Financial Reporting, Implementation, Segments

Eight considerations when creating the chart of accounts in NetSuite

intheBlk consulting provides data conversion services for organizations implementing NetSuite. Check out our NetSuite data conversion page to see the options and pricing and our NetSuite implementation resource page for additional articles on the implementation process.

Creating the chart of accounts (COA) is one of the first steps in loading the master records in NetSuite. Setting up the ideal chart of account structure is subjective and should be based on the industry and needs of various stakeholders. Getting the chart of accounts correct during the implementation can streamline the segment structure and the overall financial close process. This list includes tips and tricks from assisting 35+ clients with their NetSuite implementation.

  1. Review the Account Type of credit card, other AR and AP accounts, and prepaid expenses – users cannot change the Account Type once the account has been created. Review the Account Type before creating the account and loading historical activity to prevent the need to reclassify any historical data.
  2. Limit Accounts Payable (AP) and Accounts Receivable (AR) accounts to a 3rd party, an allowance for bad debt AR account (AR only), and an intercompany account – both QuickBooks and NetSuite will include all the AP and AR accounts in the out-of-the-box subledger reports. Clients often get frustrated when trying to run a subledger that ties to a single GL account. Unfortunately, adding an account filter on the subledger reports can be inconsistent if clients use journal entries to post subledger activity. Non-operating accounts, such as other receivables, are best classified as an 'Other Current Asset' account type.

Case Study: Read about how SmartLabs migrated individual transactions from 15 QuickBook files to a single NetSuite instance with intheBlk Consulting!

  1. Avoid building your financial statements in the account structure – I recommend grouping accounts based on shared functions, not the financial statement groupings. Most likely, users will need to customize the financial statement line items in NetSuite. Adding multiple parent-child relationships in the GL account structure is messy.
  2. Utilize the Summary account feature before loading historical transactions – this step will prevent users from accidentally mapping historical activity to a summary account. NetSuite will throw an error if this does happen, forcing you to remap this activity.
  3. Use the Analytics workbook to access all fields associated with Accounts – the Eliminate Intercompany Transactions and Currency fields are not available in the 'Account' saved search. If you need an Excel report with this information, use the Analytics workbook instead.
  4. Don't restrict the account currency – Bank and Credit Card account types require a currency. By not adding a currency, users give themselves more flexibility in the future to use the accounts. Unfortunately, users cannot change the currency on the account once it is set.
  5. Set all accounts to all subsidiaries unless you have a good reason – Unless otherwise needed, set the subsidiary to the parent and check the 'Include Children' box. This setting can be changed in the future if needed with a CSV upload.
  6. Use the system-generated accounts whenever possible – NetSuite will generate several system-generated accounts when you activate the NetSuite instance. Users should rename and renumber these accounts instead of creating new accounts. NetSuite will default to the system-generated accounts whenever you create a new transaction. For more documentation, check out this article on Prolecto's website.

Are you preparing the chart of accounts as part of your NetSuite implementation? Do you need additional assistance on the data migration component of the project? Talk to us today to find out how intheBlk consulting can assist.

Subscribe for updates!