Predicting Extended Costs and Exchange Rates in NetSuite

Problem Statement

A maritime solutions company approached us as they required a new solution for estimating extended costs for their products. They need a more accurate and customizable approach, as they found the default calculation within their existing system lacking in precision and flexibility. 

NetSuite’s Estimated Extended Cost is the anticipated total expense for making or delivering a product, helping businesses understand the complete cost involved and enabling them to set prices more accurately, manage profitability, and make informed decisions. Specifically, the standard calculation resulted in inaccuracies when the quantity on hand of the line-level location of the sales order reached zero, leading to a distorted gross profit calculation. 

Additionally, there was a need to ensure that any changes to the estimated cost during item fulfillment or invoicing would be reflected in the sales order value and associated currency exchange rates. 

What We Suggested

In response to the client’s challenges, we proposed an effective solution that addressed the specific requirements and objectives:  

•Customized Formulas: We developed a custom formula for estimating extended costs tailored to the client’s business needs and principles. This formula ensures more accurate cost estimations and aligns with the desired gross profit calculations. This happens even in scenarios where the quantity on hand reaches zero. 

•Dynamic Adjustment: To accommodate changes in estimated costs during item fulfillment or invoicing, we proposed implementing a dynamic adjustment mechanism. This automatically adjusts the estimated cost based on changes in the sales order value, ensuring consistency and accuracy throughout the sales process. 

•Exchange Rate: Leveraging the estimated extended cost as a basis, the currency exchange rate is auto updated. It varies based on the different currencies opted for.

Challenges

Developing and implementing a custom formula within NetSuite‘s framework presented technical challenges that required careful consideration and expertise. However, with multiple test cases and thorough analysis, our team successfully tackled these obstacles. 

Customer Success 

Following the implementation of our suggested solution, the client experienced significant success and benefits such as: 

•Improved Accuracy: The custom formula for estimating extended costs resulted in significantly improved accuracy, providing the client with more reliable cost estimations for products. 

•Enhanced Financial Reporting: Integration with financial reporting systems generates more accurate and detailed financial reports. It also empowers the client with better insights for decision-making and strategic planning.

•Aligned Profit Principles: The customized solution ensures that gross profit calculations align closely with the client’s business principles. It also enhances transparency and accountability in financial management. 

Key Achievements: 

•Improved Estimated product price accuracy by 80% 

•Enhanced reporting insights

Way Forward

With this customization, forecasting a product’s price range for upcoming years becomes simpler in business operations. With an estimated plan in place, our customers can confidently navigate increased demand without worry.

Are you looking to enhance the accuracy of estimated plans for your products in your business? Do you need more efficient calculations for processing orders? Contact us today to optimize your operations.