Account Optimization in NetSuite

Client Portfolio

Our client is a prominent U.S.-based distributor specializing in industrial networking devices and Industrial Internet of Things (IIoT) related solutions. With a robust market presence, they needed to optimize their NetSuite system to better manage their accounting, sales tracking, and operational processes.

Problem Statement

The client faced several challenges with their fragmented accounting structure. This made tracking sales revenue, profitability, and marketing expenses difficult. They needed a streamlined accounting system to: 

• Reduce the inventory, sales, and COGS (Cost of Goods Sold) accounts in their Chart of Accounts

• Track sales and marketing expenses specific to each selling channel. Set up classes or departments to track sales revenue and profitability as per product categories, vendors, and sales channels. 

•Monitor Google ad spend and related shipping costs for their websites.

• Configure inventory items and sales transactions. This should minimize the manual data entry for daily online orders of different items across multiple sales channels (two websites and Amazon Marketplace).

• Avoid any impact of the above-mentioned changes on legacy transactions and prior years’ financial reports. 

What We Suggested

Our NetSuite experts proposed a well-defined solution to optimize the client’s accounting structure: 

• Consolidate and streamline the Chart of Accounts by grouping similar accounts. 

• Implement custom segments and classification in NetSuite to track expenses and revenue by sales channel. 

• Enable automated recognition of Sales Orders (SO) transactions and items sold from different channels, reducing manual input. 

• Develop scripts to update historical transactions, ensuring the new classifications and changes are applied retroactively. 

Challenges and Solutions

One of the primary challenges was the vast and complex nature of the client’s existing data. Configuring a 16-year-old database to reduce and group accounts while ensuring data integrity was critical. 

Additionally, implementing custom segments with General Ledger (GL) impact and automating the update of post-implementation and historical transactions required careful planning and execution. 

Here’s how our developers approached and solved each challenge: 

• Reduction of Inventory, Sales, and COGS Accounts in the Chart of Accounts: Streamlined a 16-year-old database by consolidating the existing Chart of Accounts into unified inventory, sales, and COGS accounts. This process involved grouping the older accounts and updating the asset, COGS, and income accounts for over 9,000 items to reflect the new structure. 

• Setup for Tracking Sales and Marketing Expenses by Selling Channel: 

To track sales and marketing expenses accurately, our developers downloaded the item list from the system and added fields for department and class. We utilized custom segments with General Ledger (GL) impact to enable precise classification and reporting. 

• • Enabled both body-level and line-level classification.  

• • Made all classifications mandatory for accurate reporting.  

• • Automated the updating of post-implementation transactions in NetSuite and developed a script to update historical transactions accordingly. 
  

Tracking Sales Channel-Related Direct Expenses:
Although marketing expenses are manually recorded in NetSuite, we enhanced the system’s ability to identify and track sales channel-related expenses. 

• Enabled a custom segment in journals to capture these expenses. 

• Applied the created classifications to transactions in the current financial.

Configuration of Inventory Items and Sales Transactions:  

We configured NetSuite to automatically recognize Sales Order (SO) transactions and items sold from different sales channels by utilizing class or custom segments at the point of SO creation. 

• Segmented each Sales Order according to its originating sales channel. 

• Configured item records to apply these classifications at the line level of transactions. 

• Automated the application of these classifications to post-implementation transactions and developed a script to update older transactions.

Minimizing Impact on Legacy Transactions and Prior Financial Reports:  

To ensure that the new changes did not disrupt legacy transactions or prior years’ financial reports, we reopened the relevant periods and updated the General Ledger (GL) codes in the item records. This effectively minimized the impact on GL transactions. 

Customer Success

The tailored NetSuite solution provided significant benefits to the client. The optimized accounting structure allowed for efficient tracking of sales revenue and profitability by product category, vendor, and sales channel. 

The reduction of inventory, sales, and COGS accounts in the Chart of Accounts streamlined financial operations. Automation of sales transactions and inventory item classification minimized daily manual entries, improving operational efficiency. 

• Streamlined Accounting: Reduced and combined inventory, sales, and COGS accounts, simplifying financial reporting. 
• Enhanced Tracking: Successfully set up tracking for sales, marketing expenses, and Google ad spend. This provides detailed insights for better decision-making. 
• Operational Efficiency: Configured NetSuite to automate SO transactions, significantly reducing manual work and improving accuracy. 
• Data Integrity: Developed scripts to update legacy transactions, ensuring the changes did not affect prior financial reports. 

Way Forward

The successful optimization of the client’s NetSuite accounting structure has set the stage for continued growth and efficiency. Post-development, they can now seamlessly track the sales revenue and productivity through product categories, vendors, and sales channels. 

The client can now explore additional customizations to further enhance their financial management and operational processes. 

Are you looking to enhance your customer account management and simplify credit card operations? Do you need a seamless solution for customizing your NetSuite platform? Contact us today to elevate your business with our expert-driven, tailored solutions.