A Deep Dive into NetSuite Accounting

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On January 7th (2020) I told you that Insightful Accountant was growing our coverage of products serving the Mid-market and as part of that new direction I introduced you to NetSuite. I mentioned that in the weeks and months to come I would be turning that product introduction into a series that would explore NetSuite in greater depth as I myself learned the product from a group of product instructors and support personnel that NetSuite was providing me access to.  Today's article is the next 'deep dive' into the NetSuite 'all-in-one' cloud-based platform.

There simply comes a time when you outgrow your current small-business accounting system, no matter how many times you shake your head no when your accountant tells you it’s time to “move on up to something else.” You struggle along with sluggish performance telling yourself that it’s your computers, or your internet service because you simply don’t want to switch.

Then the day comes when your Balance Sheet doesn’t balance because somewhere one of your transactions simply can’t properly post to the appropriate segregating accounts to classify the expense within your multi-entity configuration. Even now you tell yourself “I don’t want to give up my long-standing general ledger.”

Or your accountant advises you at year-end that he or she has hours and hours of work to do in reconciling your income because your little system simply posts your accrual income as of the date of your invoices, rather than recognizes that income on the basis of its proper earnings according to generally accepted accounting standards. Now you are wondering which will cost you less, your accountant’s time or switching to a new accounting system.

Obviously, these are clear indications that you have indeed outgrown small business bookkeeping software and you’re ready for an accounting system that supports your business and where it is growing. What you are ready for is NetSuite, and you might want to attend our free webinar to find out.

Insightful Accountant hosted NetSuite Webinar

One way to assess if it's time to switch from your small business bookkeeping system to a real accounting system is to attend the webinar Insightful Accountant is hosting titled, "Graduate Your Customers onto NetSuite to Scale Your Business." The webinar is being held Wednesday February 26, 2020 at 12:00 pm Eastern. You can view the archive of this webinar in our WEBINAR VAULT.

The NetSuite General Ledger

NetSuite's cloud-based single platform architecture ensures real-time visibility into the financial performance of your business no matter what its size or complexity, providing accounting data from a consolidated level all the way down to individual transactions. Rather than force somebody else’s strict pre-defined accounting format on your business, NetSuite lets you tailor their General Ledger to meet the unique needs and conditions of your company.

This means that the finance professionals within your business, or the accountant you have on retainer, have the flexibility and visibility they need along with the functional reporting and dashboarding they desire within a framework that supports multi-subsidiary, multi-national, multi-currency, multi-tax, and multi-language capabilities within the same operating file.  That’s right, no more switching data files to move from one company or subsidiary to another, all your data is right there available at your fingertips.

And, because NetSuite supports this type of structure, you can properly record all book-specific transactions using a single business transaction within the General Ledger. You won’t have any more worries about not being able to properly record intra-company or inter-company, intra-fund or inter-fund, or similar transactions that cross the capabilities of your current small business bookkeeping system. In simple, no more out-of-balance Balance Sheets because NetSuite does what your current system can’t.

Layer Upon Layer

When it comes down to it, most people like a few things ‘a whole lot’ about their current general ledger and that alone delays their making a switch even when they know they need to. For many people, those few things boil down to how they have their existing data customized based upon the custom fields the system they have been using allows. Some systems offer ‘departments,’ some offer ‘locations,’ some offer ‘work centers,’ and some call them ‘classes.’ In some of these general ledgers you may have only one option, or a couple of these, and these fields are many times captured only as part of the primary or header record while in other systems they are captured at the detail or line-entry level.

NetSuite offers an ‘unlimited’ number of reportable segments for chart-of-accounts/transactional reporting (as shown in the illustration below), so if you were using departments before, you can have departments in NetSuite. If you were using class before, you can have class in NetSuite. Using both departments and class before, you guessed it, that’s no problem with NetSuite either. In fact, you can have, just as the chart shows, subsidiaries, and departments, and classes, and locations, and sub-locations, and sub-classes, and work-centers, and essentially any number of custom segments you want to track.

