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.

Sales Order Types

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

Sales Order Configuration

Proper sales order configuration ensures efficient processing and accurate financial recording.

Company Preferences

• Commit Inventory on Sales Orders: Determines when inventory is reserved (On Order Entry, On Order Approval, or On Ship Date)
• Allow Backorders: Allows orders when insufficient inventory exists
• Default Order Status: Sets initial status for new orders (Pending Approval, Pending Fulfillment, etc.)
• Fulfill Based On Commitment: Limits fulfillment to committed quantities only
• Allow Overage on Item Fulfillment: Permits shipping more than ordered quantity

Numbering Sequences

Configure separate numbering sequences for different transaction types. Consider prefixes that indicate order type (SO-, WO-, RMA-) for easy identification.

Order Entry Workflow

Inventory Commitment

Understanding how NetSuite commits inventory is critical for accurate availability reporting.

Commitment Levels

• Available: Quantity on hand minus all commitments
• On Hand: Physical quantity in warehouse
• Committed: Reserved for open orders
• On Order: Quantity on open purchase orders
• Back Ordered: Quantity committed but not available

Sales Order Approval Workflows

Approval workflows ensure proper oversight based on business rules.

Common Approval Triggers

• Order Value Thresholds: Orders above a certain dollar amount require manager approval
• Discount Percentage: Discounts exceeding standard limits need approval
• Credit Hold: Orders for customers on credit hold require credit manager release
• New Customer: First orders from new customers may require additional review
• Non-Standard Terms: Orders with modified payment terms need finance approval

Fulfillment Methods

Industry Considerations

Invoice Types Overview

NetSuite supports multiple invoice types to handle different billing scenarios. Understanding when to use each type ensures proper revenue recognition and customer communication.

Invoice Creation Methods

Invoices can be created through multiple paths depending on your business process and transaction volume.

From Sales Orders

The most common method for product-based businesses. Invoices are created after fulfillment to bill for shipped goods.

• Bill Remaining: Invoice all unfulfilled quantities
• Bill Fulfilled: Invoice only shipped quantities (recommended for partial shipments)
• Automatic Invoicing: Configure workflow to auto-generate invoices on fulfillment

Batch Invoicing

Process multiple orders simultaneously. Filter by customer, date range, or order status. Essential for high-volume operations.

Recurring Invoices

For subscription or service-based billing, configure recurring invoice templates that automatically generate at specified intervals.

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

Billing Schedules

For recurring revenue, billing schedules automate invoice generation.

Revenue Recognition

Proper revenue recognition ensures compliance with accounting standards (ASC 606, IFRS 15).

Invoice Approval Workflows

Common Approval Scenarios

• High-Value Invoices: Invoices above threshold require manager sign-off
• Credit Terms Changes: Non-standard payment terms need approval
• Discounts Applied: Invoices with discounts require review
• New Customers: First invoice to new customer verified

Invoice Printing & Delivery

Print Templates

• Advanced PDF/HTML Templates: Full customization using FreeMarker
• Basic Templates: Simple formatting with drag-drop editor
• Multiple Languages: Configure templates per subsidiary/customer locale

Delivery Methods

• Email: Automatic or bulk email with PDF attachment
• Print: Batch printing for mail fulfillment
• Customer Portal: Self-service access in Customer Center
• EDI: Electronic data interchange for B2B customers

Payment Collection

Efficient payment collection reduces DSO (Days Sales Outstanding) and improves cash flow.

Payment Methods

Customer Payment Portal

Enable Customer Center for self-service payments. Customers can view invoices, make payments, and download statements without contacting your team.

Industry Considerations

Procure-to-Pay Overview

Purchase Order Types

Purchase Order Creation

Purchase orders can originate from multiple sources depending on your procurement model.

Manual Entry

Direct PO creation for ad-hoc purchases or when automated systems don't apply.

From Requisitions

Enable requisitions for decentralized purchasing. Users submit requests; purchasing team consolidates and creates POs.

From Sales Orders

Automatic PO generation for drop ship and special order items. Configure vendor and pricing on item records.

From Reorder Points

Generate POs for items below reorder point. Essential for inventory-managed businesses.

Purchase Order Configuration

Company Preferences

• Require PO Approval: Enable to route POs through approval workflow
• Receive By: Quantity or line-level receiving options
• Bill From: PO or Item Receipt (determines three-way matching)
• Copy Vendor Bill From: Auto-populate bill from PO data
• Warn on Duplicate PO#: Prevent duplicate vendor PO numbers

Three-Way Matching Detail

Matching validates that PO, receipt, and bill agree before payment authorization.

