Accounts payable and receivable manage the money that flows in and out of the organization so financial advisors can accurately gauge your financial stability. In this article, you’ll learn more about Accounts Payable vs Accounts Receivable how they differ, and how to make your Accounts Payable and Accounts Receivable processes as efficient as possible.

What are Accounts Payable (AP)?

Accounts payable is the process of managing, organizing, and paying your company’s outstanding accounts. In other words, it is all the financial obligations assumed by your business. Paying your organization’s suppliers and human resources on time is an example.

To ensure the smooth running of the business, a company needs to interact with service providers, suppliers, and other audiences to hire human resources and obtain services and products. In this sense, having good account management is essential for it to fulfill its commitments and avoid financial losses.

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When reading the concept of this strategy, it seems like a very simple process: just organize the slips, pay attention to the due date of each one and pay them on the correct date, right? This dynamic exists, but the accounts payable sector has an even greater responsibility.

In addition to having to align with an established financial plan, organizing accounts payable involves understanding the company’s financial health and its ability to invest and assume new debts/costs.

In this way, accounts payable is not just a strategy to settle a company’s debt every month. This is a process that helps an organization achieve the goals defined in its growth plan, such as expanding its business.

Classification of Accounts Payable (AP)

Accounts payable are classified according to the maturity time agreed with the creditor:

• Short-term accounts payable: these correspond to current liabilities that must be paid within a year from the acquisition of the debt. There are even payments that are made monthly to daily.
• Long-term accounts payable: These are also non-current liabilities; the payment is made in a period greater than one year.

For this, specific data must appear in the accounts payable:

1. Name of the biller, the provider to whom the debt is owed
2. Company account number
3. Invoice number helps ensure accurate accounting
4. Type of expense the nature of the good or service purchased
5. Invoice receipt date
6. The payment term allows that time delays and charges for it are not generated.
7. Status if the invoice has been paid or is pending payment

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What Are the Accounts Payable of a Company?

Accounts payable can be very varied, such as:

• Payment to suppliers for merchandise or products purchased.
• Wages to pay
• Rent payment
• Services provided by third parties such as electricity, water, gas, heating, internet, etc.

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Accounts Payable Process Steps

• Receipt of the invoice: When goods or services are purchased, the company receives a physical or electronic invoice that contains information such as the name of the item, amounts, etc.

• Review of the detail of the invoice: In it, you will find data such as the name of the supplier, date, amounts, and number of items purchased, among others.

• Updating and validation of the records: These must be completed based on the values contained in the invoices received and may require approvals and consultations with internal systems. If they are physical invoices, they are stored in the corresponding place.

• Payment Made: All payments made to the provider within the established due date. A series of documentation is required, such as purchase orders, and bank account information, among others.

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Tips to Improve Accounts Payable Management

Here are some tips that may be useful to improve the administration of your company’s accounts payable:

Maintain a Balance Between Your Income and Expenses

From the outset, this point might sound quite obvious. However, it is important always to keep it in mind and ensure that the level of expenses equals the income the business receives. This is to be able to keep finances healthy and prevent too many debts from accumulating in the future to such an extent that the management of accounts payable gets out of hand, making it impossible to pay them and, therefore, other serious consequences such as the cessation of operations of the business.

Choose Your Suppliers Beyond Price

When choosing the suppliers with which a company wants to work, most of them can be carried away by the price factor. However, consider the different payment conditions offered by each one since having more flexible conditions can be more beneficial than having lower prices.

Take Advantage of the Payment Terms Offered by Suppliers

And organize the payment of your invoices based on the above so that you can prioritize those with a term closest to expiration.

Maintain Good Communication With Your Suppliers

On some occasions, your company cannot comply with the timely payment of an invoice. For this type of case, it is suggested that you notify the supplier in advance and explain the situation so that you can negotiate another payment date.

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Seek to Negotiate With Suppliers to Obtain Discounts for Early Payment

Paying early, when you have the possibility, not only contributes to a good relationship with suppliers but also gives you the opportunity to obtain early payment discounts, which can positively impact cash flow.

Check That Your Suppliers Meet Their Commitments

You must confirm that each supplier is complying on time with the previously agreed commitments. For example, certain products are delivered on the established date, in the quantity requested, and in good condition. Otherwise, make the corresponding return or claim.

Set Payment Alerts or Reminders

This helps you remember the dates on which you must carry out the corresponding transactions of the various invoices. These do not have to be physical, but some technological tools give you the opportunity to have them digitally and automatically.

Automates and Standardizes the Management of Accounts Payable

It keeps track of cost and expense invoices under a standardized form. It is also advisable to manage these invoices by cost centers and projects for greater ease.

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Accounts Payable and NetSuite ERP

NetSuite ERP (Enterprise Resource Planning) is a cloud-based business management software that contains all the processes for managing accounts payable, from invoicing and tracking to payment processing.

NetSuite’s Accounts Payable module helps automate invoice approval workflow, eliminate manual data entry errors, gain visibility into vendor balances and payment status, and handle purchase orders and expenses.

