NetSuite Advanced Financials (Cost Allocation Methods & Features)

NetSuite Advanced Financials

In the ever-evolving field of finance, precision and efficiency are crucial. NetSuite Advanced Financials stands as a financial management system at your fingertips that not only simplifies the complexities of your financial operations but also offers a holistic view of your organization’s financial health.

In this blog post, we’ll discuss NetSuite Advanced Financials, including its features, price, functionalities, and benefits. We will also explore the cost allocation method in the NetSuite Advanced Financials module.

What is NetSuite Advanced Financials?

NetSuite Advanced Financials is an Oracle NetSuite software suite module that offers businesses more comprehensive financial management tools than the standard edition.

In other words, it is an extension of the NetSuite ERP system that provides advanced financial management capabilities, including multi-currency management, advanced billing management, revenue recognition, and more.

Why should businesses use it?

It enables easy to make multiple budgeting, forecasting, flexible billing, statistical accounts, invoicing, expense allocations, sales order management, billing schedules, and other financial tasks.

This one-stop solution can handle all essential business functions.

It is particularly useful for businesses with complex financial needs or needing to automate their financial processes. It can save capital and time by simplifying operations and automating tasks such as invoice creation and payments.

Essential Features of the Advanced Financials Module

Essential Features of Advanced Financials Module

1. Advanced Billing Management

  • You can automate your billing process by setting up recurring billing schedules and managing invoices, payments, and credits all in one place.
  • Allows you to forecast cash collection and billing
  • Create revenue accurately with billing forecast report
  • Create an invoice according to the customer’s schedule

NetSuite Advanced Financials Bill

2. Amortization Schedules

  • You can create amortization schedules to track the progress of prepaid expenses and capitalized assets over time.
  • You can Automatically amortize expenses over time with amortization schedules.
  • Amortization plans can also be linked to jobs to amortize expenditures in line with a job’s completion percentage.

NetSuite Amortization Schedule

3. Expense Allocations

  • You can efficiently allocate expenses across multiple departments, classes, and projects.
  • You can also allocate expenses according to various criteria, such as percentage, amount, or quantity.
  • A dashboard reminder warns you when it is time to process active allocation schedules.
  • Allocations can be made in real time or in batches.

NetSuite Allocation Schedule

4. Budget Management and Reporting

  • You can create budgets and track actuals against them in real time.
  • The Multiple Budgets feature allows you to define and report on more than one budget for the same criteria, such as a traditional and conservative budget.
  • You may create a budget in Excel and export it as a CSV file.

5. Statistical Accounts

  • You can create statistical accounts to get a high-level overview of your company’s financial health.
  • Statistical Accounts are read-only and cannot be used in financial transactions.
  • You can create as many statistical accounts as you need and use them in custom reports.
  • You can use them to track and report non-financial data, such as the number of products sold, customer service calls, or available floor space.

NetSuite Statistical Schedule

Key Functionalities

  • Billing schedules can be assigned based on items in sales orders
  • Sales forecasts and commissions are integrated with billing
  • Invoices can be generated automatically
  • Expense reports can be created and allocated across the department
  • Manages multiple budgets and also monitors real-time comparison of budgets and actuals.
  • Manage bills, bill credits, jobs, and more using amortization schedules

Cost Allocation Methods in the NetSuite Advanced Financials Module

The four methods of cost allocation are:

Methods of Cost Allocation in the Advanced Financials Module

The first method is fixed cost allocation. This method allocates the total expenses to each department or project in a fixed ratio. This ratio can be based on the number of employees, the amount of time spent, or any other criteria.

The second method is dynamic cost allocation. This method allocates the expenses in real time according to the actual usage. This is useful for businesses that need to allocate expenses according to use, such as in a shared services environment.

The third method is batch cost allocation. In this method, the expenses are allocated in batches according to the schedule set by the administrator. That is useful for businesses that allocate expenses in large quantities or regularly.

4. Intercompany

The fourth and final method is intercompany cost allocation. In this method, the expenses are allocated between two or more companies. That is useful for businesses that have multiple subsidiaries or joint ventures.

What is NetSuite Advanced Financials Price?

  • The price depends on your business’s specific needs.
  • If your business requires advanced modules, NetSuite offers several add-on options.
  • Based on the edition type (Standard, Mid-Market, and Enterprise), NetSuite advanced modules and industry suites differ in price.
  • The open architecture and modular license approach make NetSuite an excellent choice for businesses looking to add and remove modules as their needs change.
  • You can only remove modules during the renewal period of the contract.
  • Implementing NetSuite can cost between $10,000 and $100,000.

Benefits of the NetSuite Advanced Financials Module

There are many benefits of using it, including:

  • An automated method of allocating and amortizing expenses will increase productivity.
  • Real-time budget visibility will improve decision-making.
  • The ability to allocate expenses using weighted formulas across departments, classes, and projects will improve data accuracy and accountability.
  • The ability to track and report on non-financial data will provide valuable insights.
  • A dynamic allocation can be calculated with statistical accounts to get an overview of your company’s financial health.

Steps for Using NetSuite Advanced Financials in Your Business

Infographic of Tips to Implement NetSuite Advanced Planning

If you are interested in using it in your business, there are a few things you need to do to get started:

  • First, define your allocation criteria upfront.
  • Set up your expense accounts and billing schedules.
  • Set up your sales forecast and commission rules.
  • Create your invoices and expense reports.
  • Manage your bills and bill credits last.
  • Amortize your expenses regularly.
  • Generate reports as needed.
  • Review your settings periodically to ensure they are still accurate.
  • Train your employees on how to use the module.

What is the NetSuite Advanced Financials Datasheet?

The NetSuite advanced financials datasheet is a document that provides detailed information about budgeting, spend management, billing, and statistical account functionality such as accounts receivable, accounts payable, general ledger, and cash management. Advanced financials also offers built-in analytics and reporting so that you can make informed decisions about your business.

How does NetSuite Advanced Financials differ from the standard financial management module in NetSuite?

NetSuite Advanced Financials offers additional features and capabilities beyond the standard financial management module. It includes features like advanced revenue recognition, amortization schedules, statistical accounts and more.

Can we use NetSuite Advanced Financials with other NetSuite modules?

Yes, NetSuite Advanced Financials is designed to seamlessly integrate with other NetSuite modules, such as CRM, inventory management, order management, and e-commerce, to provide a comprehensive business management solution.

How can NetSuite Advanced Financials help with multi-currency management?

NetSuite Advanced Financials enables businesses to manage transactions in multiple currencies different from the company’s base currency with customers and vendors and also automates currency conversion, financial reporting, and compliance with international accounting standards.

The Advanced Financials module in NetSuite provides businesses with various powerful tools for allocating and amortizing expenses, tracking and reporting on non-financial data, and improving decision-making.

Companies can improve productivity by automating the allocation process while gaining real-time budget visibility.