But sometimes you want to control the use of these classification capabilities to specific aspects of your organization. For example, you might not want a specific ‘Account’ within your overall chart-of-accounts to be available for use by every ‘Subsidiary’ within the business. Not a problem with NetSuite, for any of the reportable segments you define, you can create relational associations that facilitate the controls you want to put in place. The example below shows a case where a specific ‘account’ has been associated with the specific subsidiaries and subsidiary sub-components authorized by the financial staff.

Detail Upon Detail

These same concepts apply when it comes to how your data is sub-diced at the transactional level. For example, even small accounting systems will use ‘items’ (sometimes called products or services) for both sales and purchasing transactions. Obviously, sales transactions are associated with ‘customers,’ and purchasing transactions are associated with a ‘vendor.’ Many businesses need the ability to track ‘projects’ which can have an association with the customer for whom the project is being performed, but also have an association with item purchases secured from a specific vendor.

The ability to track all of these is essential. Never fear, if you are considering a conversion to NetSuite rest assured that the ability to slice and dice your transactions by any number of these types of transactional level details is available and you can call them whatever you want (as shown in the illustration below). Not only that, but with NetSuite you can create an unlimited number of custom 'module' tables of this type.

As if that wasn’t enough, the moment you as either the NetSuite Administrator, or a Power User with the necessary permissions, creates one of these custom tables, that field and data becomes immediately available on every applicable form and reporting template within NetSuite. There is no ‘custom programming required’ to make use of these custom fields on either your transactions or in reports.

Projects

I will take a moment to address projects here, even though I will cover that in far great depth in another part of this series. NetSuite offers project tracking/accounting in different levels of sophistication. One way to use projects is as a reportable segment as shown above and then associate those projects with customers, subsidiaries, locations and other accounting segments as a simplistic way of tracking your project details.

On the other hand, NetSuite also offers full-blown project management. In fact, their project budgeting capabilities enable customers to make more informed decisions by providing a single view into all aspects of project budgeting, including the ability to create multiple versions of the budget plan. So, you can track every project in detail when it comes to actual against budgeted and projected costs and revenues.

Fiscal Accountability

In the areas of fiscal accountability, NetSuite excels with features like cash management, revenue recognition, accounts receivable & payments, accounts payable, tax management, planning & budgeting and reporting. Depending on the complexity of your requirements, many of these features serve as the core functionality to expand NetSuite capabilities.

Cash Management

What is today’s all-time trending business term, “cash-flow”, has been a fundamental management component of NetSuite since day one. NetSuite provides a complete view of your company’s cash flows in real-time across every one of your bank accounts and other financial resources, across all your locations and entities, and in any of the various currencies you have established. All of this is designed to give you a complete solution for not only monitoring but forecasting and addressing your cash requirements.

Revenue Recognition

NetSuite’s revenue recognition features help companies comply with modern accounting standards including ASC 605, 606 and IFRS 15 to timely report their financial results. No more dragging out the manual ledgers of revenue schedules or relying on Excel to produce revenue recognition timelines to tell you when you should or shouldn’t recognize revenues. NetSuite automates revenue forecasts, allocations, recognitions and reclassifications via a rule-based event framework to produce accurate financial statements.

Billings, Accounts Receivable & Payments

NetSuite’s sales and accounts receivable integration not only strengthens revenue recognition but helps ensure accuracy and satisfaction when it comes to your Customers. Whether you are generating sales transactions, working on long-term projects that generate progress invoices, or you recognize period revenue through subscription billing NetSuite can not only provide for the creation of the proper billing mechanism, but associate the accounting with the proper revenue recognition framework and accounts receivable tracking.

And speaking of customers, NetSuite makes it possible to provide customers with self-service to real-time information concerning their account with your company, giving them access to their open purchase orders, history, open invoices and payment history. Your own A/R dashboard features give you details on every aspect of a customer’s open invoice along with their credit history with your company. With just one look you will know immediately just how good a customer is, not from just a buying standpoint but from a ‘paying’ standpoint.