Thanks to this software, it is possible to reduce the time spent on administrative tasks related to accounts payable, maintain control over the company’s cash flow and have greater certainty of what has been paid or will have to be paid in the future.

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Benefits of Automating Accounts Payable Process

Undoubtedly, including technology in the day-to-day of companies allows greater productivity and efficiency when managing accounts payable and digital expenses.

We will tell you about the benefits of automating the AP process and their importance for companies.

Connection Between Documents or Departments

By having the processes automated through a system, the possibility of carrying out more effective traceability of all the documents is created to know, in this way, all those elements that may be related to accounts payable, such as invoices, credit notes, or debit, dispatch guides, payments, expiration dates, and credits, among others.

In addition, today’s solutions allow all members of accounts payable management or those in charge of this area to view all the information on the same platform in real time. Thus, they can perform their tasks more efficiently.

Availability of a Portal for Suppliers

There are specific software or systems that allow providers to access their platforms to find out the payment status of an invoice or any other information generated around it by their own means, improving customer service times. And it reduces the work of those in charge of finances to answer calls, questions or claims to take advantage of it in developing strategies and actions that improve the accounts payable processes.

This way, the provider will always be informed about your pending account, what is left to be collected or if any payment was generated.

Error Reduction

Automating the billing and document reception processes facilitates the approval of payments to suppliers since the information can be verified quickly and simply if the data is correct.

This allows a more accurate recording and monitoring of invoices and, consequently, the reduction of possible errors such as the payment of double invoices, the disregard of credit notes, the verification of errors in amounts or amounts issued by the supplier and the fraudulent income invoices, inaccurate figures, among other actions.

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Likewise, when the company needs to carry out expense audits, the possibility of detecting errors is reduced: having all the information centralized and stored in a single platform makes it easier to carry out this procedure and increases the accuracy of the data.

On the other hand, the solution reduces employees’ workload when carrying out this type of management.

Execution of Punctual Payments

When an automated control of accounts payable is carried out, it is less likely that there will be delays in payments due to carelessness, ignorance, or loss of documents since each of the invoices will be registered and will have payment reminders according to their expiration date.

These platforms or software streamline processes and enable options for authorization or approval of payments, in addition to providing the possibility of automating the automatic sending of the same so that the cost to the supplier is made on the indicated date. In short, the process is easier and faster to do.

Prepare Financial Reports in Seconds

Accounts Payable Automation allows reports to be obtained with just a few clicks, providing timely information to help make better decisions when needed.

Thanks to the elaboration of these reports, it is possible to obtain data referring to the economic situation of a company, the total accumulated debts, the documents pending payment, the movement of cash flow, or any other element of expenses in general.

In this way, it is also possible to determine if a business has sufficient resources to meet pending obligations. On the contrary, it needs to search for and obtain other alternatives as potential sources of financing, which facilitates more effective cash flow management.

What Are Accounts Receivable (AR)?

Accounts receivable are the most frequent payment mechanism when carrying out a transaction between parties. Whether for services or goods. The economic system usually works on the basis of money to be collected and not on the liquidity or cash that may exist at the time of making a payment. This form of payment is called Accounts Receivable.

The Financial Information Standards define an account receivable as an exigible right by the entity to collect a consideration as a transaction for the satisfaction of an obligation acquired and fulfilled by the provision of a service or the sale of goods.

Accounts receivable typically show the debit balance on the company’s balance sheets. These are a host of rights in favor of the company against another or third parties. It arises from the provision of services or the sale of goods. In other words, accounts receivable come from the company’s periodic economic operations.

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How Do Accounts Receivable Affect the Business?

Accounts Receivable, as explained before, are future receipts that the company will have arising from payments in installments or with a future payment date.

Therefore, the enterprise’s financial planning needs to be aware of this account so that it can be assembled in the most efficient way.

Accounts receivable directly affect the company’s decision-making regarding making investments or assuming expenses because this capital is available in the future and not in the present.

Some types of credit, working capital loans, for example, can accept accounts receivable as a form of guarantee.

When the venture arrives in this situation, it may be because of poor planning.

Therefore, the company must be in control of when these future payments will be made to be aware of the commitments it may or may not assume.

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Accounts Receivable and Decision-Making

At the time of decision-making on matters relating to the company’s financial matters, it is necessary to know accounts receivable to understand the guarantees the company has in the future and the commitments that can be assumed.

Nowadays, using credit cards has become commonplace for many of the population.

Therefore, companies must be prepared for this scenario and plan to control the payment of their costs and expenses in the same period the capital is received.

In addition, there are many other advantages, such as:

• Identify good and bad payers;

• Make payment management more efficient;

• Offer a cash estimate for subsequent months;

All these analyses are extremely important for the decision to be the most appropriate for the company’s scenario, avoiding unpleasant surprises in the future, which can often lead the enterprise to fragile situations.

