Chapter 5.1

Sales Order Processing

Configure and manage the complete sales order lifecycle from quote to fulfillment, including order types, approval workflows, and fulfillment methods.

Order-to-Cash Overview

The Order-to-Cash (OTC) process represents the complete lifecycle of a customer sale in NetSuite. Understanding this flow is essential for proper configuration.

Lead/Opportunity
→
Quote
→
Sales Order
→
Fulfillment
→
Invoice
→
Payment
Transactions › Sales › Enter Sales Orders

Sales Order Types

NetSuite provides different sales order types to accommodate various business scenarios.

Order Type Use Case Inventory Impact Revenue Recognition
Standard Regular product sales Commits on save On invoice
Cash Sale Immediate payment (POS, walk-in) Immediate deduction Immediate
Progress Billing Long-term projects, milestones No commitment Per billing schedule
Blanket Order Framework agreements, releases On release On release invoice
💡 Best Practice
Use custom transaction forms to expose only relevant fields for each order type. This reduces errors and speeds up order entry for your team.

Order Entry Workflow

1

Select Customer

Choose existing customer or create new. Customer defaults (terms, price level, tax status) auto-populate.

2

Verify Ship-To Address

Confirm or select alternate shipping address. Address affects tax calculation and fulfillment routing.

3

Add Line Items

Enter items with quantities and pricing. Check availability and apply discounts.

4

Review Pricing & Tax

Verify calculated prices, discounts, and tax amounts.

5

Set Shipping Details

Select carrier, shipping method, and requested delivery date.

6

Submit for Approval

Save order to trigger approval workflow if required.

⚖️ Key Decision

Inventory Commitment Timing

👔 Professional Services
Professional Services Consideration
Distributors often need to promise inventory that hasn't arrived yet. Use "Available to Promise" (ATP) calculations that include expected receipts from open POs to give sales reps visibility into future availability.

Pre-Go-Live Sales Order Configuration

Chapter 5.2

Invoicing & Billing

Configure invoicing workflows, billing schedules, and revenue recognition to ensure accurate financial recording and customer billing.

Invoice Generation Methods

NetSuite supports multiple ways to generate invoices depending on your business model.

Method Use Case Created From
From Sales Order Standard product sales after fulfillment Fulfilled sales order lines
Standalone Invoice Service billing, miscellaneous charges Direct entry
Billing Schedule Recurring billing, subscriptions Automated generation
Progress Billing Project milestones, % completion Project record
Transactions › Sales › Create Invoices

Invoice Configuration

Accounting Preferences

  • Invoice Date vs. Ship Date: Choose when revenue is recognized
  • Billing Terms Default: Set at customer or transaction level
  • Allow Invoice Editing: Control modifications after creation
  • Email Invoice Automatically: Enable auto-send on save
⚖️ Key Decision

Invoicing Workflow

Billing Schedules

For recurring revenue, billing schedules automate invoice generation.

ℹ️ Billing Schedule Types
  • Fixed: Same amount each period (subscriptions)
  • Variable: Amount varies by usage or milestone
  • Advance: Bill at start of period
  • Arrears: Bill at end of period
👔 Professional Services
Professional Services Consideration
SaaS companies typically bill annually in advance with monthly revenue recognition. Configure Advanced Revenue Management (ARM) to handle the deferred revenue scheduling automatically, ensuring ASC 606 compliance.

Pre-Go-Live Invoicing Configuration

Chapter 5.3

Purchase Orders

Configure procurement workflows from requisition to receipt, including approval routing, vendor management, and receiving processes.

Procure-to-Pay Overview

Requisition
→
Approval
→
Purchase Order
→
Receipt
→
Vendor Bill
→
Payment
Transactions › Purchases › Enter Purchase Orders

Purchase Order Types

Type Use Case Special Features
Standard PO Regular inventory purchases Three-way matching, receipts
Blanket PO Framework agreements Multiple releases against commitment
Drop Ship PO Direct vendor-to-customer Created from sales order
Special Order PO Customer-specific items Linked to specific sales order

PO Approval Workflows

Most organizations require PO approvals based on amount thresholds or item categories.

1

Define Approval Hierarchy

Set approval levels based on amount (e.g., under $1K auto-approve, $1K-$10K supervisor, over $10K director).

2

Configure Workflow

Use SuiteFlow to build approval routing with notifications and escalations.

3

Set Up Delegation

Enable out-of-office delegation so approvals don't stall during absences.

⚠️ Three-Way Matching
Enable three-way matching for inventory POs: compare PO → Receipt → Vendor Bill. This catches quantity discrepancies before payment and is required for SOX compliance in most organizations.
👔 Professional Services
Professional Services Consideration
Manufacturers often need blanket POs for raw materials with scheduled releases. Configure release schedules that align with production planning, and use "Create PO from Work Order" to generate demand-driven purchase orders.

Pre-Go-Live Purchase Order Configuration

Chapter 5.4

Vendor Bills & Payments

Manage accounts payable from bill entry through payment, including matching, approval workflows, and payment methods.