Accounts Payable

Let’s face it, in every business the time comes when we must buy stuff. It might be supplies or it might be inventory. A lot of small businesses make the mistake of not establishing a purchasing process from the very start, and that lack of control follows them as they grow but the day comes when suddenly they realize that their buying habits are out of control. The problem is that most small business accounting systems simply don’t offer purchasing controls as part of their accounts payable.

NetSuite improves payment controls by automating the processing and payment of your payables. Ensure that every vendor bill is properly documented from purchase order to item receipt, to verify that what you pay for is what you ordered, and that you receive every discount you are entitled to.

Tax Management

When it comes to your accounting software, one of the things you want to know is how it is going to handle your tax situations like sales taxes or VAT taxes (depending on where you do business). And as your business grows from small to mid-size to enterprise, you have to concern yourself with issues like ‘Nexus’ and cross border sales; so, you need a software that supports tax calculations in all the places you do business. NetSuite’s tax engine provides not only total domestic and global tax management capabilities, but it also supports a wide variety of third-party solutions that specialize in tax, like Avalara’s AvaTax.

With NetSuite you can handle local taxes for multiple tax schedules in your state, across state lines and across the entire country. You can deal with everything from GST to VAT, to consumption taxes and all those awkward issues of the impact of exchange rates and global valuation of goods sold either at the point of sale or the point of delivery. Let’s face it, you aren’t going to be managing those tax issues with the bookkeeping software you bought down at the office supply super store.

Planning & Budgeting

Most of the small business accounting software with which our readers are familiar with have little, if any, financial planning and budgeting capabilities. If they do, then they represent some form of an incremental budget tool that simply multiplies the prior periods budget by some percentage and assumes that you can live with such a limited estimate.

NetSuite’s Planning and Budgeting features provide company-wide and departmental financial planning with modeling capabilities and reporting using a powerful calculation engine that can accommodate a wide range of business logic with fast, in-memory aggregation within a collaborative solution. It offers full integration with Microsoft Office tools such as Microsoft Outlook, Excel, Word and PowerPoint with Smart View for Office, so financial planners can make the most of the data to display the results any way they want.

Reporting

When it comes to reporting, NetSuite is all about giving you and your organization the insights you want and need exactly the way you want them. Everybody calls it ‘reporting’ but today what is one person’s report is another person’s ‘dashboard.’ With NetSuite, the options are yours and they are almost limitless.

Some individuals never want to see another piece of paper with a bunch of rows and columns of numbers on it again, they want everything displayed to them in a fully customizable dashboard with key performance indicators (KPIs) tailored specifically to their role, like many of the examples you have seen already in this article.

On the other hand, the person in the very next office is just the opposite.  They want an entire stack of custom financial reports generated from an easy-to-use financial report builder that lets them see exactly the data they want, in the order they want it, sorted how they want it, and displayed in the fashion they want it displayed. Here are just some of the standard ‘out-of-the-box’ reports for the financial areas we have been discussing in this article.

I know it seems like we have covered a lot of content in this feature but believe it or not we are not even close to being finished with our 'deep dive' into NetSuite. We have a lot more to look at when it comes to the full feature line-up that NetSuite has to offer so keep checking back for my next installment.

Insightful Accountant hosted NetSuite Webinar

One way to assess if it's time to switch from your small business bookkeeping system to a real accounting system is to attend the webinar Insightful Accountant is hosting titled, "Graduate Your Customers onto NetSuite to Scale Your Business." The webinar is being held Wednesday February 26, 2020 at 12:00 pm Eastern. You can view the archive of this webinar in our WEBINAR VAULT.

Disclosure:

While this article may reference sponsored webinars or other sponsored content, the author's content and opinions contained herein are his own and are not in any manner associated with sponsored content.