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Characteristics of Accounts Receivable

These accounts act as a kind of credit or loan to a client. The different elements and characteristics of accounts receivable are defined in the invoice:

• Expiration date or collection period

• Account amount

• Payment method

• Client data

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Types of Accounts Receivable

Accounts receivable should be part of a business’ accounting from a business and accounting standpoint. The collection term is essential since it defines the type of account receivable. Thus, accounts can be classified into two types:

• Short-term: Those that require immediate availability within less than one year. These accounts must be presented in the financial statement as current assets.

• Long Term: Its availability is more significant than one year. These types of accounts must be presented as fixed assets.

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Managing Your Accounts Receivable

Even though it is an essential requirement, controlling accounts payable and receivable is occasionally imprecise, even in large companies. It may seem simple, but it requires constant monitoring and a certain amount of pragmatism.

Establish Effective Billing Processes

Errors when capturing prices, names and concepts can cost your company dearly. On the one hand, it means a more significant investment of time and money; on the other, the inconvenience with your clients will be resolved. Therefore, having an efficient billing system is a priority need.

Keep Your Customer Database Updated

Centralizing your clients’ information in a single place is essential to maintain the correct accounts receivable management. Having incorrect contact information can cause problems when sending an invoice, which will cause the invoice to be redone, resent to the indicated client and delay the receipt of payments. You would waste a lot of time and money!

Define Credit Approval Processes

Sometimes, to increase your client portfolio and sales, you can create the bad habit of granting credit left and right, which seriously affects your business finances. We want to tell you that giving credit to one of your clients is okay, but you must be very careful since there must be an adequate process to grant it.

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Perfect Your Payment Application Process

This rule is one of the most important in any company: as soon as you receive a payment, apply it to the corresponding account in your register! This will allow you to differentiate at all times the accounts that are current from those that are already expired.

Optimize Your Collection Processes

The above points will help make your collection process more organized and straightforward. When payments are applied correctly, it is much easier to determine which accounts are at risk of failing to meet the payment dates.

Invest in Technology

To avoid loss of productivity, you can invest in technologies that optimize processes. With this, you put into practice a dynamic flow of information that is beneficial for decision-making.

Accounts Receivable and NetSuite

NetSuite ERP is an ideal tool for managing accounts receivable. This solution automates one system’s billing, credit review, collections, and customer service processes. 

In addition, it helps reduce errors by having all the information centralized and automating tasks associated with Accounts Receivable. By implementing NetSuite, you will be able to control all your finances in a single platform.

In conclusion, Accounts Receivable management must be taken seriously because it affects the financial health of any business. Knowing how to receive payments and optimize collection processes can make a massive difference in cash flow and customer relationships. 

Investing in technology like NetSuite can also optimize your processes and make financial operations easier. With a good Accounts Receivable management strategy, any business will have a greater chance of success.

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Accounts Payable vs Accounts Receivable

Accounts payable and accounts receivable are two components of a company’s balance sheet. Accounts payable is the total amount of money your business owes to its suppliers, while accounts receivable is the total amount owed by customers for goods or services provided. 

The distinction between these two types of accounts lies in their purpose: Accounts payable exist to reduce debt, while accounts receivable exist to increase sales.

The accounts payable vs accounts receivable difference also lies in their relationship. Accounts payable describes the amount of money that you owe, while accounts receivable reflects the amount that customers owe your business. 

This means that when a customer pays for goods and services provided, it will show up as an increase in accounts receivable and a decrease in accounts payable. On the other hand, when you make payments to suppliers for goods and services, it will show up as an increase in accounts payable and a decrease in accounts receivable.

The importance of understanding the difference between these two types of accounts cannot be overstated. Properly managing your company’s accounts payable and receivable is key to maintaining a healthy cash flow. As such, it is important to invest in technology that can help you better manage these accounts and ensure that your company’s finances are well managed. 

With the right tools, you can improve efficiencies within your business’s Accounts Receivable and Payable departments and ensure that your customer and supplier relationships are managed effectively.

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Conclusion

Accounts payable (AP) and accounts receivable (AR) are two important aspects of any business. In this guide, we’ve outlined the basics of each process and what you need to know in order to effectively manage your company’s finances. 

Contact us at OdeCloud today if you’re looking for more information or to discuss implementing AP/AR into your business. We specialize in helping businesses like yours get set up with the right financial software, so you can focus on what you do best – running your business. Thanks for reading!

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Tax due diligence is especially important during mergers and acquisitions, as the acquiring company assumes responsibility for any existing tax liabilities or compliance issues.

Oracle NetSuite simplifies this process with built-in features like NetSuite Tax Management, designed to provide users and stakeholders easy access to key tax information, streamlining decision-making with just a few clicks.

NetSuite Tax Due Diligence Checklist  

1. NetSuite File Cabinet

NetSuite File Cabinet is a place where we can find all the relevant business documents applicable to a business.

These documents are locked and are accessible and editable only to few stakeholders as configured permission to.

Businesses can be asked to store in the following documents for an easy access: 

• State and Local Tax Returns
• Foreign Income Tax Returns
• Excise Filings for 5 years
• Tax Exemption Certificates

2. Tax Codes

NetSuite Advanced Taxes feature allows to manage and calculate taxes for multiple nexuses within the same NetSuite account.