In addition, the ability to allocate expenses using weighted formulas across departments, classes, and projects provides businesses with the accuracy and accountability they need to make informed decisions.

  • ds advanced financials pdf

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How to set up a costing location in netsuite.

Are you struggling with managing costs and expenses in your business? Look no further, as this article will guide you on setting up a costing location in NetSuite, a powerful and user-friendly accounting software. With the increasing complexity of modern business finances, it is essential to have an efficient costing system in place. Let’s dive into the details and optimize your cost management process.

What is NetSuite?

NetSuite is a cloud-based ERP (Enterprise Resource Planning) software that offers a comprehensive suite of applications to manage business operations. It includes functionalities for financial management, inventory and order management, e-commerce, CRM , and more. NetSuite helps streamline processes, improve efficiency, and provide real-time visibility into operations. It is scalable and customizable to suit the unique needs of various industries and business sizes. With NetSuite, organizations can centralize their data and access it from anywhere, making it a valuable tool for modern businesses.

Pro Tip: Utilize NetSuite’s robust reporting and analytics capabilities to gain insights into business performance and make informed decisions based on data.

What is a Costing Location in NetSuite?

A costing location in NetSuite is a designated physical or virtual location used for tracking and assigning costs. This feature enables businesses to allocate expenses to specific areas, such as departments, branches, or projects, providing accurate insight into the profitability of each location and facilitating informed decision-making.

Costing locations can be established based on different criteria, such as geographical location, production facility, or distribution center. By defining costing locations in NetSuite, businesses can efficiently manage and analyze costs throughout their operations.

Why is Setting Up a Costing Location Important?

Setting up a costing location in NetSuite is crucial for accurate financial reporting and inventory management. It is essential for businesses to track costs associated with specific locations, such as warehouses or production facilities. By assigning costs to different locations, companies can analyze profitability and make informed decisions. Additionally, it enables tracking of inventory levels and valuation in each location, facilitating efficient stock management. With a costing location setup, businesses can easily identify cost variances between locations and take appropriate actions to optimize operations and maximize profitability. Overall, setting up a costing location is essential for effective cost control and strategic decision-making.

How to Set Up a Costing Location in NetSuite?

In this section, we will guide you through the process of setting up a costing location in NetSuite. This is an essential step for managing your inventory and accurately tracking costs. We will cover the necessary steps for defining the costing location, assigning it to items, and setting up default costing methods. Additionally, we will discuss how to set up costing locations for multiple subsidiaries, providing a comprehensive guide for managing your inventory across different locations.

Step 1: Accessing the Set Up Page

To access the set-up page for costing locations in NetSuite, follow these steps:

  • Log in to your NetSuite account.
  • Go to the Setup menu and select Accounting Preferences.
  • In the Costing section, click on “Items & Inventory”.
  • Under the Inventory Costing tab, click on “Locations”.
  • Select “New” to create a new costing location or “Edit” to modify an existing one.

Some suggestions for accessing the set-up page in NetSuite are:

  • Ensure you have the necessary permissions to access and modify costing locations.
  • Double-check that you are accessing the correct set-up page for costing locations.
  • Follow any additional instructions or guidelines provided by NetSuite or your organization.

Step 2: Defining the Costing Location

In NetSuite, defining a costing location is an important step in setting up your system. Here are the steps to follow:

  • Access the Set Up page in NetSuite.
  • Click on ‘Costing Locations’ to define a new location, as outlined in Step 2.
  • Provide a name and description for the costing location.
  • Specify the subsidiary, department, and other relevant details.
  • Save the costing location.

By following these steps, you can effectively define a costing location in NetSuite and ensure accurate cost allocation and tracking.

Step 3: Assigning the Costing Location to Items

To assign a costing location to items in NetSuite, follow these steps:

  • Go to the Costing Location section and select the desired costing location.
  • Under the Items tab, choose the items you want to assign to the desired costing location.
  • Save the changes and ensure that the costing location is properly assigned to the items.

Pro-tip: Regularly review and update costing locations to ensure accurate tracking of costs and inventory in NetSuite.

Step 4: Defining Default Costing Method

Defining the default costing method is an important step in setting up costing locations in NetSuite. To ensure accurate cost calculations, follow these steps:

  • Go to the Costing Location section and select the desired location.
  • Click on the “Edit” button to define the default costing method.
  • Choose the appropriate costing method, such as standard cost, average cost, or FIFO .
  • Save the changes to complete the setup and apply the default costing method to the selected location.

To optimize your costing location setup, consider these suggestions:

  • Regularly review and update costing locations to reflect any changes in your business.
  • Use descriptive names for costing locations to make it easier to identify and manage them.
  • Ensure consistency in costing locations across multiple subsidiaries for accurate reporting and analysis.

Step 5: Setting Up Costing Locations for Multiple Subsidiaries

To effectively manage costing locations for multiple subsidiaries in NetSuite, follow these steps:

  • Access the Set Up page.
  • Define the costing location by providing a descriptive name and selecting the subsidiary it belongs to.
  • Assign the costing location to items by indicating which items should use this specific location for costing purposes.
  • Define the default costing method for the costing location.
  • Repeat steps 2-4 for each subsidiary to set up costing locations for multiple subsidiaries.

By following these steps, you can easily set up costing locations for multiple subsidiaries in NetSuite.

What are the Best Practices for Setting Up Costing Locations in NetSuite?

When setting up costing locations in NetSuite, it’s important to follow best practices in order to ensure accuracy and efficiency in your costing processes. In this section, we’ll discuss three key practices that can help you effectively set up costing locations in NetSuite. These include keeping your costing locations consistent, using descriptive names for easy identification, and regularly reviewing and updating your costing locations to maintain accuracy. Let’s dive in and learn how to optimize your costing location setup in NetSuite.

1. Keep Costing Locations Consistent

Keeping costing locations consistent in NetSuite is crucial for accurate financial reporting and inventory management. To ensure consistency, follow these steps:

  • Standardize Naming: Use a clear and uniform naming convention for the consistent costing locations.
  • Create a Master List: Maintain a centralized list of all costing locations to avoid duplicates or variations.
  • Document Changes: Keep a record of any updates or modifications made to the consistent costing locations.
  • Communicate Changes: Inform relevant stakeholders about any changes to the consistent costing locations to maintain alignment.
  • Regular Audits: Conduct periodic audits to ensure that all consistent costing locations are accurately defined and assigned.

Fun Fact: Consistent costing locations streamline financial processes and enhance data accuracy.

2. Use Descriptive Names

When creating costing locations in NetSuite, it is crucial to utilize descriptive names for effortless identification and organization. Follow these steps to ensure effective naming:

  • Begin with a clear and concise name that accurately represents the purpose of the costing location.
  • Avoid using generic or vague terms; instead, opt for specific descriptors to distinguish between locations.
  • Incorporate relevant information, such as the subsidiary, department, or geographical location.
  • Maintain consistency by following a naming convention across all costing locations.

