How does Accounts Receivable (A/R) work in NetSuite? In the blog, we’re going to get an overview of the entire A/R process in NetSuite, from beginning to end. We’ll look at key A/R transactions and records, discuss relationships between them, and provide tips along the way for using these transactions. Ready to get started? Let’s dive into Accounts Receivable in NetSuite.
Setting Up Accounts Receivable in NetSuite
What goes into setting up Accounts Receivable in NetSuite? First things first, you need to enable the A/R feature. You can enable this feature on the Basic Features section of the Accounting tab in Enable Features. The A/R feature allows you to invoice your customers and set up payment terms. In order to perform these tasks, you will need access to customer records as well as to transactions like invoices, receipts, cash sales, and payments. Essentially, Accounts Receivable encompasses the entire Order to Cash process, and turning on the A/R feature will give you access to all the related tabs, forms, and fields of Order to Cash.
Accounts Receivable Records and Transactions
To better understand how all these records and transactions interact with one another, let’s break them down a bit.
Customer Record: The AR Command Center
Think of the customer record as your AR headquarters. These records are detailed profiles of the individuals or businesses that owe you money for your products or services. After enabling A/R, you’ll be able to access the customer record by navigating to Lists > Relationships > Customers. Here, you can create, edit, and manage customer records. On the customer record you’ll find key data on each of your customers, including—
- Contact info
- Payment terms
- Open invoices
- Past transactions
- Billing information
Once all this information is saved on the Customer record, you can start connecting customers to key transactions in the A/R process.
Sales Order: The First Step
The Order to Cash process starts with a simple sales order. The sales order acts as a formal request for products or services. It tells you what exactly your customer wants to buy from you. The sales order will later be converted into an invoice once the products are ready to be shipped or services are provided.
As with the customer record, the sales order contains key data that is essential for the Accounts Receivable process, including things like—
- Customer
- Payment Terms
- Items
- Billing
- Shipping
Because everything is connected through the A/R process, you can return to the Sales Order at any time to see the current status of the order or move the order from one stage to the next.
Item Fulfillment: Delivering the Goods
Once you have recorded in your system what you’re going to sell and who you’re selling it to, it’s time to actually deliver the goods. On the sales order record, you’ll have the option of selecting the Fulfill button at the top of the page. This will generate an Item Fulfillment record, where you can select exactly which line items on the order you want to mark as being fulfilled. NetSuite supports partial fulfillment as well if only a portion of the sales order items are being fulfilled.
Invoice: Please Pay
If you received payment for the goods or services at the time of delivery, then you’ll need to enter a cash sale in NetSuite to record that. Otherwise, you’ll be sending your customer their invoice. The invoice communicates to your customer what they purchased from you, how much they owe, and when they need to pay you. Because all the A/R records and transactions are connected, you can generate an invoice directly from its corresponding sales order.
Payment: Cha-Ching!
Payments are the final step in the A/R cycle. Once payment has been received and recorded against an invoice, the sales order will be marked as Closed and the invoice is marked as Paid in Full. Your go-to place for handling payments in NetSuite is the Payment form. On this form, you can link payments to specific invoices, making it easy to track who has or hasn’t paid.
Accounts Receivable Analytics
Part of what makes NetSuite so valuable is its reporting features. And when it comes to reporting on Accounts Receivable, NetSuite shines.
Statements: The A/R Progress Report
A/R statements are kind of like report cards for your customers. These documents provide a snapshot of each customer’s financial relationship with your business. They summarize what your customers owe, what they’ve paid, and any outstanding balances. Statements help to keep your customers on the same page with you.
Aging Reports: Time and Money Management
NetSuite’s A/R functionality also lets you generate aging reports. Unlike statements, which focus on specific customers, these reports compile data across all your customers. They categorize outstanding invoices by their due dates, helping you understand which payments are overdue, pending, or due soon. This valuable insight allows you to manage your cash flow effectively and make strategic decisions.
Conclusion
From creating sales orders and generating invoices to recording payments and generating statements, you’ve witnessed the entire lifecycle of A/R transactions. NetSuite empowers you to manage your finances with precision, ensuring your business stays on the path to success.