This facilitation of automation of taxation by NetSuite helps in assigning the right code to each transaction. The code applied with the rate can be further verified using the System Notes option to sample check the ethnicity of users and to detect malfunction if any.

3. Tax Reports

NetSuite has built-in default detailed reports running in real-time, giving a sneak-peek into the transactions till date without lags. This fosters accountability with the figures and makes it easy to make analysis over the tax figures and resultant profits of a business.

4. Top-Drill Down Model

NetSuite uses a drill-down model which enables users to dig down reports to the impacted key line- item transactions which created the issue.

Thus, with NetSuite – we can ensure subsidiaries are in compliance with global tax requirements.

5. Deferred Tax Assets and Liabilities

NetSuite maintains a separate account for each of these, further facilitating quick overview of each account and its related transactions, thus supporting tax due diligence.

6. Audit Capabilities

NetSuite features its own auditing capabilities, with strict look into logins and logouts, streamlined transactions make sure tax calculations made per line are displayed with country-specific tax details applied and only authorized users can make overriding changes.

Plus, each change is auto captured by the system which cannot be deleted helping in further tax due diligence for the system.

Hence, NetSuite helps us track, calculate, and pay various types of taxes based on the sale or purchase of products and services and plays a major part in tax due diligence.

It has all the applicable features enabled to support this due diligence and result in a smooth transitional process.

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That’s where Oracle NetSuite ERP comes at rescue! NetSuite One World is this one-stop store filled with multiple accounting options.

One of its standout features is NetSuite Multi-Book, which allows companies to support multiple accounting versions in one instance. This feature helps businesses keep two sets of accounts without high costs.

When dealing with transactions across subsidiaries, businesses often face a choice: enable Multi-Book or opt for Adjustment-Only Books. Each approach offers unique features and advantages. Here’s a quick comparison to help you decide which is the right fit for your needs.

Continue reading for to learn more about Multi-Book Accounting and how it compares to Adjustment-Only Books.

Multi-Book vs Adjustment-Only Book Accounting

Thus, depending on actual real-time business requirements, companies can choose to have either or both instilled in their ERPs for a better accounting experience.

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NetSuite Multi-Book allows companies to support multiple accounting versions in one instance. This feature helps businesses keep two sets of accounts without high costs.

Available to NetSuite One World users with just a few clicks, the multi-book feature allows a business unit to show two different faces under the same organization.

With this NetSuite accounting feature, businesses can show different accounting rules, currencies, and charts of accounts in each account book. The main principal book will be termed as Primary Book while another book will be called as Secondary Book.

And that brings us to what are the scenarios which require this multi-book accounting

Why is Multi-Book Accounting essential in upcoming business models?

Varying Statutory Reporting Requirements

Many times, organizations have to follow local reporting rules per country/state. These may differ from the main parent company accounting rules. Thus, organizations prefer to maintain books of accounts for each subsidiary to avoid statutory non-compliances.

Different Tax Filing Laws

This happens when the accounting period is taken differently for different entities as per their defined tax countries. Tax codes change from country to country and state to state. It becomes easier to maintain one set of books per company than to mix up data due to manual errors.

Avoid Currency Mix-Up

Countries have their own currency. Maintaining books as per parent’s base currency might hurt certain calculations and analysis in the long run. 

Whether it be tax filings or making bank payments, it is always handy to have figures in the local currency. Thus, making secondary books a must for most of the companies!

Upcoming Mergers and Acquisitions

Mergers and Acquisitions have a significant impact on financial transactions of an organization. Thus, the pre- and post-merger figures might make a drastic graph, which need to be reported in full. Keeping two sets of accounts helps both stakeholders and auditors. This creates fairness and ensures accurate reporting.

How to Enable Multi-Book Accounting in NetSuite?

Setup → Company → Enable Features → Accounting → Multi-Book Accounting → Full Multi-Book Accounting

Features of NetSuite Multi-Book Accounting 

Adjustment Only Books

This is not a complete multi-book feature. It allows for limited adjustments beyond the Primary Books. These adjustments use the same currency and accounting period as the primary books.

Full Multi-Book Accounting

Mult-books allows up to five accounting books. That way, you can manage your business with different currencies, accounting periods, chart of accounts, and tax structures.

Foreign Currency Management

Helps in managing foreign transactions across books.

Chart of Account Mapping

Allows different account values to be used across books.

Revenue and Expense Management

Recognize and amortize revenue and expenses per book.

Extended Accounting Period Close Process

Allows independent periods close to books.

Thus, gave wings to the accounting world. Multi-book accounting is a simple solution that ensures businesses are protected under one customized accounting system.

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The modern business environment is a complex and ever-evolving landscape that requires systems that can keep up with the pace of change. To handle the increased complexity, finance teams need access to a robust financial management system that gives them the necessary visibility. NetSuite Cash Management is an innovative cloud-based solution designed to streamline cash flow and optimize working capital by providing real-time insights into key financial operations – giving businesses more control over their finances. In this blog post, we’ll explore NetSuite Cash Management, its features, its benefits, and how it can help you maximize your company’s profits.

