Transactions
Master the core business transactions in NetSuite: sales orders, invoicing, purchasing, inventory movements, journal entries, and period close procedures.
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 and sets the foundation for all sales-related transactions.
Sales Order Types
NetSuite provides different sales order types to accommodate various business scenarios. Choosing the correct type affects inventory commitment, revenue recognition, and fulfillment processes.
| 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 |
Use custom transaction forms to expose only relevant fields for each order type. This reduces errors and speeds up order entry for your team.
Sales Order Configuration
Proper sales order configuration ensures efficient processing and accurate financial recording. Key settings are found in both company preferences and form customization.
Company Preferences
- Commit Inventory on Sales Orders: Determines when inventory is reserved. Options include "On Order Entry," "On Order Approval," or "On Ship Date."
- Allow Backorders: When enabled, allows orders to be placed even when insufficient inventory exists.
- Default Order Status: Sets the initial status for new sales 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 including prefixes that indicate order type (SO-, WO-, RMA-) for easy identification.
Order Entry Workflow
A well-designed order entry process reduces errors and ensures consistent data capture across your team.
Select Customer
Choose existing customer or create new. Customer defaults (terms, price level, tax status) auto-populate.
Verify Ship-To Address
Confirm or select alternate shipping address. Address affects tax calculation and fulfillment routing.
Add Line Items
Enter items with quantities and pricing. Check availability and apply any applicable discounts or promotions.
Review Pricing & Tax
Verify calculated prices, discounts, and tax amounts. Override if necessary with appropriate permissions.
Set Shipping Details
Select carrier, shipping method, and requested delivery date. Calculate or enter shipping costs.
Submit for Approval
Save order to trigger approval workflow if required, or proceed directly to fulfillment.
Inventory Commitment
Understanding how NetSuite commits inventory is critical for accurate availability reporting and fulfillment planning.
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
Allowing backorders without proper visibility leads to customer service issues. Always configure backorder reports and alerts when enabling this feature.
Sales Order Approval Workflows
Approval workflows ensure proper oversight of sales orders based on business rules. Common triggers include order value, discount percentage, and credit status.
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
Start with simple approval workflows and add complexity as needed. Over-engineered approval processes create bottlenecks and user frustration. Target 80% of orders to flow through without approval.
Fulfillment Methods
NetSuite supports multiple fulfillment approaches to match your operational model.
| Method | Description | Best For |
|---|---|---|
| Ship Complete | All items ship together | Simple orders, gifts |
| Partial Fulfillment | Ship available items, backorder rest | High-value customers, mixed availability |
| Drop Ship | Vendor ships directly to customer | Specialty items, bulky goods |
| Special Order | PO created from sales order | Made-to-order, custom products |
| Store Pickup | Customer collects from location | Retail, local delivery |
Industry Considerations
Configure sales orders to create work orders for made-to-order items. Use the "Create Work Order" feature on sales order save, and consider lead time calculations for accurate promise dates.
Implement blanket orders for recurring customers. Use release orders against blanket agreements to streamline repeat ordering and maintain contracted pricing.
Cash sales bypass the standard fulfillment process. Configure POS integration to create cash sales with immediate inventory reduction and revenue recognition.
Use non-inventory items for software licenses and subscriptions. Configure revenue recognition schedules for multi-year deals and implement renewal workflows.
Sales orders often link to projects. Configure project creation on order approval, and use progress billing for milestone-based invoicing.
Sales Order Checklist
Invoicing & Billing
Master invoice creation, billing schedules, revenue recognition, and customer payment collection strategies in NetSuite.
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 Type | Created From | Use Case | GL Impact |
|---|---|---|---|
| Standard Invoice | Sales Order / Fulfillment | Product sales after shipment | Debit AR, Credit Revenue |
| Standalone Invoice | Direct entry | Services, one-time charges | Debit AR, Credit Revenue |
| Progress Invoice | Progress billing SO | Milestone billing, projects | Debit AR, Credit Deferred Revenue |
| Cash Sale | Direct entry | Immediate payment transactions | Debit Cash, Credit Revenue |
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.
