A standard chart of accounts in NetSuite is made up of 4 segments. These segments allow you to cut your organisation’s data along the intersections of these segments and allow for easier analysis, segmentation, and commentary across your business. If you are coming from using a flat chart of accounts in QuickBooks segmental reporting across a number of dimensions will present a big change but also an improvement in how you look at your organisation’s data. The standard NetSuite segments are:
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- Accounts
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- Departments
- Classes
- Locations
You are able to change the names of these segments and repurpose them as other category types to best fit your organisation. You can also add custom segments if your organisation has more complicated reporting requirements and would like to analyse data across more than 4 segments. Budgeting and forecasting as well as actuals should follow these segmental lines.
This post will focus on your account structure and is based on our experience as end-user accountants and systems implementation experts. Our next post will focus on departments, classes, and locations.
Setting up Accounts in NetSuite
Accounts represent your standard chart of accounts which is summarised for the main part of your P&L and Balance Sheet accounts. Your starting point for developing your new chart of accounts will be your existing account structure. If you are satisfied with your existing chart of accounts this can mirror your existing CoA.
If you are using the migration exercise to clean up your existing chart of accounts, then you will need to map your existing TB to your new accounts. It is recommended to treat developing a new chart of accounts and setting up NetSuite as 2 distinct tasks if you want to minimise risk and ensure your pre and post-go-live financials are comparable. We would also encourage businesses to have proper stage gates and sign-off procedures around developing a new chart of accounts.
Mapping your Chart of Accounts
In NetSuite, your accounts will be the same across all entities which may not be the case in your existing set of books. This will make financial reporting and consolidating numbers easier going forward but may complicate the initial mapping process.
When mapping your chart of accounts to NetSuite remember, that the system will automatically create some accounts based on your setup preferences so it may not look exactly like you envisage. VAT and intercompany are 2 areas where NetSuite will automatically set up accounts.
Another consideration when developing your chart of accounts is how easy it will be for people to post at this level. For example, say landline phone and mobile phone costs are invoiced from the same supplier and you want to post them separately – is this information readily available for posting? Is your invoice posting process automated, will this posting require a manual intervention? Is the benefit from the additional analysis worth adding manual steps to a process? We usually advise setting up everything as simply as possible and seeing if there is a request or need for a more detailed analysis. It is always easy to add more accounts later.
As we are talking about ease of processing revenue posting should be another consideration. Will NetSuite be integrated with a CRM like Salesforce? If this is the case, you will need to ensure that the NetSuite revenue accounts exist in the CRM and are being populated. If needs be, you can link this to another Salesforce object that is meaningful to the sales team. See our post here for more information about integrating NetSuite with Salesforce.
Account Hierarchies
When designing a NetSuite chart of accounts, it is worth bearing in mind how you would like to report your financial data and designing your chart of accounts around this. NetSuite contains summary non-posting accounts and posting accounts. Using summary accounts for reporting purposes will make your report building easier. Examples of summary accounts can include turnover, staff expenses, and trade debtors.
Restrictions
Restrictions can be applied to accounts so that they can only be posted with specific locations, classes, or subsidiaries. This can help to improve financial controls over data, limiting mispostings and improving the integrity of financial data. It may be difficult to think through restrictions when you are developing your CoA for the first time so these restrictions can be applied once you have started using the system and begin to identify posting errors and control risks.
Statistical accounts
Statistical accounts contain non-financial data such as headcount or sales quantities. These can be populated for reporting purposes and are also used for running cost allocations.
Changes to your Chart of Accounts
If you are unsure about certain elements of your chart of accounts at the outset do not fret too much. Changes can be made to your Chart of Accounts at any point in the future. What will require some effort will be reposting historical data. You may decide this doesn’t need to be done. If you would like to reallocate historic data this will require some analysis to create and post journals. A one-to-one change will be easy to make. Even splitting accounts into 2 can be relatively easy but may need some analysis at some document level. Splitting things across several dimensions may require a bit more work but is also possible to do.
If you have any questions about setting up a new chart of accounts or mapping your chart of accounts from a legacy ledger then please get in touch below to speak with one of our directors.