What Is NetSuite Cash Management?

NetSuite Cash Management is a cloud-based system that improves financial insight and visibility. It enables businesses to connect directly with bank accounts, streamline cash flow management, reduce days sales outstanding (DSO), and optimize working capital. With almost two decades of experience in business software development, NetSuite provides the reliable performance and features needed to help you improve your financial operations.

How Does NetSuite Cash Management Work?

A cash management solution like NetSuite can help in today’s fast-paced business environment. It ensures real-time bank and credit card data visibility, allowing finance teams to stay on top of accounts without needing to sift through paper reports manually. By streamlining the reconciliation process, the accounting team’s efficiency and productivity improve significantly, leaving them more time to concentrate on higher-priority tasks.

Features of NetSuite Cash Management

Cash management is an important part of any business. With the right tools, you can ensure that your cash is handled efficiently and accurately. NetSuite’s cash management features provide a comprehensive suite of tools to manage your finances. Here are five important features to consider when using NetSuite for cash management.

Banking Integration

NetSuite’s banking integration feature lets you connect directly with your bank account and see all transactions in real-time. This feature eliminates the need for manual entry and reduces errors associated with manual bookkeeping. Additionally, it provides visibility into your current financial state at any given time and helps you better manage cash flow daily.

Automated Financial Reconciliation

NetSuite’s automated reconciliation feature makes it easy to reconcile your accounts quickly and accurately. This feature can help save time and reduce errors associated with manual reconciliation processes by automatically matching transactions between NetSuite and your bank account in real-time. It also enables you to easily identify discrepancies between the two data sources so they can be addressed promptly.

Auto-Post Journal Entries

NetSuite’s auto-post journal entries feature simplifies the process of creating journal entries for transactions or adjustments made in other areas of the system. This means that journal entries can be created quickly and accurately without manually entering each transaction or adjustment into a separate ledger or spreadsheet.

Cash Flow Management

NetSuite’s cash flow management features make it easier to track cash flows across different accounts, departments, or regions within your organization. This enables you to make informed decisions about how to best use available funds and identify potential risks before they negatively affect operations or liquidity positions.

Electronic Bank Payments

Electronic bank payments enable businesses to pay their bills electronically instead of cutting paper checks or using traditional payment methods such as wire transfers or ACH payments. This feature streamlines the payment process while providing added security against fraud since payments are made directly from NetSuite’s system instead of third-party services or providers.

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Harness the Power of NetSuite Cash Management

Managing cash flow is an essential part of owning and operating a business. With the proper tools, it can be easier to keep track of and manage your finances, leading to potential losses in revenue. Fortunately, NetSuite Cash Management makes it easier for businesses to stay on top of their finances through its powerful features. Let’s look at some of the benefits you can expect when using NetSuite Cash Management.

Real-Time Visibility

One of the most important features of NetSuite Cash Management is its real-time visibility into your financial data. With this feature, you can easily monitor your revenues and expenses in real-time, giving you an up-to-date view of your financial health withmanually compilingpile data from multiple sourceswaitingwait for reports to be generated. This allows you to make more informed decisions about managing your cash flow and ensure you get the most out of every dollar.

Enhanced Accuracy and Efficiency

NetSuite Cash Management also helps improve accuracy and efficiency by streamlining processes such as invoicing and payments. With automated workflows and integrated payments solutions, you can easily create invoices for customers and manage their payments. This reduces manual input errors and simplifies payment processing so that you can focus on other aspects of your business without worrying about manually entering information or waiting for payments to clear.

More Control

Finally, NetSuite Cash Management gives you more control over your finances by providing enhanced security measures such as multi-factor authentication (MFA). MFA ensures that only authorized users have access to sensitive financial data, which helps prevent unauthorized access or misuse of funds. Additionally, with built-in fraud detection algorithms, any suspicious activity is flagged immediately so that appropriate action can be taken promptly. This extra layer of security helps protect businesses from potentially costly incidents related to cybercrime or other malicious activities.

Conclusion:

NetSuite’s Cash Management features provide businesses with powerful tools to better manage their cash flow and finances. With real-time visibility, enhanced accuracy and efficiency, and more control over data security, businesses can feel confident that their financial data is secure and easy to access. Whether running a small business or a large enterprise, NetSuite Cash Management will make your financial management easier and more efficient.

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Companies handle various types of intercompany transactions, including: 

1. Upstream Transactions: the subsidiary sells to parent
2. Downstream Transactions: parents fund the subsidiary 
3. Lateral Transactions: two or more sister companies collaborate on joint projects

With solutions tailored to handle these complex transactions, organizations can unlock substantial savings, streamline operations, and realize impactful gains.

Let’s dive deeper into intercompany netting and the various benefits it holds across going concerns. 

6 Benefits of Intercompany Netting

1. Transaction Efficiency

Netting reduces the number of intercompany payments directly impacting the downfall of bank fees. Fewer transactions mean less time spent on payment processing and lower forex costs associated with it.