Schedule batch invoicing as a saved search with email alerts. This ensures consistent billing cycles and reduces manual effort.
Billing Schedules
Billing schedules enable structured payment collection over time. They're essential for subscriptions, installment plans, and progress billing.
Creating Billing Schedules
- Frequency: Daily, weekly, monthly, quarterly, annually, or custom
- Repeat Count: Number of billing cycles
- Amount Type: Fixed amount, percentage of total, or calculated
- In Advance vs. Arrears: Bill before or after service period
Revenue Recognition
Proper revenue recognition ensures compliance with accounting standards (ASC 606, IFRS 15) and accurate financial reporting.
Revenue recognition configuration has significant financial statement impact. Always involve your accounting team and external auditors in the design phase.
Revenue Recognition Methods
| Method | Recognition Timing | Use Case |
|---|---|---|
| Point in Time | On invoice/delivery | Product sales, one-time services |
| Over Time (Straight-Line) | Evenly over service period | Subscriptions, maintenance |
| Over Time (Milestone) | At milestone completion | Project-based services |
| Percentage of Completion | Based on progress percentage | Long-term contracts |
Invoice Approval Workflows
Invoice approvals ensure proper review before customer communication, particularly for complex billing scenarios.
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
Most companies over-approve invoices. Consider approving at the sales order level instead, allowing invoices to flow automatically once the order is approved.
Invoice Printing & Delivery
Configure invoice templates and delivery methods to match customer preferences and regulatory requirements.
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
| Method | Configuration | Best For |
|---|---|---|
| Credit Card | Payment gateway integration | B2C, e-commerce, recurring |
| ACH/EFT | Bank account on file | B2B recurring payments |
| Check | Manual deposit entry | Traditional B2B |
| Wire Transfer | Bank reconciliation | Large transactions, international |
Customer Payment Portal
Enable Customer Center for self-service payments. Customers can view invoices, make payments, and download statements without contacting your team.
Include a "Pay Now" link in invoice emails that takes customers directly to payment. This simple addition can reduce average payment time by 5-10 days.
Industry Considerations
Implement usage-based billing with metered services. Configure revenue recognition for multi-element arrangements (license + support + services) per ASC 606 requirements.
Use time and expense billing with project-linked invoices. Configure work-in-progress (WIP) accounting and progress billing schedules for long-term engagements.
Handle progress billing for large custom orders. Configure milestone-based invoicing tied to production stages and delivery schedules.
Configure pledge billing and grant invoicing. Track restricted vs. unrestricted revenue and implement donor acknowledgment workflows.
Invoicing Checklist
Purchase Orders
Configure the procure-to-pay process including purchase order creation, approval workflows, receiving, and vendor management.
Procure-to-Pay Overview
The Procure-to-Pay (PTP) process governs how your organization acquires goods and services. A well-configured PTP process ensures cost control, vendor compliance, and accurate financial recording.
Purchase Order Types
Different purchase order types serve different procurement scenarios. Selecting the appropriate type affects workflow, receiving, and financial treatment.
| PO Type | Use Case | Receiving Required | Billing |
|---|---|---|---|
| Standard | Regular inventory/expense purchases | Yes (Item Receipt) | Bill from PO or Receipt |
| Drop Ship | Ship directly to customer | No | Bill from PO |
| Special Order | Customer-specific procurement | Yes | Bill from Receipt |
| Blanket PO | Framework agreements | Per release | Per release |
Drop Ship: Vendor ships directly to customer; you never touch the inventory. Special Order: You receive the item first, then ship to customer. Choose based on quality control needs and logistics.
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.
Configure preferred vendors on item records with negotiated pricing. This speeds up PO creation and ensures consistent vendor selection.
