • Time & Materials Services: Billable by hour/day
  • Fixed Fee Services: Project-based deliverables
  • Retainer Services: Ongoing availability fees
  • Expense Pass-through: Reimbursable expenses

Key Custom Fields

  • Billing Rate Tier: Partner, Manager, Staff rates
  • Internal Cost Rate: For profitability calculation
  • Service Category: Advisory, Implementation, Support
  • Skill Required: Required qualifications
  • Non-Billable Flag: For internal/pro-bono work
🎯 Consultant Insight
Create service items at the intersection of rate tier and service type. "Senior Consultant - Implementation" is better than just "Consulting" because it enables rate analysis by both dimensions. But don't over-segment—too many items complicates time entry.

Nonprofit Item Patterns

👔 Professional Services
Professional Services Consideration
Nonprofits track donations, grants, and programs—items enable fund accounting and donor stewardship.

Typical Item Structure

  • Donation Items: General donations, annual fund, capital campaign
  • Grant Items: Restricted and unrestricted grants
  • Program Fees: Event registrations, membership dues
  • Merchandise: Items sold for fundraising

Key Custom Fields

  • Fund/Campaign: Link to fundraising campaign
  • Restriction Type: Unrestricted, temporarily restricted, permanently restricted
  • Tax Deductible Amount: For donor acknowledgment
  • Grant Period: Start/end dates for grant tracking
  • Program Area: Link to program for allocation
💡 Nonprofit Best Practice
Use NetSuite's class segment for fund tracking when possible. Items combined with classes enable detailed fund accounting while keeping item setup manageable. "General Donation" + Class "Annual Fund 2024" beats creating separate items per fund per year.

Healthcare Item Patterns

👔 Professional Services
Professional Services Consideration
Healthcare organizations need stringent compliance, lot tracking, and complex billing—items must support regulatory requirements.

Typical Item Structure

  • Medical Supplies: Lot-tracked inventory items
  • Pharmaceuticals: Serialized, lot-tracked with expiration
  • Medical Devices: Serialized equipment with warranty tracking
  • Services: Procedures, consultations, therapy sessions

Key Custom Fields

  • NDC Number: National Drug Code for pharmaceuticals
  • HCPCS Code: Healthcare Common Procedure Coding System
  • FDA Class: Device classification
  • Controlled Substance Schedule: DEA scheduling
  • Expiration Date: For lot tracking
  • Storage Requirements: Temperature, handling instructions
🚨 Healthcare Compliance
Healthcare items often require HIPAA-compliant handling, FDA tracking (UDI), and controlled substance logging. Engage compliance experts early in item design. The cost of getting it wrong far exceeds the investment in proper planning.

Industry Pattern Summary

Industry Primary Item Types Key Considerations
Manufacturing Assembly, Inventory BOMs, costing, lot/serial
Wholesale Inventory, Non-inventory Pricing, vendor management
Retail Matrix, Inventory Variants, promotions
Software/SaaS Service, Non-inventory Revenue recognition
Services Service Billing rates, time tracking
Nonprofit Service, Non-inventory Fund accounting
Healthcare Inventory, Service Compliance, lot/serial

Pre-Go-Live Industry Setup