• PO Amount: What you ordered
• Receipt Quantity: What you received
• Bill Amount: What vendor charged

PO Approval Workflows

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

Common Approval Thresholds

Receiving (Item Receipts)

Item receipts record the physical arrival of goods and trigger inventory updates.

Receiving Options

• Full Receipt: Receive entire PO in one transaction
• Partial Receipt: Receive available quantities; remainder stays open
• Receive with Variances: Handle over/under shipments
• Multi-Location: Receive to different warehouse locations

GL Impact on Receipt

• Inventory Items: Debit Inventory, Credit Received Not Billed
• Expense Items: Debit Expense, Credit Received Not Billed

Vendor Management

Effective vendor management in purchasing optimizes costs and ensures reliable supply.

Vendor Record Configuration

• Default Payment Terms: Net 30, Net 60, etc.
• Default Expense Account: For non-inventory purchases
• Currency: Primary transaction currency
• Tax Settings: 1099 eligibility, tax exemptions
• Payment Methods: Check, ACH, wire preferences

Item-Vendor Relationships

Configure preferred vendors, vendor pricing, and lead times on item records for automated procurement.

• Preferred Vendor: Default supplier for reorder
• Vendor Name/Code: Vendor's item identifier
• Vendor Price: Negotiated pricing
• Lead Time: Days from order to receipt

Industry Considerations

Vendor Bill Overview

Vendor bills represent your company's obligations to suppliers. Proper bill management ensures accurate AP balances, timely payments, and cash flow optimization.

Bill Creation Methods

Vendor Bill Entry

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

Bill Entry Process

Bill Approval Workflows

Bill approval ensures proper authorization before committing to payment, especially for non-PO expenses.

Payment Processing

Payment Methods

Payment Run Process

• Select Bills: Filter by due date, vendor, discount date
• Review Totals: Verify cash availability
• Apply Credits: Offset with vendor credits/prepayments
• Process Payment: Generate checks or electronic files
• Bank Confirmation: Match to bank statement

Early Payment Discounts

Capturing early payment discounts can significantly reduce procurement costs. Configure terms to automatically calculate discount availability.

Common Payment Terms

• 2% 10 Net 30: 2% discount if paid within 10 days, otherwise due in 30
• 1% 15 Net 45: 1% discount within 15 days, net 45
• Net 30: No discount, due in 30 days

1099 Processing

Track payments to US vendors for annual 1099 reporting requirements.

Configuration Requirements

• Mark vendors as 1099-eligible on vendor record
• Collect W-9 and enter Tax ID
• Map expense accounts to 1099 boxes
• Review 1099 report before year-end filing

Inventory Transaction Types

Item Receipt Process

Inventory Adjustments

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

Inventory Transfers

Inventory transfers move stock between locations within the same subsidiary. Unlike transfer orders, inventory transfers are single transactions that immediately update both locations.

Transfer Orders

Transfer orders provide a full workflow for moving inventory with shipping, receiving, and optional in-transit tracking. They support both intra-company and intercompany movements.

Assembly Builds

Assembly builds consume component items to create finished goods or kits. NetSuite automatically calculates member item consumption based on the BOM (Bill of Materials) defined on the assembly item.

Assembly Unbuild

Use assembly unbuilds to reverse a build and return components to inventory. Common uses include:

• Quality issues requiring disassembly
• Incorrect build quantities
• Recovering components from obsolete assemblies
• Rework requiring different components

Physical Inventory Counts

Physical inventory counts reconcile actual quantities with system quantities. NetSuite supports both full physical inventories and cycle counting approaches.

Cycle Counting

Cycle counting involves counting subsets of inventory on a rotating basis rather than counting everything at once. Benefits include:

• No warehouse shutdown required
• More frequent accuracy verification
• Earlier detection of discrepancies
• Better focus on high-value items (ABC analysis)

Count Variance Analysis

Before posting count adjustments, investigate significant variances:

• Timing issues: Transactions entered after count but backdated
• Location errors: Items in wrong bin or location
• Unit of measure: Counted in wrong UOM
• Pending transactions: Unfulfilled orders or unreceived POs
• Damaged/expired: Items not counted due to condition

Bin Management

Bin management tracks item locations within a warehouse at the bin level. When enabled, inventory transactions require bin specification for affected items.