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
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
Three-way matching is essential for audit compliance but can slow AP processing. Set tolerance thresholds (e.g., 5% variance allowed) to balance control with efficiency.
Purchase Order Approval
Approval workflows ensure proper authorization based on business rules before committing to vendor purchases.
Common Approval Thresholds
| Amount Range | Approver | Typical Turnaround |
|---|---|---|
| $0 - $1,000 | Auto-approve or Supervisor | Same day |
| $1,001 - $10,000 | Department Manager | 1-2 days |
| $10,001 - $50,000 | Director + Finance | 2-3 days |
| $50,000+ | VP/Executive + CFO | 3-5 days |
Avoid requiring CEO approval for routine purchases. This creates bottlenecks and frustration. Reserve executive approval for truly significant commitments.
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
Implement barcode scanning at receiving to speed up the process and reduce errors. NetSuite's mobile app supports barcode scanning for item receipts.
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
Integrate PO creation with MRP (Material Requirements Planning). Configure blanket POs for recurring raw material purchases and implement vendor-managed inventory for critical components.
Use blanket purchase orders for volume discounts. Configure automatic PO generation from reorder points and implement EDI for high-volume vendor communication.
Implement seasonal purchasing workflows. Configure drop-ship capabilities for extended product offerings and use purchase order approval for markdown and promotional buys.
Focus on expense purchases (subcontractors, supplies). Configure project-linked POs for pass-through billing and implement vendor qualification workflows.
Purchase Order Checklist
Vendor Bills & Payments
Process vendor invoices, manage accounts payable, configure payment runs, and optimize cash flow management.
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
| Method | Source | Best For |
|---|---|---|
| From PO | Purchase Order / Item Receipt | Inventory and ordered expenses |
| Standalone | Direct entry | Utilities, rent, services |
| Vendor Portal | Vendor self-service | High-volume vendors |
| EDI/Integration | Electronic import | Large vendor relationships |
Bill Entry Process
Select Vendor
Vendor defaults (terms, accounts, currency) auto-populate. Verify vendor is not on hold.
Enter Bill Details
Invoice number, date, due date, and reference. Invoice number prevents duplicates.
Add Line Items
Select from PO/Receipt or enter manually. Verify quantities, prices, and expense accounts.
Apply Coding
Assign departments, classes, locations for expense allocation and reporting.
Submit for Approval
Route through approval workflow before payment authorization.
Always enter the vendor's invoice number exactly as printed. NetSuite warns on duplicates, but consistent data entry is the first line of defense against double-payment.
Bill Approval Workflows
Bill approval ensures proper authorization before committing to payment, especially for non-PO expenses.
If you already approve POs, consider auto-approving matching bills. Double-approval (PO + Bill) rarely adds value and delays payment, potentially losing early payment discounts.
Payment Processing
NetSuite offers multiple payment methods to match your banking relationships and vendor preferences.
Payment Methods
| Method | Configuration | Use Case |
|---|---|---|
| Check | Check printing setup | Traditional vendors, auditable payments |
| ACH/EFT | Bank file format, NACHA | Recurring vendors, domestic |
| Wire | Manual bank instruction | Large payments, international |
| Credit Card | Corporate card integration | Quick purchases, cash back rewards |
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
A 2% 10 Net 30 discount equals an annualized return of 36%. If your cost of capital is lower, always take the discount. Create saved searches to alert AP when discounts are approaching expiration.
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
Vendor Bills Checklist
Inventory Transactions
Master inventory adjustments, transfers, assemblies, and physical counts to maintain accurate stock levels across locations.
Inventory Transaction Types Overview
NetSuite provides multiple transaction types for managing inventory movements. Understanding when to use each type ensures accurate inventory records and proper GL impact.