2. Quicker Monthly Closures

Netting reduces the complexity of tracking and reconciliation of bulk intercompany transactions; thus, shifting the focus to few leading to faster month-end closes and cleaner financial statements.

3. Cost Effective

Netting not only reduces bank charges and the related forex conversions; but also, overall administrative charges of maintaining their books of account, saving time as well as cost.

4. Time Effective

Reduced discrepancies and fewer potential adjustments ultimately saving time and resources during the closing process.

5. Reduced Taxation

Reduced transaction mapping results in reduced cashflow between the two entities resulting in lower amounts open to taxation and cross boundary tariff rates.

6. Better Compliance

Netting ensures companies are following all legal and statutory compliances with accounting standards, transfer pricing regulations and accurate financial consolidation.

A Unified approach of following intercompany netting is a blessing in disguise for organizations running in cross-border sister concerns. It not only supports time saving but also improves a company’s financial standing in the long-run!

By leveraging NetSuite for intercompany accounting, businesses can optimize cash flow, reduce reconciliation time, and focus on strategic growth rather than transactional management.

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IAS 16 – referred to International Accounting Standard 16, outlines the accounting methodologies to be used governing Property, Plant and Equipment.

This standard covers all the ifs and buts to be considered for cost, disposal, depreciation, and revaluation of any asset falling under the criteria of Property, Plant and Equipment other than the ones covered by the later accounting standards specifically belonging to the respective assets.

Eg – IAS 41 covers biological assets used for Agriculture and the same will not be considered under IAS 16

Accounting Models Used in IAS 16

Cost Model

The asset is carried at cost less depreciation and impairment.

It adheres to the original asset cost till the end of life of the asset.

Revaluation Model

The asset is carried at revalued amounts. Fair Value at the date of revaluation – Depreciation and Impairment.

The Value of asset is dependent on market factors impacting the pricing.

Are these Models covered By Oracle NetSuite?

Yes. Both Cost and Revaluation Models have been added in Oracle NetSuite Fixed Assets Management Module.

Principles of recognition and accounting for Plant, Property and Equipment can be thoroughly followed using the NetSuite ERP System.

Fixed Asset Management in Oracle NetSuite

Fixed Asset Management in NetSuite provides automated management of asset’s acquisition, depreciation, revaluation, retirement as well as maintenance schedules and insurance.

FAM also covers mid-life assets which can be imported in NetSuite too.

A fixed asset in NetSuite can be created from Purchases, Expenses, and Inventory Transfers.

Cost Model in Oracle NetSuite

Cost Model as in Oracle NetSuite = Initial Asset Cost + Installation Cost Incurred- Accumulated Depreciation as per attached schedule

Treatment in Income Statement and Balance Sheet

– Initial Asset Cost and Installation Services = Asset

– Depreciation on the Asset for the Year = Expense

– Accumulated Depreciation Calculated over a period of years = Liabilities

– Disposal of Asset = Income

– Gain/Loss is further a result of Cost – Disposal = Income/Expense

Revaluation Model in Oracle NetSuite

Rest all concepts same as Cost Model, Revaluation in Oracle NetSuite takes its effect from IAS 16.

Where normally, the asset cost decreases over a period, however under the Revaluation Model, the asset price will go up if the market suggests.

Revaluation Model in Oracle NetSuite = Fair Value as updated in NetSuite – Accumulated Depreciation as per the attached schedule.

Treatment in Income Statement and Balance Sheet – Initial Asset Cost and Installation Services = Asset

– Depreciation on the Asset for the Year = Expense

– Accumulated Depreciation Calculated over a period of years = Liabilities

– Disposal of Asset = Income

– Gain/Loss is further a result of Cost – Disposal = Income/Expense

– Gain/Loss from Revaluation = Income/Expense

Disclosures

IAS 16 mentions reporting and disclosure requirements which can again be tackled by NetSuite customized reports and saved searches.

Disclosure Notes can be further added using NetSuite Saved Searches covering all the mandate disclosures to be made to reflect the IAS 16 statutes.

Thus, rest everything remaining the same, accounting models used in Oracle NetSuite are in sync with the International Accounting Standards making things relatable to the global standards.

The post Does NetSuite Fixed Asset Module Run on IAS 16 Specified Models? appeared first on OdeBlog.

Key performance indicators (KPIs) display the operational and financial health of an organization and its sustainability in upcoming years to go.

Financial KPIs measure a company’s key business objective against its decided goals and targets. However, tracking metrics like revenue, expenses and income is a challenging task using excel spreadsheets; and it is becoming extremely important to have a software in check to measure and monitor these.

Oracle NetSuite supports KPIs and has a varied pre-configured one on its Analytics dashboard. We can further, create KPIs based on custom reports and saved searches to create KPIs as per the business needs.

Here are a few most needed Financial KPIs to look for a growing startup industry

6 Essential Financial KPIs for Startups 

1. Gross Profit and Net Profit Margins

These ratios are a mirror to the actual profit earned by a business over a period of time.