Pro-tip: Consider including the type of cost or inventory being tracked in the name to facilitate quick identification and selection of the appropriate costing location.

3. Regularly Review and Update Costing Locations

Regularly reviewing and updating costing locations in NetSuite is essential for maintaining accurate and efficient cost allocation. Follow these steps to ensure your costing locations are up to date:

  • Access the Costing Locations page in NetSuite.
  • Review the existing costing locations for any outdated or incorrect information.
  • Update the names, descriptions, or any other relevant details of the costing locations.
  • Verify that the costing locations are still correctly assigned to the appropriate items or subsidiaries.
  • Regularly monitor and review the costing locations to ensure they continue to align with your business needs and organizational changes.

By regularly reviewing and updating costing locations, you can maintain accurate and up-to-date cost allocation processes in NetSuite.

What are the Common Challenges in Setting Up Costing Locations in NetSuite?

While setting up costing locations in NetSuite may seem straightforward, there are common challenges that users may face. These challenges can affect the accuracy of cost calculations and lead to data discrepancies. In this section, we will discuss the most common challenges in setting up costing locations, including mapping them to subsidiaries, managing changes, and troubleshooting potential errors. By understanding these challenges, you can ensure a smoother and more efficient process for setting up costing locations in NetSuite.

1. Mapping Costing Locations to Subsidiaries

Mapping costing locations to subsidiaries in NetSuite is a crucial step in ensuring accurate cost allocation and financial reporting. Follow these steps to ensure a smooth process:

  • Define the costing location by specifying the name, address, and other relevant details.
  • Assign the costing location to items, ensuring proper categorization and tracking.
  • Define the default costing method for the costing location, such as standard, average, or FIFO.
  • Set up costing locations for multiple subsidiaries, linking each subsidiary to its respective costing location.

To successfully map costing locations to subsidiaries:

  • Maintain consistent naming conventions for costing locations across subsidiaries.
  • Use descriptive names for costing locations to easily identify their purpose.
  • Regularly review and update costing locations to reflect any changes in operations or organizational structure.

By following these best practices, businesses can effectively map costing locations to subsidiaries in NetSuite, ensuring accurate financial management and reporting.

2. Managing Changes in Costing Locations

Managing changes in costing locations in NetSuite involves a structured process to ensure accuracy and efficiency. Here is a step-by-step guide:

  • Identify the need for a change in costing locations, such as a new warehouse or production facility.
  • Access the Costing Location Set Up page in NetSuite.
  • Update the existing costing location or create a new one, providing all necessary details like name, address, and subsidiary association.
  • Assign the updated or newly created costing location to relevant items in your inventory.
  • Review and update the default costing method for the costing location.
  • If managing multiple subsidiaries, set up costing locations for each subsidiary individually.

3. Troubleshooting Costing Location Errors

Troubleshooting costing location errors in NetSuite involves a systematic process to identify and resolve issues efficiently. Follow the steps below to troubleshoot costing location errors:

  • Review error messages: Analyze any error messages or warnings displayed in NetSuite to pinpoint the source of the issue.
  • Check data accuracy: Verify that the entered costing location data is accurate and meets the necessary requirements.
  • Review setup configuration: Ensure that the costing location setup is correctly configured, including subsidiary mapping and default costing method.
  • Investigate transactions: Examine transactions related to the costing location to identify any discrepancies or errors that may be causing the issue.
  • Consult NetSuite support: If the problem persists, seek assistance and guidance from NetSuite support for further resolution.

True History Example: In 2020, a company encountered costing location errors in NetSuite due to inaccurate data entry. Upon reviewing error messages, they discovered discrepancies in the setup configuration and resolved them by adjusting the costing location mappings. This experience highlights the importance of thorough troubleshooting to maintain accurate costing locations in NetSuite.

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  • Volume Based Landed Cost 

January 18. 2024

cost allocation netsuite

What is the Landed Cost?

Landed cost is the total cost of a product, accumulating all expenses required to receive the product from the supplier during the procurement process. It includes the actual purchase price of the goods and all shipment charges, freight charges, duty fees, taxes, insurance and all the other costs incurred along the way. 

In today’s competitive conditions, calculating the landed cost accurately is crucial for companies, more than ever. Proper calculation of product costs enables determining the sales price as precise as possible, whilst still guaranteeing profitability.  

How to manage Landed Cost in Netsuite?

NetSuite’s Landed Cost Management module seamlessly integrates with Purchase Orders, Inbound Shipments and Vendor Bills, facilitating the inclusion and allocation of supplementary expenses like shipping, insurance, and customs duties. It incorporates diverse allocation methods such as by weight, quantity, value, or even customizable approaches, on global transaction or line item level, ensuring precise and efficient cost assignment. The system automatically computes the total asset cost for received items, while robust reporting tools offer comprehensive insights into landed costs in real time. This empowers informed decision-making for procurement and logistics, ensuring financial accuracy, compliance, and optimized inventory management within the NetSuite platform.

Novutech Landed Cost Solution

Out-of-the-box, Netsuite provides 3 cost allocation methods: weight, quantity and value. However, for some companies who source very diverse items from multiple suppliers in (mostly) overseas countries, the requirements for proper tracking of landed cost are more demanding. One example would be the import of lightweight, high volume items in sea containers, which requires the purchaser to allocate the shipping costs to the different items based on the volume they take up in each container. Based on our experience working for customers with such diverse supply chains, Novutech brings you a comprehensive solution to have more flexibility on landed cost, featuring volume based and even customized allocation methods. Besides, our solution also caters for the recording of additional costs for Inbound shipments after receiving and the subsequent recalculation of the item costs for historic receipts.

Key Features

  • Landed Cost over duty Percentages
  • Based on inbound shipments 
  • Flexibility to add expenses after receipt 
  • Recalculation for open periods
  • Multicurrency

Customized allocation methods

Novutech landed cost solution allows users to enter volume and duty information on the item level. .

Novutech Landed cost solution

Intuitive and time saving entry form for landed costs, with visibility of inbound shipments

Novutech Landed cost solution

Custom Landed Cost Process

The custom process developed by Novutech includes the following steps:

  • Landed cost transactions are created by users and applied onto an inbound shipment,  after bills and manually entered transactions are completed 
  • Users can process all the charges over receipts which are related with the specific inbound shipment.   
  • During the allocation process, the Netsuite landed cost lines will be updated with the data sourced from Novutech’s landed cost form.  
  • This allocation process can be re-run for open periods. 

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Meet Thomas, Business Consultant

January 18 2024

A Journey through ERP and Alternatives

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Learn How To Automatically Apply NetSuite Landed Costs from Purchased Freight

This article is relevant if you need a mechanism to automatically apply NetSuite landed costs against purchased freight or other related costs.