Inventory Adjustment: Use for quantity or value changes without physical movement (shrinkage, damage, corrections)
Inventory Transfer: Use for moving stock between locations within the same subsidiary
Transfer Order: Use for planned transfers with shipping/receiving workflow or intercompany movements
Assembly Build: Use for building finished goods from component items
Assembly Unbuild: Use for breaking down assemblies back to components
Inventory Count: Use for physical inventory reconciliation
Inventory Adjustments
Inventory adjustments modify item quantities or values when no purchase, sale, or transfer is involved. Common uses include correcting errors, recording shrinkage, and adjusting for damage.
Select the GL account for adjustment offset (Inventory Shrinkage, Damaged Goods, etc.)
Choose the inventory location where adjustment occurs
Enter positive values to increase inventory, negative to decrease
For bin-managed locations, indicate specific bin for adjustment
For lot or serialized items, specify affected numbers
Inventory adjustments debit or credit the Inventory Asset account and offset to the adjustment account selected on the transaction. Create specific adjustment accounts for different reasons (shrinkage vs. damage vs. corrections) to enable better analysis.
Adjustment Reasons
Create custom lists for adjustment reasons to track why adjustments occur:
- Cycle Count Variance: Differences found during cycle counts
- Damage/Spoilage: Items damaged or expired
- Theft/Shrinkage: Unexplained inventory loss
- Data Entry Error: Correcting prior mistakes
- Receiving Variance: Actual received differs from recorded
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.
Use inventory transfers for same-day movements within one warehouse or between nearby locations. Use transfer orders when you need shipping/receiving workflow, in-transit tracking, or intercompany transfers.
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.
Transfer Order Types
Intra-Company (Same Subsidiary):
- Simple inventory movement between locations
- No financial transaction between entities
- Only inventory asset accounts affected
Intercompany (Different Subsidiaries):
- Creates intercompany sale and purchase
- Uses intercompany pricing (cost, markup, or transfer price)
- Generates elimination entries for consolidation
When using transfer orders with in-transit tracking, configure an in-transit location and asset account. Items are valued in the transit location between fulfillment and receipt. This is required for accurate inventory valuation when transit times are significant.
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.
Choose the assembly item to build
Specify how many units to build
Choose build location (components consumed from same location)
Verify component quantities and availability
Components decremented, assembly incremented
The cost of the built assembly equals the sum of component costs at the time of build. If using standard costing, a variance is recorded if component costs differ from assembly standard cost.
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)
Implement cycle counting with ABC classification: count A items (high value/velocity) monthly, B items quarterly, C items annually. This provides the best balance of accuracy and operational efficiency.
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
Freeze inventory transactions during physical counts to prevent timing discrepancies. If transactions occur during counting, document them carefully and adjust count results accordingly.
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
Use bin types to categorize bins by function: Receiving, Picking, Bulk Storage, Shipping, Returns. This enables filtered bin selection and warehouse organization.
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
Inventory Transactions Checklist
Journal Entries
Create and manage manual journal entries for adjustments, accruals, reclassifications, and other accounting entries not generated by standard transactions.
Journal Entry Overview
Journal entries are manual accounting entries that directly impact the general ledger. They're used when standard transactions (sales orders, bills, etc.) don't create the needed accounting impact or when adjustments are required.
Use Journal Entries For:
- Month-end accruals and deferrals
- Reclassification between accounts
- Correction of posting errors
- Recording depreciation
- Intercompany eliminations
- Opening balance entry during implementation
Avoid Journal Entries For:
- Customer or vendor transactions (use proper transaction types)
- Inventory movements (use inventory transactions)
- Bank transactions (use deposits or checks)
Journal entries bypass normal transaction workflows and don't update subledgers. Excessive journal entry use can indicate process gaps. Review journal entries regularly and consider whether standard transactions should be used instead.
Creating Journal Entries
Journal entries require balanced debits and credits. Each line can have different accounts, subsidiaries (if enabled), departments, classes, and locations.