Vendor Bill Entry

Transactions › Payables › Enter Bills

Bill Entry Methods

  • From PO: Create bill from received PO lines with three-way match validation
  • Standalone: Direct entry for services, utilities, or non-PO purchases
  • Import: CSV upload for high-volume bill processing
  • Automated: Integration with invoice scanning/OCR solutions
⚖️ Key Decision

Bill Entry Approach

Bill Approval Workflow

🎯 Consultant Insight
Don't skip bill approvals even if you have PO approvals. Bills should be approved to verify: 1) Goods/services were received as billed, 2) Pricing matches agreement, 3) GL coding is correct. This is your last line of defense before payment.

Payment Processing

Transactions › Payables › Pay Bills

Payment Methods

Method Use Case Configuration
Check Traditional vendors, one-time payments Check printing setup, bank account
ACH/EFT Regular vendors, recurring payments Vendor bank details, file format
Credit Card Small purchases, travel expenses Card account mapping
Wire Transfer International, urgent payments Bank routing, SWIFT codes
🚨 Payment Security
Require dual authorization for ACH file uploads and wire transfers. Configure payment amount limits by user. Review all bank account changes before processing payments to prevent fraud.

Pre-Go-Live AP Configuration

Chapter 5.5

Inventory Transactions

Manage inventory movements including receipts, transfers, adjustments, and fulfillment operations.

Inventory Transaction Types

Transaction Purpose Inventory Effect
Item Receipt Receive inventory from PO Increases quantity, records cost
Item Fulfillment Ship inventory on sales order Decreases quantity, relieves cost
Inventory Transfer Move between locations Decrease from, increase to
Inventory Adjustment Correct quantities (count variance) Increase or decrease with reason
Assembly Build Consume components, create finished good Decrease components, increase assembly

Item Receipt Process

Transactions › Purchases › Receive Orders
1

Select PO

Choose purchase order to receive against.

2

Verify Quantities

Enter actual received quantities. Handle overages or shortages.

3

Assign Lot/Serial

Enter lot numbers or serial numbers if tracked.

4

Set Location/Bin

Specify receiving location and bin for putaway.

Inventory Adjustments

Transactions › Inventory › Adjust Inventory
⚠️ Adjustment Approval
Require approval for inventory adjustments above a threshold amount. Large unexplained adjustments may indicate theft, data entry errors, or process failures that need investigation.

Common Adjustment Reasons

  • Cycle Count Variance: Differences found during counting
  • Damaged Goods: Items damaged and scrapped
  • Theft/Shrinkage: Missing inventory
  • Data Correction: Fix entry errors
  • Sample/Demo: Items given away
👔 Professional Services
Professional Services Consideration
Retail operations should implement daily cycle counting for high-value or high-velocity items. Configure automated variance alerts when adjusted quantities exceed thresholds (e.g., >5% variance requires manager approval).

Pre-Go-Live Inventory Configuration

Chapter 5.6

Journal Entries

Record non-transactional GL entries including accruals, reclassifications, adjustments, and reversing entries.

When to Use Journal Entries

Journal entries should be used sparingly—most entries should flow from source transactions. Valid use cases include:

  • Accruals: Recognize expenses before invoice receipt
  • Reclassifications: Move amounts between accounts
  • Adjusting Entries: Period-end corrections
  • Non-Cash Transactions: Depreciation, amortization
  • Intercompany Eliminations: Consolidation adjustments
Transactions › Financial › Make Journal Entries

Journal Entry Types

Type Purpose Special Features
Standard Manual GL adjustments Basic debit/credit entry
Intercompany Entries affecting multiple subsidiaries Auto-balance, elimination
Statistical Non-financial metrics No GL impact, reporting only
Opening Balance Beginning balances at go-live Posted to opening balance account

Reversing Entries

💡 Auto-Reversing Entries
For accruals that should automatically reverse in the next period, check "Reversal" on the journal entry and set the reversal date. This ensures accruals don't double-count expenses.

Journal Entry Controls

  • Approval Workflow: Require approval for entries over threshold
  • Memo Requirement: Make memo field mandatory for audit trail
  • Account Restrictions: Limit which accounts users can journal to
  • Period Locks: Prevent entries to closed periods
🚨 Audit Trail
Never delete journal entries—void them instead. Maintain complete supporting documentation for all manual entries. Auditors review journal entries closely as a potential fraud indicator.

Pre-Go-Live Journal Entry Configuration

Chapter 5.7

Credit Memos & Returns

Handle customer returns, credits, and refunds with proper inventory and financial recording.

Returns Process Flow

Return Authorization
→
Item Receipt
→
Credit Memo
→
Refund/Apply

Return Types

Scenario Transactions Inventory Impact
Standard Return (resalable) RMA → Receipt → Credit Memo Returns to available inventory
Damaged Return RMA → Receipt → Credit Memo Returns to scrap/damaged location
Price Adjustment (no return) Credit Memo only No inventory movement
Refund Before Receipt Customer Refund Expect RMA receipt later
Transactions › Sales › Issue Return Authorizations

Credit Memo Configuration

⚖️ Key Decision

Credit Memo Application

🎯 Consultant Insight
Track return reasons with a custom field on the RMA. Analyze returns data to identify product quality issues, shipping damage patterns, or customer satisfaction problems. This data drives process improvements.