Bin-Enabled Transactions

• Item Receipt: Specify putaway bins for received items
• Item Fulfillment: Pick from specific bins
• Inventory Adjustment: Adjust specific bin quantities
• Inventory Transfer: Move between bins within location
• Assembly Build: Pull components from bins, put assembly to bin

Preferred Bins

Set preferred bins on item records to suggest default locations:

• Preferred Stock Level: Main picking location
• Replenishment Bin: Bulk storage location
• Return Bin: Location for returned items

Lot and Serial Number Tracking

Lot and serial number tracking provides traceability for inventory items through all transactions. This is critical for recall management, warranty tracking, and regulatory compliance.

Lot Numbered Items

Lot tracking groups items by production batch or receipt lot:

• One lot can have multiple units
• Track expiration dates per lot
• FIFO or FEFO (First Expired First Out) rotation
• Lot merge and split capabilities

Serialized Items

Serial tracking assigns unique identifiers to individual units:

• One serial number per unit
• Track complete history per serial
• Required for warranty management
• Essential for high-value assets

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
• Opening Balance Entry: During implementation

Journal Entry Types

Reversing Entries

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

Creating Journal Entries

Journal entries require balanced debits and credits. Each line can have different accounts, subsidiaries (if enabled), departments, classes, and locations.

Key Fields on Journal Entries

• Date: Posting date for GL impact
• Subsidiary: Required in OneWorld (determines base currency)
• Currency: Defaults from subsidiary, can be changed
• Reversal Date: Auto-reverses entry on specified date
• Approved: Checkbox for approval (or workflow approval)
• To Be Printed: Include in batch print queue

Journal Entry Approval

Journal entry approval prevents unauthorized GL changes. Configure approval requirements based on amount thresholds, accounts affected, or other criteria.

Common Journal Entry Scenarios

Accruals

Record expenses or revenues in the period incurred regardless of cash timing:

• Expense Accrual: DR Expense, CR Accrued Expense Liability
• Revenue Accrual: DR Accrued Revenue Asset, CR Revenue

Deferrals

Spread prepaid expenses or unearned revenue over multiple periods:

• Prepaid Expense: DR Prepaid Asset, CR Cash (initial); DR Expense, CR Prepaid Asset (monthly)
• Deferred Revenue: DR Cash, CR Deferred Revenue (initial); DR Deferred Revenue, CR Revenue (monthly)

Reclassifications

Move amounts between accounts without external impact:

• Account Reclassification: DR New Account, CR Old Account
• Segment Reclassification: Same account, different department/class/location

Error Corrections

Fix posting mistakes from prior transactions:

• Document the original error in memo
• Reference original transaction number
• Consider restating if material and period is still open

Recurring Journal Entries

Set up memorized or scheduled journal entries for repetitive transactions like monthly allocations or standard accruals.

Memorized Transaction Setup

• Reminder: Creates reminder to manually process
• Automatic: Creates journal entry automatically on schedule
• Frequency: Daily, weekly, monthly, quarterly, yearly
• End Date: Optional date to stop recurrence

Journal Entry Best Practices

Returns Process Flow

Return Types

Customer Credit Memo Overview

Credit memos reduce amounts owed by customers. They can be created standalone, from invoices, or from return authorizations. Understanding when to use each method ensures proper accounting and customer account management.

Credit Memo Configuration

Creating Credit Memos

Credit memos can include items, discounts, and shipping adjustments. Each line affects revenue and potentially inventory depending on configuration.

Credit Memo vs. Customer Refund

• Credit Memo: Reduces AR balance, can be applied to future invoices
• Customer Refund: Returns cash to customer, reduces credit balance
• Typical Flow: Credit Memo → Customer Refund (if returning money)

Return Merchandise Authorization (RMA)

The RMA process manages product returns with a formal workflow including authorization, receipt, inspection, and credit or replacement.

RMA Configuration Options

• From Sales Order: Link RMA to original sales order for traceability
• Restock: Indicate if items should be returned to inventory
• Replacement Order: Create new sales order instead of credit
• RMA Number: Auto-generated number to track returns

Applying Credits

Credits can be applied to open invoices or left as unapplied credits on the customer account. Proper application ensures accurate aging and customer balances.

Customer Refunds

Customer refunds return money to customers, typically after a credit memo creates a credit balance.

Credit Memo Approval

Implement approval workflows to control credit memo issuance. This prevents unauthorized credits and ensures proper documentation.