Date, subsidiary, currency, memo for the overall entry
Account, debit/credit amount, memo, and segments per line
Total debits must equal total credits
Upload supporting documents for audit trail
Route through approval workflow if configured
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
Always enter descriptive memos on each journal entry line. The header memo appears in transaction lists, but line memos appear in GL reports and account inquiries, making troubleshooting easier.
Journal Entry Types
NetSuite supports several journal entry types for different purposes. Understanding these types helps ensure proper accounting treatment.
Standard Journal Entry
Basic manual entry for general adjustments. Most commonly used type.
Statistical Journal Entry
Records non-monetary statistical quantities (headcount, square footage, units). Uses statistical accounts and doesn't impact financial statements but enables allocation and analysis.
Create accounts with type "Statistical" for tracking non-monetary metrics. Use statistical journal entries to record values, then use these for allocation bases or KPI reporting.
Intercompany Journal Entry
Creates balanced entries across multiple subsidiaries with automatic intercompany receivable/payable booking. Required for transactions affecting more than one subsidiary.
Advanced Intercompany Journal Entry
Allows more complex intercompany scenarios with:
- Multiple subsidiaries in single entry
- Different currencies per subsidiary
- Automatic elimination entries
- Complex allocation scenarios
Reversing Entries
Reversing entries automatically create an offsetting entry on a future date. Essential for accrual accounting and period-end adjustments.
Setting Up Reversing Entries
- Manual Reversal Date: Enter specific date in Reversal Date field
- Automatic Reversal: System can auto-set reversal to first day of next period
- Reversal Status: Track whether reversal has occurred
Set up a saved search to identify journal entries with reversal dates that haven't yet reversed. Review monthly to ensure reversals are occurring as expected and investigate any entries that should have reversed but haven't.
Journal Entry Approval
Journal entry approval prevents unauthorized GL changes. Configure approval requirements based on amount thresholds, accounts affected, or other criteria.
Approval Methods
Simple Approval:
- Approved checkbox on transaction
- Control via role permissions
- Unapproved entries don't post to GL
Workflow Approval:
- Multi-level approval routing
- Amount-based thresholds
- Email notifications
- Audit trail of approvals
Unapproved journal entries do not post to the general ledger. Run the "Journal Entries Pending Approval" report before closing periods to identify entries that need approval.
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
For material errors in closed periods, consider whether the correction should be booked to retained earnings (prior period adjustment) rather than current period income/expense. Consult accounting standards for guidance.
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
Even automatic recurring entries should be reviewed periodically. Set up a monthly review process to verify recurring entries are still needed and amounts are still accurate.
Journal Entry Best Practices
Don't: Use JEs to record customer payments (breaks AR aging), post to bank accounts without reconciliation consideration, bypass approval processes, or create JEs without documentation. These practices create audit issues and reconciliation problems.
Journal Entries Checklist
Credit Memos & Returns
Process customer credit memos, return authorizations, and vendor returns while maintaining accurate accounting and inventory records.
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.
Standalone Credit Memo:
- Price adjustments or goodwill credits
- Service credits or billing corrections
- Not linked to specific invoice
Credit from Invoice:
- Creates credit linked to original invoice
- Can credit full invoice or specific lines
- Copies invoice details automatically
Credit from Return Authorization:
- Part of RMA workflow
- Links to received return items
- Updates inventory when applicable
Creating Credit Memos
Credit memos can include items, discounts, and shipping adjustments. Each line affects revenue and potentially inventory depending on configuration.
Choose the customer to credit (their balance decreases)
Enter items being credited or adjustment amounts
Document why credit is being issued
Verify accounts and amounts are correct
Apply to invoice or leave as credit balance
Credit memos typically debit revenue accounts and credit Accounts Receivable. If inventory items are included and restocking is enabled, inventory is also increased and COGS is credited.
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. This provides better control and visibility than direct credit memos.
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
Create an RMA approval workflow to control return authorization. Include return reason codes and estimated restocking condition to help analyze return patterns and identify product quality issues.
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.