Pre-Go-Live Returns Configuration

Chapter 5.8

Deposits & Prepayments

Handle customer deposits, vendor prepayments, and the proper accounting treatment for unearned revenue and prepaid expenses.

Customer Deposits

Customer deposits are payments received before goods or services are delivered. They represent a liability until earned.

Transactions › Customers › Accept Customer Payments › Customer Deposit

Deposit Workflow

1

Collect Deposit

Record customer deposit. Cash increases, liability (Customer Deposits) increases.

2

Apply to Order

Link deposit to sales order if known. Tracks deposit against specific order.

3

Create Invoice

Generate invoice when goods ship or services delivered.

4

Apply Deposit

Apply customer deposit to invoice. Liability decreases, AR decreases.

ℹ️ GL Impact
Customer deposits post to a liability account (typically "Customer Deposits" or "Unearned Revenue"). When applied to an invoice, the deposit transfers from liability to reduce AR, not to revenue. Revenue is recognized when the invoice is created.

Vendor Prepayments

Prepayments to vendors before receiving goods or services. These are assets until the goods/services are received.

Transactions › Payables › Pay Bills › Vendor Prepayment
⚖️ Key Decision

Prepayment Application

👔 Professional Services
Professional Services Consideration
Manufacturers often pay deposits for custom tooling or large material orders. Track prepayments by purchase order to ensure they're properly applied when goods arrive. Large prepayments may require progress payment schedules tied to milestones.

Pre-Go-Live Deposits Configuration

Chapter 5.9

Intercompany Transactions

Configure and manage transactions between subsidiaries including intercompany sales, purchases, and eliminations for consolidated reporting.

Intercompany Relationship Types

Transaction Type From To Elimination
Intercompany Sale Selling subsidiary Buying subsidiary Revenue/Expense eliminated
Intercompany Transfer Source location Destination location No P&L impact
Intercompany Journal Multiple subsidiaries Multiple subsidiaries Auto-balanced
Intercompany Allocation Parent/Shared Services Operating subsidiaries Eliminated at consolidation

Intercompany Sales Orders

When subsidiaries sell to each other, NetSuite can automatically create matching purchase orders.

Setup › Accounting › Intercompany
1

Enable Intercompany

Turn on Intercompany Selling in Enable Features. Configure intercompany preferences.

2

Set Transfer Pricing

Define markup or transfer prices for intercompany transactions.

3

Configure Auto-Generation

Set whether matching POs/bills are created automatically or manually.

⚠️ Transfer Pricing Compliance
Intercompany transfer pricing must comply with tax regulations (arm's length principle). Document your transfer pricing methodology and ensure consistency. Consult tax advisors for cross-border intercompany transactions.

Intercompany Eliminations

At consolidation, intercompany balances and transactions must be eliminated to avoid double-counting.

💡 Automatic Eliminations
NetSuite can automatically eliminate intercompany balances when you run consolidated reports. Enable "Eliminate Intercompany Transactions" in your consolidated subsidiary settings.

Pre-Go-Live Intercompany Configuration

Chapter 5.10

Period Close Transactions

Execute month-end and year-end close procedures including accruals, reconciliations, and period locking.

Period Close Checklist

1

Complete Transactions

Ensure all transactions for the period are entered. Run open transaction reports.

2

Post Accruals

Enter accrual journal entries for expenses incurred but not billed. Set to auto-reverse.

3

Reconcile Accounts

Reconcile bank accounts, intercompany balances, and key balance sheet accounts.

4

Run Depreciation

Generate fixed asset depreciation for the period.

5

Review Reports

Run trial balance, P&L, and balance sheet. Investigate variances.

6

Lock Period

Lock the period to prevent additional entries.

Setup › Accounting › Manage Accounting Periods

Period Locking

NetSuite provides multiple lock levels to control posting to periods.

Lock Type Effect Typical Use
Lock All No transactions allowed Final close, audit complete
Lock A/P No payables transactions AP close before full close
Lock A/R No receivables transactions AR close before full close
Allow Non-Posting Only non-posting transactions allowed Soft close during review

Year-End Close

ℹ️ Automatic Year-End
NetSuite automatically calculates retained earnings at year-end. The system closes income and expense accounts to retained earnings when you run reports for the new year. No manual year-end journal entry is required.

Year-End Considerations

  • Verify Opening Balances: Confirm balance sheet accounts carry forward correctly
  • Tax Adjustments: Post any year-end tax provisions
  • Audit Adjustments: Book any adjustments from external audit
  • Lock Prior Year: Fully lock all periods in prior year after audit
🚨 Prior Period Adjustments
If you must post to a locked period, unlock carefully. Document the reason, make the entry, and immediately re-lock. Notify stakeholders that prior period financials have changed.

Pre-Go-Live Period Close Configuration