I have written a number of articles about NetSuite landed costs that have helped our readers think about how to capitalize costs beyond the material product purchase order price. Most illustrate automation concepts. Consider these references:

cost allocation netsuite

  • 2016 Article: How To: Add Packaging Costs to Standard NetSuite Inventory Items
  • 2017 Article: Track NetSuite Inventory In-Transit with Freight Containers and Automated Landed Costs
  • 2017 Article: Finally: Capitalize NetSuite Inventory Costs with Item Consumption Landed Costs
  • 2018 Article: Learn how to Reliably Measure NetSuite Gross Profit and Margin
  • 2021 Article: Best Practice on Shipping Charge Handling in NetSuite Dropships

In this article, I discuss a landed cost model where organizations plan their own inbound receipt logistics and thus use freight-based purchase orders to drive allocated freight charges into the value of inventory as it is received.

NetSuite Landed Cost Considerations

cost allocation netsuite

In a mature accounting operation, the goal is to get the financial books closed as soon as possible. To close the books in a timely fashion means to use good judgment to record accruals through the use of estimates. You can’t close the books if you use actual vendor bills to apply landed costs because item receipts are in previous accounting periods — costs must be updated requiring the accounting periods to be open. Furthermore, when you apply landed costs on back-dated item receipts, the revised cost must roll through inventory ledgers including affecting all cost of goods sold and other work order build transactions.

Thus, the best practice is to use landed costs estimates to drive inventory capitalization — and it is one of the indications of how better-planned organizations scale their operations.

The Estimated Purchased Freight Model to Apply NetSuite Landed Costs

In many organizations, it may be difficult to plan inbound freight when third parties are utilized to produce specific inventory logistics. However, if you can plan your inbound freight logistics, you likely can estimate your freight costs in advance. Consider a situation where multiple supplier purchase orders are being used to acquire goods overseas.  Furthermore, consider the goal to fill a freight container full of purchased inventory to maximize the value of the cost of freight across all the goods.

cost allocation netsuite

Sean G., a senior consultant on the Prolecto Resources team , worked with one of our clients under this model. He invented the following practice:

  • Product Purchase Orders : order goods as you normally would from product suppliers.
  • Freight Purchase Orders : issue a freight-based purchase order to the freight provider.

cost allocation netsuite

With this information, the following is possible:

  • Anticipated Product-based Purchase Order Landed Costs : with freight purchase orders linked to product purchase orders, you can now anticipate (estimate) how much freight costs to apply to the purchased goods. We record this value on a custom field on the product purchase order in anticipation of item receipts (click image to see calculated estimated landed costs and the method to gather anticipated costs).
  • Pro-Rate based On Item Receipt Inventory Value : apply the pro rata amount of estimated freight landed cost to respective product-based item receipts depending on how much was received versus what was purchased.  In other words, if a partial item receipt is recorded, use that portion’s percentage against the estimated landed costs (click image to see a partial value be applied to the landed cost allocation).

cost allocation netsuite

Get Automated Landed Costs Applications

Given the number of different ways we have helped our clients estimate and automate landed costs, we have put this algorithm into a bundle to make it easier to distribute to our clients.  We do not charge our clients for any of our existing software or algorithms — instead, we use our previously developed software to act as a jumpstart template to solve client-specific requirements.

If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you are ready to tackle your automated NetSuite landed costs challenge, let’s have a conversation .

See Related Articles

  • Drive Automated NetSuite Transfer Order based Landed Costs
  • Drive Automated Estimated NetSuite Landed Costs from Purchase Orders
  • Learn NetSuite Landed Costs Fundamentals

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NetSuite Landed Cost Guide: How To Set and Manage 2024

February 14, 2024

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Frequently Asked Questions

What are landed costs.

The total expenses incurred in obtaining a product and bringing it to the buyer's location is what we refer to as the landed cost. It provides a comprehensive view of the total investment required to acquire goods and bring them to their final destination, helping businesses like eCommerce, wholesale distribution, and logistics accurately calculate product costs and make informed pricing and inventory decisions.

Expenses that contribute to landed costs can include the following:

  • shipping charges
  • freight fees
  • import fees
  • duty fees (excise and customs)
  • handling charges

Setting Up Landed Costs in NetSuite for 2024

Establishing landed costs may seem complex at times, yet we've simplified the process with clear steps, so you can navigate through it effortlessly:

Enabling Features for Landed Cost

To enable the Landed Cost feature, follow these steps:

  • Using the Administrator Role, go to Setup > Company > Setup Tasks > Enable Features.
  • Under the Inventory subtab , check the Landed Cost box.
  • Click Save .

Configuring Landed Cost Categories

To create a Landed Cost category, follow these steps:

  • Go to Setup > Accounting > Setup Tasks > Accounting Lists > New.
  • Click Cost Category .
  • Select Expense Account. 
  • Enter a name for the expense account.
  • Click Save.

Make sure to select the correct Expense Account to avoid issues when creating transactions with Landed Cost and linking Freight Bill to an Item Receipt.

Setting up Item Record for Landed Cost

To track landed costs for specific items, you must identify it on the item record. To set up an item record for landed cost accounting, follow these steps:

  • Go to Lists > Accounting > Items.
  • Click Edit next to the item for which you want to track landed cost.
  • On the Purchasing/Inventory subtab, check the Track Landed Cost box.

You can now input landed cost details on item receipts and bills that involve the item.

Setting up Item Record to track Landed Cost Separately

To track the landed cost separately, follow these steps:

  • Go to Lists > Accounting > Items > New.
  • Select an item type you want to create to track the landed cost.
  • In the Item Name/Number field, enter a unique name for the landed cost expense.
  • In the Accounting subtab, in the Expense Account field, select the account on which you want to record freight and other such charges.

Tracking Landed Costs in NetSuite

Monitoring landed costs involves keeping a close eye on expenses associated with acquiring and transporting goods, ensuring accurate financial management and informed decision-making. Check out these methods to track landed costs:

Tracking and Allocating Methods

In NetSuite, there are different ways to track and assign landed costs to transactions and items. Some NetSuite costing methods are:

  • Weight or Volume Allocation: Assign costs based on the weight or volume of received items. Useful for goods like liquids or bulk materials.
  • Percentage Allocation: Distribute costs based on a set percentage of the total. Each item gets a share according to its cost value.
  • Quantity Allocation: Divide costs evenly among received items, regardless of their individual costs.
  • Custom Allocation Rules: Create personalized rules in NetSuite based on factors like item category, supplier, or transaction type. This gives flexibility in assigning costs to meet specific business needs.
  • Automated Allocation: Use NetSuite's automation features to streamline cost allocation. Set up rules that automatically assign costs based on predefined criteria, saving time and ensuring accuracy.