Application Methods
Apply at Creation:
- Apply subtab on credit memo shows open invoices
- Enter amount to apply per invoice
- Can partially apply if credit is less than invoice
Apply Later:
- Leave credit unapplied when saved
- Apply when processing customer payment
- Auto-apply option in payment processing
Auto-Apply:
- System preference to auto-apply credits
- Applies to oldest open invoices first
- May not be desired for all scenarios
The auto-apply preference can cause unexpected application of credits. In disputed invoice scenarios, you may want specific credits applied to specific invoices. Disable auto-apply if you need precise control over credit application.
Customer Refunds
Customer refunds return money to customers, typically after a credit memo creates a credit balance. Refunds can be issued via check, credit card refund, or other payment methods.
Customer must have credit balance
Choose which credit memos to refund
Check, ACH, credit card refund, etc.
Print check or process electronic refund
For credit card refunds, NetSuite can process refunds back to the original card used for payment (if payment gateway supports it). This requires the original payment transaction to be linked.
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
Use vendor return authorizations to formally track items being returned to vendors. This creates visibility into pending credits and helps ensure credits are received from vendors for all returned goods.
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
Unapplied vendor credits can be overlooked, leaving the company overpaying vendors. Create a saved search to monitor unapplied vendor credits and review regularly to ensure credits are being utilized.
Industry Considerations
Credit Memos & Returns Checklist
Deposits & Prepayments
Manage customer deposits, vendor prepayments, and prepaid expense amortization with proper accounting treatment and application workflows.
Customer Deposits Overview
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.
Sales Order Deposits:
- Deposit required before order processing
- Linked to specific sales order
- Applied when order is invoiced
Standalone Deposits:
- Retainer or prepayment not tied to order
- Applied to future invoices
- Used for ongoing service relationships
Project Deposits:
- Milestone-based project billing
- Recognized as project progresses
- May involve multiple deposit applications
Creating Customer Deposits
Customer deposits can be created from sales orders, standalone, or automatically based on payment terms. Each method has different workflow implications.
From Sales Order
Enter order with deposit-required payment terms
Create deposit linked to sales order
Fulfill and invoice sales order
Deposit automatically applied to invoice
When a deposit is received: DR Cash, CR Customer Deposits (liability). When applied to invoice: DR Customer Deposits, CR Accounts Receivable. This ensures revenue isn't recognized until the sale is complete.
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
Monitor unapplied customer deposits regularly. These represent revenue that may have been earned but not recognized. Run the Customer Deposits report to identify deposits awaiting application.
Deposit Refunds
When deposits need to be returned to customers (order cancellation, overpayment), use the proper refund process to maintain accurate records.
If a deposit is forfeited (non-refundable and order cancelled), create a journal entry to move the deposit from liability to revenue. Document the reason and reference the original deposit transaction.
Vendor Prepayments
Vendor prepayments are payments made to vendors before receiving goods or services. They create prepaid assets that are expensed when bills are received.
Purchase Order Prepayments:
- Vendor requires payment before shipping
- Linked to specific PO
- Applied when bill is received
Deposit with Vendor:
- Security deposit or retainer
- May be held for extended period
- Applied or refunded at relationship end
Enter vendor prepayment with amount and PO reference
Pay vendor via check, ACH, or wire
Enter vendor bill when invoice received
Apply prepayment to vendor bill
Vendor prepayment: DR Vendor Prepayments (asset), CR Cash. When applied to bill: DR Accounts Payable, CR Vendor Prepayments. This ensures expenses aren't recorded until goods/services are received.
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
Create a saved search for aging vendor prepayments. Prepayments outstanding for extended periods may indicate process issues—goods not received, bills not entered, or prepayments that should be refunded.
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 over time. Configure schedules on items or transactions for consistent processing.