Calculating these not only guarantees business having its expenses in check but also pinpoints to the most expensive expense to reduce them substantially.

Gross Profit = (Net Sales – COGS)/Net Sales *100

Net Profit = (Gross Profit/Revenue) * 100

2. Working Capital Ratio

Current ratio pictures the real assets available to pay off the liabilities in case of business shutdown. A ratio from 1.5-2 is considered safe. Anything below 1 is not a good sign.

Working Capital Ratio = Current Assets/Current Liabilities

3. Days Payable and Receivable Outstanding

These two financial KPIs show whether business is getting payments within decided due dates and whether business is paying suppliers with due time. Any lag in either of these shows a bad financial position of the company.

Days Sales Outstanding = Total Receivables/ Total Sales * No of Days

Days Purchases Outstanding = Total Payables/ COGS * No of Days

4. Cost per Unit

Yet another impactful analysis, cost per unit helps generate the exact cost one must recover while making sales. It helps set the profit percentage to overload on the cost.

Cost per unit = (Total fixed cost + Total variable cost)/Number of units produced

5. Cash Conversion Cycle

This again shows how much time is required by the business to convert its sales into real cash to be deposited in the bank.

This monitors the actual cash flow and identifies the red flags in this process.

Cash Conversion Cycle = Days Sales Outstanding + Days of inventory outstanding – Days payable outstanding

6. Sell Through Rate

When it comes to Inventory Management, Sell Through Rate shows Inventory sold versus inventory produced. This exactly helps in to stop wastage of funds and raw material and generate only required inventory as per the demand season.

Sell Through rate = (Number of Units sold / Number of units produced) *100

Takeaways

Thus, all these ratios judge and guide a business to sail through. Generating effective reports and saved searches will further help NetSuite generate formulas and KPI graphs and reports based on custom requirements and data put in and present it on NetSuite Dashboards.

The post Financial KPIs for a Growing Startup Company appeared first on OdeBlog.

Accounts receivable can be extremely daunting for any business owner, large or small. Keeping track of what clients owe your company and getting them to pay on time is crucial to keeping any business healthy and successful. That’s why NetSuite Accounts Receivable is so important; it provides businesses with streamlined tools and advanced automation to help keep their accounts receivable processes organized and efficient. By automating routine tasks such as billing creation, invoicing reminders, customer account management, collections tracking, cash visibility forecasting, and much more, NetSuite makes staying on top of your accounts receivable easier. Let’s take a closer look at some key features that make up this powerful tool.

What Are NetSuite Accounts Receivable?

NetSuite Accounts Receivable is an integrated system designed to help businesses streamline their billing, payment collection, and customer account management processes. Whether you are dealing with a single customer or multiple customers with complex invoicing arrangements, the built-in financial tools in NetSuite can automate most of your accounts receivable tasks. This includes tracking customer payments, preparing invoices and reminders, collecting overdue balances, forecasting cash flow visibility, and more.

Features of NetSuite Accounts Receivable

NetSuite Accounts Receivable (AR) is an essential tool for businesses that need to manage their customer accounts. With its comprehensive suite of features and tools, NetSuite AR makes it easy to handle the daily demands of managing customer records, invoices, payments, and collections in one place. Let’s take a closer look at what makes NetSuite AR so good.

Accounts Receivable Dashboard

The Accounts Receivable Dashboard gives you an intuitive overview of all your financial data in one place. This includes current receivables, credit limits, billing and payment history, and what customers owe. The dashboard allows users to search for customers by name or invoice number easily. This feature provides a great way for businesses to stay on top of their finances and ensure that they receive the payments they are due from customers promptly.

Customer Records

NetSuite AR helps you keep track of your customer base with detailed profiles and contact information for each customer. This feature makes it easy to quickly access important details such as account balances or payment terms without searching multiple databases or files. You can also set up automated notifications when payments are due, or customers exceed their credit limit.

Automated Invoicing

NetSuite AR simplifies the invoicing process with automated invoicing capabilities that allow you to create custom invoices quickly and easily. You can also define custom invoice formats according to your business’s specific needs. And with its built-in analytics capabilities, you can track which invoices have been sent out and when they were paid in real-time.

Invoice Consolidation

NetSuite AR allows you to consolidate multiple invoices into a single invoice for customers who have outstanding balances on multiple accounts. This feature makes it easier for customers who are paying multiple bills at once by allowing them to make one payment instead of several separate ones. It also helps streamline the accounts receivable process by reducing paperwork and eliminating redundant data entry tasks associated with multiple invoices being issued separately.

Payment Management

Payment management is made easier with NetSuite AR’s integrated payment processing system, allowing you to accept payments via credit card, ACH transfer, or check directly from within the platform. You can also set up automated reminders for overdue accounts to ensure that all of your payments are processed on time every month without having to track down each customer’s payment status individually manually.