Real-Time Tracking and Updates

In NetSuite, real-time tracking and updates for landed costs let you handle these costs as transactions happen. Instantly see landed cost data, including any changes during procurement and shipping.

With real-time tracking and updates in NetSuite, you can:

  • Monitor Transactions: Keep an eye on total landed costs for different transactions like purchase orders, inventory receipts, and vendor bills as they happen.
  • Receive Instant Updates: Stay updated with landed cost data, like changes in shipping charges, customs duties, or handling fees.
  • Ensure Accuracy: Report and analyze finances more precisely better with more accurate landed cost calculations and allocations.

Estimated Landed Cost

Automatically calculate landed cost estimates for each transaction line item with the use of landed cost templates as necessary. Templates can be set up with multiple cost categories each assigned with its own allocation method. Landed cost estimates are derived from the allocation method and cost factor, which you can update as needed.

Calculating Estimated Landed Cost in NetSuite

Landed cost templates can be added to the following item types to track landing cost:

  • Inventory Items
  • Assembly Items

Estimated Landed Cost can be used on the following transactions:

  • Purchase Order
  • Item Receipt
  • Standalone Vendor Bill

When assigning landed cost templates to transaction line items, landed cost estimates are automatically applied as the items are received. You can receive large orders without having to manually apply landed cost estimates for each of the items.

Reconciling Estimated Landed Cost with Actual Costs

Regularly check and revise landed cost of NetSuite estimates with these steps:

  • Go to the Landed Cost feature in NetSuite.
  • Review existing landed cost estimates to ensure accuracy.
  • Adjust estimates based on variances in shipping costs, customs duties, or other relevant factors.
  • Confirm the updated estimates by comparing them with actual costs incurred.
  • Document any differences from the estimates.
  • Share the updated estimates with relevant stakeholders like finance teams or procurement managers.
  • Keep an eye on landed costs to spot any significant changes.
  • Analyze how total landed costs affect overall product costs and profitability regularly.

By keeping landed cost estimates up to date, businesses can maintain accurate financial reporting, manage costs, and make well-informed decisions on supplier negotiations and pricing strategies.

Advanced Landed Cost Management Strategies

Dynamic cost allocation.

With the help of NetSuite allocation rules in NetSuite, you can implement dynamic models to allocate landed costs based on factors such as item category, supplier, or transaction type for better cost management.

Automate Calculations

Implement automated algorithms or processes to allocate landed costs to products or transactions based on predefined rules to reduce manual effort through NetSuite workflows and scripts.

Utilize Predictive Analytics

With the latest predictive analytics in NetSuite, you can forecast future landed costs based on historical data and market trends. Predictive models help in risk management by anticipating fluctuations in cost.

Best Practices for Landed Cost Management in 2024

Regular reconciliation.

Regularly compare estimated landed costs with actual costs to make accurate financial reports.

Accurate Cost Allocation

Implement accurate methods for allocating landed costs to products or transactions to ensure fair distribution and precise financial reporting.

Integrating with Logistics

Integrate landed cost management with supply chain processes to gain visibility into cost implications and optimize logistics and procurement strategies.

Landed costs are expenses associated with acquiring and delivering a product to the buyer's location. To automatically calculate these landed costs, you can set up landed cost estimates for each transaction line item with the use of landed cost templates.

By diligently reconciling these estimated landed costs with actual expenses, businesses make better financial reports and well-informed decisions. Leveraging advanced strategies like dynamic cost allocation and automated calculations not only streamlines processes but also strengthens cost management practices. 

Through integration with logistics and utilization of predictive analytics, businesses can anticipate market trends and mitigate potential risks effectively. Embracing these best practices positions businesses to navigate the evolving landscape of financial management with more resilience.

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Product Allocation Defined: Methods & Best Practices

Abby Jenkins

The law of supply and demand influences more than just how to price products. It also informs how to accurately allocate products among a company’s various points of sale, both online and offline. Get it right, and the results will show in boosted sales revenue and more repeat customers. Miscalculations can cost a company, leading to lower sales, lost customers and unnecessary storage and shipping expenses. As a business grows and expands, it becomes increasingly important to manage the product allocation process with software that provides real-time visibility across the entire distribution network.

What Is Product Allocation?

Product allocation is an important part of inventory management , focused on matching product supply with product demand to fulfill customer orders as efficiently as possible. From a business standpoint, proper allocation can reduce the likelihood of overordering or underordering, either of which can hurt revenue. Determining where and how much product to allocate to different locations and online sales channels is typically based on a combination of data-driven factors, including historical customer data, demand forecasting and seasonal trends.

Key Takeaways

  • Product allocation is an inventory management process that aims to strategically distribute finished products across points of sale to meet demand, increase customer satisfaction and maximize sales.
  • Products are typically allocated across a company’s distribution channels one of three ways: equally, following trends or seasonally.
  • Decisions about product allocation tend to be best when informed by demand-planning data that factors in how much customers have bought in the past, combined with sales forecasts and additional information.
  • Many of the challenges related to product allocation can be resolved with software that monitors inventory levels across a business’s entire distribution network.

Product Allocation Explained

The goal of product allocation is to make sure that enough goods are on hand when and where they’re needed so that customers can buy what they want and a business can profit. Product allocation involves the strategic distribution, tracking and management of products across a business’s network of ecommerce fulfillment centers, storage facilities and brick-and-mortar stores.

Perhaps most critical during times of product shortages and rationing — which has been the case with gasoline, toilet paper and, most recently, baby formula — product allocation is also a daily concern among growing businesses that are more sensitive to the financial losses associated with the inability to meet customer demand.

Why Is Product Allocation Important?

Product allocation is part of the inventory management process, with the mandate to ensure all points of sale are adequately stocked with the right amount of items to meet demand. Any time a customer is ready to buy a product but faces an empty shelf or “temporarily unavailable” message on a website, the business loses a sale and possibly the customer, who may leave and look for the item elsewhere. Well-managed product allocation also minimizes the cost and number of days it takes to ship products — another way to satisfy customers and rise above the competition.

Properly allocating products throughout a business’s myriad sales points — such as retail stores, fulfillment centers, warehouses, drop-shippers, popup shops and third-party logistics providers — decreases the risk of running out of products, which is known as stockouts, or ordering too many products that go unsold, which is called dead stock. That’s key because excess products can take away precious shelf space from other products. Product allocation can also cut down on storage costs resulting from having too many products or, conversely, reduce empty, wasted storage space when companies don’t have enough products.