Schedule Configuration
- Schedule Name: Descriptive name (e.g., "12-Month Straight-Line")
- Recognition Period: Number of periods for amortization
- Period Type: Monthly, quarterly, custom
- Recognition Method: Straight-line, custom percentages
- Initial Amount: Full amount or prorated first period
Assign default amortization schedules to expense items that are typically prepaid (insurance, subscriptions). This automatically creates amortization when bills are entered with these items.
Transaction-Level Amortization
For one-time or variable amortizations, set up schedules directly on transaction lines:
- Enable amortization on the expense line
- Enter start and end dates
- System calculates monthly amounts
- Creates amortization journal entries
NetSuite automatically creates amortization journal entries based on schedules. These entries post to the periods defined in the schedule. Review the Amortization Schedule report to monitor upcoming entries.
Industry Considerations
Deposits & Prepayments Checklist
Intercompany Transactions
Configure and process transactions between subsidiaries with automatic elimination entries and proper consolidation handling.
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 functionality requires NetSuite OneWorld edition. Single-subsidiary accounts cannot have intercompany transactions as there are no other entities to transact with.
Intercompany Sales/Purchases:
- Sales orders between subsidiaries
- Automatic paired purchase orders
- Inventory transfer pricing
Intercompany Journal Entries:
- Cost allocations between subsidiaries
- Management fee charges
- Shared service allocations
Intercompany Transfer Orders:
- Inventory movement between subsidiaries
- Transfer pricing on inventory moves
- Cross-subsidiary fulfillment
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 accounts must be configured on each subsidiary before processing intercompany transactions. Missing configuration will cause transaction errors or incorrect postings.
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 Sales Orders
When one subsidiary sells to another, NetSuite can automatically create the matching purchase order on the buying subsidiary, ensuring both sides of the transaction are recorded.
Enter the sales order from the selling subsidiary context
Choose the intercompany customer representing the buying subsidiary
Use transfer pricing or intercompany price levels
System creates linked purchase order automatically
Each subsidiary needs an intercompany customer record (representing other subsidiaries as customers) and intercompany vendor record (representing other subsidiaries as vendors). These link transactions between entities.
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 journal entries must balance across all subsidiaries involved. The system automatically creates intercompany receivable/payable entries to balance each subsidiary's portion of the entry.
Advanced Intercompany Journal Entry
For complex multi-subsidiary entries, use Advanced IC Journal Entries:
- Multiple subsidiaries in single entry
- Different currencies per subsidiary
- Custom intercompany account selection
- Detailed segment assignment per line
Intercompany Transfer Orders
Transfer orders between subsidiaries move inventory while creating proper financial entries for the transfer. Pricing on these transfers affects inventory valuation at each subsidiary.
Intercompany Transfer Pricing
At Cost:
- Transfer at current inventory cost
- No profit recorded on transfer
- Simple but may not satisfy transfer pricing rules
Cost Plus Markup:
- Cost plus percentage markup
- Records intercompany profit on selling sub
- Requires elimination for consolidated statements
Transfer Price List:
- Specific prices defined for IC transfers
- May be based on arm's length pricing
- Supports transfer pricing compliance
Intercompany transfer pricing must comply with tax regulations. Many jurisdictions require arm's length pricing between related entities. Consult with tax advisors to determine appropriate transfer pricing policies.
Elimination Entries
Elimination entries remove intercompany balances and transactions from consolidated financial statements. NetSuite can automatically generate these entries during consolidation.
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
Configure automatic elimination entries in consolidation settings. The system can automatically eliminate intercompany receivables/payables and revenue/expense when running consolidated financial statements.
Intercompany Settlement
Intercompany balances can be settled through actual payments between subsidiaries or through netting arrangements. Settlement keeps intercompany balances from growing indefinitely.
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
Establish a regular intercompany settlement schedule (monthly or quarterly). This prevents intercompany balances from growing too large and simplifies reconciliation.
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
When IC transactions are in different currencies at each subsidiary, ensure exchange rates are synchronized. Mismatched rates create out-of-balance conditions that complicate elimination and reconciliation.