Approval Workflow Considerations

• Amount Thresholds: Different approval levels by credit amount
• Credit Reason: Route based on reason (return vs. goodwill vs. pricing)
• Customer Type: Different rules for different customer segments
• Salesperson: Require manager approval for sales rep credits

Vendor Credits (Bill Credits)

Vendor credits reduce amounts owed to vendors. They're created when vendors issue credits for returns, pricing adjustments, or billing errors.

Vendor Credit Creation

• Standalone: Enter credit from vendor memo
• From Bill: Credit linked to original bill
• From Vendor Return: Credit after returning items to vendor

Applying Vendor Credits

Vendor credits can be applied to open bills or taken as a reduction in future payments. Proper application keeps vendor aging accurate.

Application Options

• Apply to Specific Bill: Reduce specific outstanding bill
• Apply During Payment: Apply when paying vendor bills
• Leave Unapplied: Keep credit available for future bills

Industry Considerations

Customer Deposits

Customer deposits are payments received before goods are shipped or services are rendered. They create deferred revenue liabilities that are recognized when the actual sale is completed.

Deposit Workflow

Vendor Prepayments

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

Creating Customer Deposits

From Sales Order

Standalone Deposits

For deposits not tied to specific sales orders:

• Create deposit directly for customer
• Specify payment method and amount
• Deposit remains on account until applied
• Apply manually to future invoices

Deposit Application

Deposits must be applied to invoices to recognize revenue. Application can happen automatically or manually depending on configuration.

Automatic Application

• Sales order deposits auto-apply when invoiced
• System matches deposit to originating order
• Partial deposits apply proportionally

Manual Application

• Select customer with unapplied deposits
• Choose invoices to apply against
• Specify application amounts
• Can apply one deposit to multiple invoices

Deposit Refunds

When deposits need to be returned to customers (order cancellation, overpayment), use the proper refund process to maintain accurate records.

Applying Vendor Prepayments

Prepayments are applied to vendor bills to reduce the amount owed. Proper application keeps vendor aging accurate and prepayment balances current.

Application Methods

• From Bill: Apply subtab on vendor bill shows available prepayments
• Batch Application: Apply multiple prepayments to multiple bills
• Auto-Application: System can auto-apply PO-linked prepayments

Prepaid Expenses

Prepaid expenses are amounts paid in advance for future benefits (insurance, rent, subscriptions). These require amortization over the benefit period.

Prepaid Expense Types

• Prepaid Insurance: Annual policies paid upfront
• Prepaid Rent: Rent paid in advance
• Prepaid Subscriptions: Software or service subscriptions
• Prepaid Maintenance: Service contracts paid annually

Amortization Schedules

NetSuite's amortization feature automates the recognition of prepaid expenses and deferred revenue over time, eliminating manual journal entries.

Amortization Types

Schedule Configuration

Processing Amortization

Amortization Reports

Industry Considerations

Intercompany Overview

Intercompany transactions occur between subsidiaries within the same NetSuite OneWorld account. These transactions require special handling to ensure proper accounting on both sides and appropriate elimination for consolidated financial statements.

Intercompany Relationship Types

Intercompany Sales Orders

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

Intercompany Setup

Proper intercompany configuration ensures transactions post correctly to both subsidiaries and elimination entries are created for consolidation.

Intercompany Account Configuration

• Intercompany Receivable: Asset account for amounts owed by other subsidiaries
• Intercompany Payable: Liability account for amounts owed to other subsidiaries
• Elimination Subsidiary: Subsidiary for booking elimination entries
• Intercompany Revenue: Revenue account for sales to related entities
• Intercompany Expense: Expense account for purchases from related entities

Intercompany Preferences

• Auto-generate Paired Transaction: Create matching transaction automatically
• Intercompany Time Approval: Route IC time entries for approval
• Cross-Subsidiary Fulfillment: Allow fulfilling from different subsidiary

Intercompany Journal Entries

Intercompany journal entries create balanced entries across multiple subsidiaries with automatic intercompany receivable/payable posting.

Common IC Journal Entry Uses

• Cost Allocations: Distribute shared costs (IT, HR, facilities) to subsidiaries
• Management Fees: Charge subsidiaries for corporate services
• Royalties: Record royalty charges between entities
• Interest: Intercompany loan interest charges
• Corrections: Adjust prior intercompany postings

Intercompany Transfer Orders

Transfer orders between subsidiaries move inventory while creating proper financial entries. Pricing on these transfers affects inventory valuation at each subsidiary.

