Account Optimization in NetSuite

Requirement

The client prerequisite was to optimize their fragmented accounting structure as well as set up classes or departments to track sales revenue and profitability as per product categories, vendors and sales channels.  

Here are the core client requirements:  

1. Reduce inventory, sales and COGS (Cost of Goods Sold) accounts in Chart of Accounts. 

2. Setup tracking of sales and marketing expenses related to each selling channel specifically. 

3. Set up tracking for Google ad spend and related shipping costs for both their websites.  

4. Configure inventory items and sales transactions to minimize daily operation manual entries for their daily online orders of different items coming from the 3 sales channels (2 Websites and Amazon Marketplace). 

5. Avoid impacts of above changes to legacy transactions and prior years financial reports. 

Solution

Our NetSuite experts analyzed the requirements and built a well-defined accounting structure. 

Here’s how our developers solved the requirements: 

1. Reduce inventory, sales and COGS accounts in Chart of Accounts.

They configured a 16-year long database and grouped the old Chart of accounts into single inventory, sales and COGS accounts in order to reduce inventory, sales and COGS accounts in Chart of Accounts. They also updated the asset, COGS accounts and income accounts of 9000+ items.

2. Setup tracking of sales and marketing expenses related to each selling channel specifically. 

Our developers solved this challenge through downloading the item list from the system and adding fields for department and class. We utilized custom segments with GL (General Ledger) Impact for classification and reporting. 

• Body level and line level classification were enabled. 

• All classifications created for the reporting were mandatory.

• NetSuite will automatically update the post implementation transactions, and for updating the historical transactions, we developed a script.

3. Setup tracking for sales channel related direct expenses

Marketing expenses are manually recorded on NetSuite. 

• To identify the sales channel-related expenses, we enabled the custom segment in journals and set up custom segments.

• Updated the transactions in the current financial year with the classification created.

4. Configure inventory items and sales transactions

We configured the NetSuite system to automatically recognize the SO transactions and items sold from different sales channels, we made use of class or custom segments while the SO is created from the sales channel. 

• Identify the segmentation for each Sales Order created from the Sales channel. 

• Setup the item records to use the classification in the line level of the transaction.

• NetSuite will automatically update the post implementation transaction from item record to line level and we developed script for updating the older transactions. 

5. Avoid impacts of above changes to legacy transactions and prior years financial reports. 

After reopening the period, we updated the GL codes in the item record, thus minimizing impact on the GL transactions. 

Result

Our client heavily benefitted from our customizations. Having an accounting structure helped them reduce inventory, sales and COGS accounts in Chart of Accounts. Post-development, they can now seamlessly track the sales revenue and profitability through product categories, vendors, and sales channels. After configuring the inventory items and sales transactions we were able to minimize daily operation manual entries.  

Partner with Jobin & Jismi for Netsuite Customization Services that are tailored to your business needs. Contact us at contactus@jobinandjismi.com to schedule a consultation and see how we can help you achieve your goals.