Dunning & Collections

No matter how well you manage your accounts receivable process, there will inevitably be some customers who fall behind on their payments or become delinquent on their debts altogether—and this is where dunning & collections come in handy! With NetSuite AR’s dunning & collections feature, you can customize automated notices that will be sent out automatically whenever a customer falls behind on their payments so that you don’t have to track down each delinquent account individually every month manually!

Reporting

Last but not least is reporting—perhaps one of the most powerful features of NetSuite AR! You can generate detailed reports about everything from individual customer accounts to overall trends in your business’ accounts receivable performance over time—allowing you to see exactly where potential problems may occur before they become too large an issue!

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Benefits of NetSuite Accounts Receivable

As a business owner, you understand the importance of having a reliable accounts receivable system. An effective accounts receivable process is essential for streamlining customer account management, increasing efficiency and accuracy, and ensuring compliance with applicable regulations. Many businesses are turning to NetSuite Accounts Receivable (AR) to help them manage their finances more efficiently and accurately. Let’s look at some of the key benefits that NetSuite AR can offer your business.

Automated Billing and Invoicing Processes

NetSuite AR automates billing and invoice processes so that you don’t have to worry about manual entry mistakes or delays in sending out invoices. This ensures that customers receive their bills on time and that they are accurate, which boosts customer satisfaction while reducing the amount of time it takes to get paid.

Streamlined Customer Account Management

NetSuite AR allows you to manage customer accounts from one centralized location easily. You can quickly access customer data such as payment history, contact information, credit limits, discounts, and more. This makes it easier for you to make informed decisions about each customer’s account status and determine how best to proceed with any outstanding payments or disputes.

Cash Visibility Forecasting

NetSuite AR also provides cash visibility forecasting to gain insights into your company’s cash flow over time. This helps you anticipate future cash needs and better plan for upcoming expenses. It also allows you to identify any discrepancies or irregularities in customer payments sooner rather than later to address them before they become major problems.

Collections Tracking

With NetSuite AR, tracking collections is easy! You can easily view all outstanding payments due from customers at any given time, as well as track receipts by payment method or customer account type. Up-to-date collection information enables faster resolution of disagreements or discrepancies between customers and your business while helping you stay on top of overdue payments with timely follow-ups when needed.

Easier Compliance

NetSuite AR helps ensure compliance with applicable industry regulations thanks to its extensive validation checks for each transaction entered into the system. This reduces the risk of errors or noncompliance issues that could put your business at risk in an audit situation. Plus, all transactions are stored securely in a cloud-based environment to be accessible whenever you need them without taking up valuable storage space on-premise servers or physical hard drives.

Conclusion

NetSuite AR is a powerful accounts receivable system that can help you manage customer accounts, streamline invoicing and billing processes, track collections, and ensure compliance with applicable regulations. Its automated features make it easier for you to stay on top of your company’s finances while providing valuable insights into cash flow forecasting and customer account management. With NetSuite AR, you can be sure that your business is running as smoothly and efficiently as possible.

The post NetSuite Accounts Receivable: Automate Your Invoicing, Billing, and Collections appeared first on OdeBlog.

All publicly-traded companies, wholly-owned subsidiaries, and foreign companies that are publicly traded and do business in the United States must comply with SOX. SOX also applies to accounting firms that audit public companies.

NetSuite offers a managed bundle called Strongpoint for Change Management, specifically designed for SOX compliance. However, NetSuite’s native features are also powerful enough to establish internal controls that meet SOX standards.

1.   Section 302 and 906: Corporate Responsibility for Financial Reports

2.   Section 404: Management Assessment of Internal Controls

3.   Section 409: Real-Time Issuer Disclosures

4.   Section 806: Sarbanes Oxley Whistleblower

Data Security Framework of NetSuite SOX Compliance

The data security framework of NetSuite SOX compliance can be summarized by five primary pillars:

1. Ensure Financial Data Security

All transactions in NetSuite can be routed through approval workflows which guarantee financial data to be displayed only to the people authorized to approve it. NetSuite further has inbuilt mechanisms to restrict data by allowing it to be displayed only to a set of people involved in the transaction.

2. Prevent Tampering of Data

All roles in NetSuite are guarded by a set of permissions and restrictions which do not allow any peep into the areas which an employee is not related to. There are further View, Edit, Create options which can be applied for each employee of a group of departments to minimize data breach and manipulation.

3. Track Data Breach

There are multiple tracking solutions available in NetSuite to track each and every employee activity in the system and on a specific record.

Employee Login Audit Trail and System Notes on every record are one of the major trackers to get the exact view over these.

4. Records available for Auditors

System Notes is a one spot for auditors to get each and every detail which has happened with the record. These are event logs readily available for auditors and drive an audit trail.

5.Demonstrate Compliance in every 90 days

Required financial statements and internal control structures are maintained by NetSuite via their reports and saved searches. These are designed to be built on the principles of accountability and authenticity of data input and resultant output.

Abiding to SOX is mandatory for all US public companies to safeguard interest of all the company stakeholders. However, NetSuite small/medium scale users also have a chance to abide by these compliances without any additional costs of managed bundles/modules.

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