Intercompany Eliminations

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

Types of Eliminations

• Balance Sheet Eliminations: Remove IC receivables and payables
• Income Statement Eliminations: Remove IC revenue and expense
• Inventory Profit Eliminations: Remove unrealized profit in IC inventory
• Investment Eliminations: Remove subsidiary investment balances

Intercompany Settlement

Intercompany balances can be settled through actual payments between subsidiaries or through netting arrangements.

Settlement Methods

• Direct Payment: Actual cash transfer between subsidiary bank accounts
• Netting: Offset receivables and payables between entities
• Capital Contribution: Forgive balance as capital contribution
• Dividend: Settle as dividend from subsidiary to parent

Multi-Currency Considerations

When subsidiaries operate in different currencies, intercompany transactions involve currency conversion and may create exchange gains/losses.

Currency Handling

• Transaction Currency: Can use either subsidiary's currency or third currency
• Exchange Rates: Use consolidated exchange rate tables
• Revaluation: Open IC balances subject to currency revaluation
• Settlement: Exchange differences at settlement

Intercompany Reporting

Monitor intercompany activity with dedicated reports and saved searches to ensure proper processing and timely settlement.

Key Reports

• Intercompany Balance Report: Shows balances between all subsidiary pairs
• IC Transaction Report: Lists all intercompany transactions
• IC Aging: Ages intercompany receivables/payables
• Elimination Report: Shows elimination entries by period

Period Close Overview

Period close procedures ensure financial statements are accurate and complete before publishing results. A structured close process reduces errors and accelerates reporting timelines.

Period Close Checklist

Common Adjusting Entries

Adjusting entries align financial records with the accounting period being closed. Most are recurring and can be templated.

Accrued Expenses

Record expenses incurred but not yet invoiced:

• Accrued Wages: Payroll for days not yet paid
• Accrued Interest: Interest expense not yet due
• Accrued Utilities: Utility usage not yet billed
• Accrued Professional Fees: Services received, invoice pending

Accrued Revenue

Record revenue earned but not yet invoiced:

• Unbilled Services: Work completed, invoice not sent
• Accrued Interest Income: Interest earned, not yet received
• Milestone Revenue: Project milestones achieved

Deferred Items

Recognize deferred revenue and amortize prepaid expenses:

• Deferred Revenue Recognition: Recognize earned portion of deferred revenue
• Prepaid Expense Amortization: Expense portion of prepaid items

Account Reconciliation

Reconciliation verifies GL balances match supporting detail. Complete reconciliations before posting final adjusting entries.

Bank Reconciliation

• Match cleared transactions to bank statement
• Identify outstanding checks and deposits
• Investigate and resolve discrepancies
• Post bank fees and interest

Subledger Reconciliation

Verify subledger detail matches GL control accounts:

• AR to GL: AR aging total equals AR GL balance
• AP to GL: AP aging total equals AP GL balance
• Inventory to GL: Inventory valuation equals Inventory GL balance
• Fixed Assets to GL: Asset register equals Fixed Asset GL balance

Currency Revaluation

Foreign currency revaluation adjusts monetary balances to current exchange rates, recording unrealized gains or losses.

Accounts Subject to Revaluation

• Bank Accounts: Foreign currency bank balances
• Accounts Receivable: Open invoices in foreign currency
• Accounts Payable: Open bills in foreign currency
• Intercompany: IC balances in different currencies

Period Locking

NetSuite provides multiple lock levels to control posting to periods.

Year-End Close

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

Close Process Efficiency

Accelerating the close process provides faster financial information and reduces accounting team workload peaks.

Best Practices for Faster Close

• Continuous Close: Perform tasks throughout the month, not just at month-end
• Standard Entries: Use memorized transactions for recurring entries
• Automation: Automate data entry through integrations
• Clear Cut-offs: Enforce transaction cut-off dates
• Parallel Processing: Complete independent tasks simultaneously
• Exception Focus: Spend time on exceptions, not routine items

Audit Trail and Controls

Maintain strong controls during and after period close to ensure financial statement reliability.

Key Controls

• Segregation of Duties: Separate entry, approval, and posting
• Journal Entry Approval: Require approval for all manual entries
• Period Lock: Lock periods promptly after close
• Variance Analysis: Investigate significant period-over-period changes
• Management Review: Review and sign-off on financials