3 Types of Product Allocation Strategies

Naturally, how a company chooses to allocate its products will be tailored to its specific products and needs. Companies tend to use one of three strategies:

  • Equal allocation distributes the same amount of a product to every point of sale. It is also known as universal allocation and is the most commonly used strategy for growing businesses that may not have a large quantity or variety of products, or are just starting out and lack the sales history or data to accurately forecast demand.
  • Trend allocation distributes products based on where they are most popular and selling quickly. For example, fashion trends often begin in California. Following trend allocation, a retailer would be more inclined to allocate most of its fashion-forward apparel near the West Coast until the trend becomes popular in other parts of the country.
  • Seasonal allocation distributes products based on weather conditions. For example, a national sporting goods retailer would store the bulk of its surfing gear in stores and distribution centers close to the West Coast, whereas most of its snowboarding equipment would be allocated across the northern portion of the country.

Benefits of Product Allocation

Done right, a business that accurately allocates products across its distribution network and sales channels will see many benefits. For example, effective product allocation can:

Increase revenue:

Having the right levels of stock allocated to the correct places maximizes sales, which in turn increases revenue and improves cash flow .

Reduce waste:

Overordering can lead to dead stock , which is excess inventory that doesn’t sell. Businesses must often resort to discounting unsold products in an attempt to at least break even . Losses extend beyond the unsold products and include storage carrying costs , as well as less space for other revenue-generating products.

Reduce stockouts:

A stockout occurs when a business runs out of a product and is unable to meet customer demand. Every missed sale represents a financial loss. Backorders — assuming a customer is willing to wait for the product to come back in stock — can chip into a business’s profit margins, since companies will often incur extra costs from paying expedited shipping fees in an effort to reward customers for their willingness to wait.

Reduce shipping costs and transit time:

It stands to reason that shipping costs and lead times are higher when an order has to travel a great distance to reach the customer. By allocating products to stores and distribution centers located close to where they’re most in demand, businesses often pay less and can charge customers less for shipping, and products can reach their destinations more quickly. This can also provide a company with a competitive edge.

Improve the customer experience :

Customers who visit a business’s store or website, find exactly what they need and take the products home or receive their shipments when promised are happy customers who are likely to return. They are also more apt to leave a good review or recommend a company to a friend.

Inform production:

The ability to match supply to demand also applies to product manufacturers, which need to align and allocate the right amount of inventory, such as raw materials, components and unfinished goods, across their production facilities.

Drawbacks of Product Allocation

Product allocation is not without some challenges, although software can overcome them. (More on that topic soon.) Among the scenarios that may impact product allocation are:

A spike in demand.

Even the best prognosticators can’t predict when some products will take off. In the early 1980s, for example, toy stores found themselves overrun by customers desperate — some might say crazed (opens in new tab) — to buy suddenly popular Cabbage Patch dolls for their children. Having safety stock on hand to avoid a stockout can help carry the business over until additional products arrive, though how much to keep on hand as backup has to be balanced against related carrying costs. Products can also be reallocated from one location to another if the spike is contained to a specific area.

Product shortages.

Like a spike in demand, a sudden drop in supply can quickly clear inventory. Many circumstances can lead to product shortages — including, for example, supply-chain issues related to the COVID-19 pandemic — and many of these factors are out of a business’s control. Again, safety stock and reallocation may help. Other times a business may choose to limit how many products customers can buy at one time to better spread the wealth.

Unreliable data.

Mistakes in product allocation often stem from decision-making based on inaccurate or outdated data about inventory levels and anticipated demand. Automated, real-time inventory management software can keep stock levels transparent, accessible and accurate everywhere from the largest warehouse to a corner of the smallest shelf.

3 Product Allocation Best Practices

There is no one way to determine product allocation. Each business also has its own requirements and restrictions. What’s more, factors beyond its control, such as a product shortage or weather event like a hurricane, can shake up the most thought-out strategy. Nevertheless, businesses can draw on the following trio of best practices when determining product allocation:

Lean on demand data:

Demand planning combines sales forecasts with historical sales data, consumer trends and seasonal information to help determine optimal inventory levels, whether across multiple distribution points or even just one shop. To be most effective, demand planning should be an ongoing process based on the analysis of real-time data. For companies just starting out, researching how similar products have performed in their industries can help predict initial demand.

Continually monitor inventory levels:

A constant eye on inventory levels helps ensure that enough supply is available to meet customer demand and determine whether any reallocation is necessary. It’s also important further up the supply chain, since an inventory count can signal when more products need to be produced or production should be paused.

Automate with inventory management software:

As a business grows and expands, manually tracking inventory becomes less practical and increasingly prone to error. Leading inventory management software automatically tracks product levels in real time across multiple sales points and channels to ensure product availability and proper allocation.

Requirements for Product Allocation

The moment a business upgrades from a single point of sale, it becomes time to consider how to allocate products in accordance with demand. This ability requires thorough, real-time visibility into and tracking of inventory levels.

But product allocation doesn’t work in a bubble. A supply of beach chairs could be running low in a New York-based fulfillment center, but if it’s mid-September, does it make sense to replenish inventory? The answer can best be determined by demand-planning software that estimates inventory needs based on historical data — perhaps it was still “beach weather” through October for the past three years — combined with sales forecasts and other data. Sophisticated inventory management software will include these capabilities and more, optimizing inventory levels so that supply matches demand.

Bolster Product Allocation & Meet Customer Demand With NetSuite

Decisions about product allocation are most accurate when based on real-time intelligence viewed in the context of past and forecasted data. NetSuite Inventory Management answers the call. The software provides complete visibility into product levels across every location a company sells its inventory. As a result, the company can proactively monitor its stock levels to ensure product availability matches customer demand — maximizing revenue potential without the worry of financial losses due to understocking or overstocking. NetSuite Inventory Management sends real-time alerts should product levels fall below a predefined threshold, automates the replenishment process and assists with demand planning.

The concept of product allocation is simple: Match product supply to customer demand. Its execution, however, is a bit more complicated, especially as a business grows and expands its footprint through multiple locations and online sales channels. But by following a few best practices, combined with feature-rich inventory management software, businesses can stay on top of their inventory levels and weather unforeseen changes in the market — all of which leads to higher revenue and more satisfied, loyal customers.

Award Winning Cloud Inventory

Product Allocation FAQs

Why is a product on allocation.

Product allocation is the process of distributing the right amount of products to be sold among a company’s multiple locations, such as retail stores and fulfillment centers, to match customer demand. Inventory tracking and monitoring are also integral to the process.

What are the features of product allocation?

The goal of product allocation is to make sure enough goods are available when and where they are needed so customers can buy what they want and a business can profit. This involves the strategic distribution, tracking and management of products across a business’s network of ecommerce fulfillment centers, storage facilities and stores.

What are the three types of product allocation strategies?

Product allocation works best when tailored to a company’s specific products and needs. Generally speaking, business owners and inventory management teams typically use three common strategies. Equal allocation, also known as universal allocation, distributes the same amount of a product to every point of sale. Trend allocation distributes products based on where they are most popular and selling the fastest. Seasonal allocation distributes products based on weather conditions in a certain area during a particular time of year.

What does allocation mean in manufacturing?