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
Build a saved search that compares IC receivable and payable balances between each subsidiary pair. Differences indicate unmatched transactions or posting errors that need investigation before consolidation.
Intercompany Transactions Checklist
Period Close Transactions
Execute month-end and year-end close procedures including adjusting entries, reconciliations, currency revaluation, and period locking.
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.
Establish a close calendar with specific deadlines for each close task. Communicate deadlines to all stakeholders and track progress against the calendar each period.
Period Close Checklist
NetSuite provides a period close checklist to track completion of close tasks. Customize the checklist to match your organization's specific requirements.
Common Close Tasks
- Transaction Cut-off: Ensure all transactions are entered for the period
- Bank Reconciliation: Reconcile all bank accounts
- Credit Card Reconciliation: Reconcile credit card statements
- AR Reconciliation: Verify AR aging matches GL
- AP Reconciliation: Verify AP aging matches GL
- Inventory Reconciliation: Verify inventory value matches GL
- Fixed Asset Reconciliation: Verify asset schedule matches GL
- Revenue Recognition: Complete revenue recognition entries
- Expense Accruals: Record expense accruals
- Prepaid Amortization: Run amortization schedules
- Depreciation: Record depreciation entries
- Currency Revaluation: Revalue foreign currency balances
- Intercompany Reconciliation: Verify IC balances match
- Financial Review: Review and approve financials
Customize the period close checklist with task owners, due dates, and sequence numbers. This creates accountability and ensures tasks are completed in the proper order.
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
Create memorized journal entries for recurring adjustments. This saves time and ensures consistency. Set them to create automatically or generate reminders depending on whether amounts vary each period.
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
Differences between subledgers and GL often indicate journal entries posted directly to control accounts. Investigate and correct these—control accounts should only be updated through subledger transactions.
Intercompany Reconciliation
For OneWorld accounts, verify intercompany balances:
- IC receivable at Sub A equals IC payable at Sub B
- Investigate and resolve differences
- Post correcting entries before elimination
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
Ensure period-end rates are current in the system
Select subsidiary, period, and accounts to revalue
Verify gain/loss amounts are reasonable
Create journal entry for unrealized gain/loss
Revaluation entries typically reverse in the next period. When transactions settle, realized gains/losses are recorded and unrealized amounts reverse. This prevents double-counting gains or losses.
Period Locking
Locking periods prevents changes to closed periods, ensuring financial statement integrity. NetSuite offers multiple locking levels.
Lock Levels
Lock None:
- Period fully open for transactions
- No restrictions on posting
Lock All:
- No transactions can be posted
- Complete period close
Lock AR:
- Prevents AR transactions in period
- Other transactions still allowed
Lock AP:
- Prevents AP transactions in period
- Other transactions still allowed
Lock Payroll:
- Prevents payroll transactions in period
- Other transactions still allowed
Restrict the ability to unlock periods to senior accounting personnel. Changes to closed periods should require approval and documentation. Use role permissions to control period management access.
Year-End Close
Year-end close includes all monthly close procedures plus additional steps for annual reporting and new year setup.
Additional Year-End Tasks
- Retained Earnings: Verify income closes to retained earnings
- 1099 Processing: Review and generate 1099 forms (US)
- W-2 Processing: Complete payroll year-end
- Audit Preparation: Prepare schedules and support for auditors
- Tax Provision: Calculate and record income tax provision
- New Year Setup: Open new accounting periods
NetSuite automatically closes income and expense accounts to retained earnings when running reports for the new fiscal year. No manual closing entry is required.
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
Document the close process with a detailed checklist including task owners, dependencies, and estimated time. Analyze close cycle time and identify bottlenecks. Target a specific close day and work backward to set task deadlines.
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
If changes to closed periods are necessary, document the reason, obtain approval, and re-review affected reports. Excessive post-close adjustments indicate process issues that should be addressed.