In manufacturing, allocation means requesting parts and stocking the right amount of materials — such as raw materials, components and unfinished goods — in the appropriate facilities in advance of product production.

Inventory Management

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NetSuite Customization for Landed Cost Feature

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One of our clients from Germany who deals with garden furniture had a requirement to include the Volume as a Cost Allocation Method for the Landed Cost feature to the NetSuite account . We provided a solution which is perfectly suitable for their processes.  

Requirement

The client required us to include the Landed Cost with the Cost Allocation Method: ‘Volume’ that will eventually split the costs to the items based on the volume occupied in the shipping carrier.  

The risks associated with these implementations include performance issues if more item lines and cost categories are there in item receipt/bill and the ‘Landed Cost per Line’ field can only be changed on new transactions.

Our experts analyzed the requirements and the challenges in detail and provided the solution by creating a checkbox ‘Cost Allocation based on Volume’ at the body level. If this checkbox is checked , the user can enter the Landed Cost details in the custom sublist created, ‘Landed Cost- Volume’ (Basically a custom record) in the Item Receipt and Bill. Also, using the script we will be checking the checkbox “Landed cost per Line” when the user ticks the check box ‘Cost Allocation based on Volume’. If this check box is checked then only, we could calculate the landed cost.

Our specialists attained the requirements successfully. They added Volume as a Cost Allocation Method for the Landed Cost Feature that will eventually split the costs to the items based on the volume occupied in the shipping carrier.

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  • SCM (Supply Chain Management)
  • Inventory Management
  • Advanced Inventory Management
  • Supply Allocation
  • Supply Allocation Management

Creating Allocation Strategies

Create an allocation strategy to define the rules that allocate particular inventory. You can create multiple strategies, then select them on demand order lines to specify the inventory allocation to respond to that demand.

For example, you want to allocate e-commerce orders quickly and allocate wholesale orders close to the Supply Required By Date. You can create several strategies to cover various cases and create new ones as situations change over time.

When you enable the Supply Allocation feature, two predefined allocation strategies are available by default. Note that these default strategies only consider inventory that is currently on-hand, not future inventory.

Predefined Available Allocation Strategy - This strategy uses the Allocation Quantities setting to allocate any available quantities.

You cannot delete a Predefined Available Allocation Strategy . In some cases, NetSuite uses this record as backup. For example, manually allocating current inventory on the reallocate items page to order lines with no allocation strategy.

Predefined Complete Allocation Strategy - This strategy uses the Allocation Quantities setting to allocate only complete quantities.

To view a complete list of allocation strategies, go to Setup > Order Management > Order Allocation Strategies .

To create an allocation strategy:

Go to Setup > Order Management > Order Allocation Strategies > New .

Enter a Name for the strategy. This name appears in strategy lists.

Check the Inactive box if you do not want this strategy to show in lists.

To consider future inventory for allocation, under Inventory Options, check the Future Inventory box.

This includes inventory that is on-order and in-transit, but not yet received. Note that inventory that is currently on-hand is always considered for allocation.

In the Future Inventory Order Types field, click each type to consider for future inventory. To select more than one, press the Shift key and then click each item.

If you select Purchase Order , Inbound Shipment is automatically selected. However, you can select Inbound Shipment without selecting Purchase Order .

To exclude future inventory from consideration for allocation, clear the Future Inventory box.

Use the Allocation Period fields to limit the allocation of inventory by defining a specific period before or after the Supply Required by Date .

If no allocation period is defined, this allocation strategy considers all inventory that is available to allocate.

To limit the inventory allocation to a period before the Supply Required by Date :

Under Current and Future Inventory , check the Limit Inventory Allocation Period Before Supply Required by Date box.

In the Days field, enter the number of days for the limited allocation period. The default value is 180 days. The maximum value you can enter is 9999.

To limit inventory allocation to the period after the Supply Required by Date :

Under Future Inventory Only , check the Limit Inventory Allocation Period After Supply Required by Date box.

In the Days field, enter the number of days in the period after the Supply Required by Date to consider. The default value is 0 days. The maximum value you can enter is 9999.

For example, for seasonal items, you want to limit allocation to 30 days before and 30 days after the Supply Required By Dat e . To do this, check both boxes and enter 30 in the Days fields.

Under Allocation Method , choose one of the following:

Allocate as Soon as Available Before Supply Required by Date

Allocate as Close as Possible to Supply Required by Date

Under Allocation Quantities , choose one of the following:

Available Quantity - Allows NetSuite to allocation a partial quantity of items as soon as any portion of the total amount needed becomes available. NetSuite will allocate the remainder at a future time after another allocation calculation.

For example, a sales order line needs 10 items. Only five items are available now to be committed. Using this setting, NetSuite allocates five items to demand on the line now and the remaining five in the future.

Complete Quantity – Allocate items only when the total amount needed for the line is available for commitment. If only a portion of the full amount is available, NetSuite does not yet commit any of the items.

For example, a sales order line needs 10 items. Only 5 items are available now for commitment. When you choose this option, NetSuite allocates 0 items to demand on the line now. No items are allocated against the demand until the full amount is available for commitment. NetSuite will allocate all 10 items in the future.

Under Available Date Calculation , choose one of the following:

Calculate Available Date with ATP Lead Time – to calculate the available date using available to promise lead time.

Calculate Available Date without ATP Lead Time – to calculate the available date without available to promise lead time.

Supply Allocation assigns the latest date among the following date source options as the expected ship or supply date:

Supply Required By Date – Sets the available date to later than or equal to the Supply Required By Date.

Dates of the allocated supplies – Sets the available date to the date of the latest allocated supply

Current date – Sets the available date to today’s date if the other date sources are in the past

Based on your Available Date Calculation choice, Supply Allocation may include the ATP lead time to calculate the available date using the current date.

Available date calculation also depends on the order line allocation. Along with the expected ship or supply date, the expected receipt date for transfer orders is also calculated. For more information, see Supply Allocation Calculations .

Under Allocation Type , choose one of the following to indicate the allocation type:

Reserved Allocation – NetSuite commits inventory, but can also reallocate it to other orders.

Firm Allocation - NetSuite commits inventory and cannot reallocate it to other orders by the system. You can only reallocate this inventory manually.

When part of the ordered quantity is Firm Allocation, the system may allocate further quantities in addition to the amount that has been allocated. The system can drop such allocation only when the user sets the strategy on the order line to Do Not Allocate.

Click Save .

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COMMENTS

  1. NetSuite Applications Suite

    This is useful in advanced costing such as Activity Based Costing and Usage Based Costing, and when you are running cost centers and profit centers. To calculate statistical weight, NetSuite uses the flat amount for each destination line in the allocation schedule, rather than dividing by the total amount entered in all of the destination lines.

  2. NetSuite Applications Suite

    When you use NetSuite OneWorld in conjunction with the Expense Allocation feature, you can create an intercompany allocation schedule. Intercompany schedules allocate a balance from one source subsidiary to multiple destination subsidiaries for costs that are shared between subsidiaries on a regular basis such as rent utilities.

  3. NetSuite Applications Suite

    With NetSuite, cost accountants can allocate and track landed cost values at a line-item level. This preference lets you track one or more landed cost categories for a specific line item. You can also automatically distribute the cost based on an attribute such as weight or value within a transaction. ... Using Landed Cost Allocation Per Line ...

  4. Landed Costs Setup & Management in NetSuite

    Use Landed Cost Templates to allow NetSuite to calculate Landed Costs for you. Lists > Accounting > Landed Cost Templates . Create New or Edit Existing One: Name; Description; Currency (Set default, but can select this again for each line on a Purchase Order) Add Categories: Select Category; Select Cost Allocation Method; Select Cost Factor

  5. NetSuite Advanced Financials (Cost Allocation Methods & Features)

    Cost Allocation Methods in the NetSuite Advanced Financials Module. The four methods of cost allocation are: 1. Fixed . The first method is fixed cost allocation. This method allocates the total expenses to each department or project in a fixed ratio. This ratio can be based on the number of employees, the amount of time spent, or any other ...

  6. NetSuite Tutorial: How to Create an Allocation Schedule in NetSuite

    In this video, we discuss how to access the allocation schedule entry form, enter the frequency, start date and remaining allocations, enter source date for ...

  7. Understand NetSuite Allocation Methods and Explore Shared ...

    Most larger NetSuite organizations elect to activate NetSuite Advanced Accounting which contains a feature called Allocation Schedules. All NetSuite accounts also have a technology, SuiteGL, that allows you to manipulate the posting routines. These offerings should be compared to the NetSuite SuiteSolutions Shared Vendor Bill bundle.

  8. Marty Zigman on "Learn the Power of Dynamic NetSuite ...

    Fundamental Cost Allocation Challenges. While listening to our client's objectives, we began to appreciate that the payroll costs were only the beginning of information gathering exercise. ... Now with the inputs at hand, we defined our allocation algorithms using NetSuite tools. The key was to take department salaries and then further break ...

  9. A Better Way to Amortize and Allocate Expenses

    Some expenses need to be allocated to multiple cost centers. Allocation & Amortization in Practice. Rent is a perfect example. Suppose a company with 100 employees spread across five departments leases 10,000 square feet of office space for $35,000 per month. The expense could be divided into equal parts, with $7,000 allocated to each of the ...

  10. How to Set Up a Costing Location in NetSuite

    Pro-tip: Regularly review and update costing locations to ensure accurate tracking of costs and inventory in NetSuite. Step 4: Defining Default Costing Method. Defining the default costing method is an important step in setting up costing locations in NetSuite. To ensure accurate cost calculations, follow these steps: Access the Set Up page in ...

  11. NetSuite Applications Suite

    NetSuite provides the following inventory costing methods: Average - Costing is calculated as the total units available during a specific date range. The units are then divided by the beginning inventory cost plus the cost of additions to inventory. Average is the moving average method. First-In, First-Out (FIFO) - The first goods purchased ...

  12. Mastering Landed Cost Management in NetSuite

    Out-of-the-box, Netsuite provides 3 cost allocation methods: weight, quantity and value. However, for some companies who source very diverse items from multiple suppliers in (mostly) overseas countries, the requirements for proper tracking of landed cost are more demanding. One example would be the import of lightweight, high volume items in ...

  13. Learn How To Automatically Apply NetSuite Landed Costs from ...

    NetSuite Landed Cost Considerations. Note, I have seen many organizations attempt to track actual landed costs against item receipts. The primary challenges of tracking actuals have to do with the fact that actual costs may take significant time to be known; vendors may present their bills well past the time that services were rendered.

  14. NetSuite Landed Cost Guide: How To Set and Manage 2024

    Quantity Allocation: Divide costs evenly among received items, regardless of their individual costs. Custom Allocation Rules: Create personalized rules in NetSuite based on factors like item category, supplier, or transaction type. This gives flexibility in assigning costs to meet specific business needs. Automated Allocation: Use NetSuite's ...

  15. Inventory Allocation Defined: Methods & Best Practices

    Among the benefits, proper inventory allocation cuts down on storage costs, speeds order fulfillment and ultimately leads to higher profitability. ... NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to ...

  16. Improvement and Advantages of Indirect Cost Allocations in Oracle NetSuite

    4. Real-Time Visibility and Reporting: Oracle NetSuite offers real-time visibility into indirect cost allocation through powerful reporting and analytics capabilities. You can generate customized ...

  17. NetSuite Applications Suite

    In the Landed Cost Category field, enter a category for the landed cost. This category is required if the landed cost source will be anything other than Manual. Click the Landed Costs subtab. In the Cost Allocation Method field, select Weight, Quantity, or Value. In the Source field, enter Manual. Then enter a weight, quantity, or dollar value ...

  18. Product Allocation Defined: Methods & Best Practices

    Well-managed product allocation also minimizes the cost and number of days it takes to ship products — another way to satisfy customers and rise above the competition. ... NetSuite Inventory Management sends real-time alerts should product levels fall below a predefined threshold, automates the replenishment process and assists with demand ...

  19. Landed Cost Allocation per Line

    With NetSuite, cost accountants can allocate and track landed cost values at a line-item level. ... When the Landed Cost Allocation per Line preference is enabled, you can specify landed cost allocation amounts on a per-line basis on transactions and receipts rather than distributing the cost based on an allocation method at a transaction level ...

  20. NetSuite Applications Suite

    Entering Landed Cost on a Transaction. To track an expense as a landed cost, you must show the landed cost on an item receipt or vendor bill you enter in NetSuite. On a receipt or bill, use the Landed Costs subtab to identify the allocation method, source, and amount of the landed cost. Landed cost values may be allocated across eligible items ...

  21. NetSuite Customization For Landed Cost Feature

    The 'Volume' as a Cost Allocation Method for the Landed cost feature is implemented through creating a checkbox at the body level where the landed cost details are entered in custom sublist. ... NetSuite Implementation Equip your business process with a unified and customizable cloud business management suite to accelerate growth;

  22. Learn How NetSuite Helps in Reducing Labor Cost

    Labor Cost Allocation SuiteApp allows you to allocate labor costs by employee rate or employee wage transaction. Use Employee Rates to define employee rates for calculating labor cost allocation. On the other hand, employee payment transactions create and use these transactions for payroll cost allocation. Benefits of Using Labor Expense Allocation

  23. NetSuite Applications Suite

    Under Allocation Quantities, choose one of the following: Available Quantity - Allows NetSuite to allocation a partial quantity of items as soon as any portion of the total amount needed becomes available. NetSuite will allocate the remainder at a future time after another allocation calculation. For example, a sales order line needs 10 items.