We all want to work less and make the work we do be as easy and efficient as possible. Thankfully, NetSuite offers a range of tools to help automate and simplify various processes. One of these tools includes simplifying your accounting process, especially around month end closing, with Expense Allocation Schedules.
Now a few of the people reading this, if not most of them, are probably thinking, “I’ll just handle it in Excel.” Well, this thought process is pretty common. You’re comfortable with Excel and you’ve already got a process that works for you so there’s no need to mess with it.
But is that process working as efficiently as it could be? There’s a pretty good chance that NetSuite could help you automate expense allocation, but that doesn’t always mean it’s the right choice. In part one of this 4-part series blog post, we will run through the high-level benefits and limitations of Expense Allocation Schedules.
Expense Allocation Schedules can streamline the accurate allocation of expenses across your company each month. They not only move dollars between accounts, but also allocate across departments, classes, locations, and even custom segments. By using this flexible feature, manually tracking and allocating expenses can be a thing of the past. NetSuite even allows for intercompany allocations if your corporate headquarters has expenses to push down to one or more subsidiaries.
For example, you may want to allocate rent expenses or utilities across departments based on a fixed percentage. A simple Fixed Expense Allocation schedule can take a Bill or Journal that meets the Source criteria from the Expense Allocation Schedule and spread that across the financial segments and subsidiaries. Do you want these departmental costs allocated by headcount instead of an even split? NetSuite’s dynamic Expense Allocation Schedules can use statistical account entries as a weighted source for accurate division of expenses to hit each department’s Profit & Loss (P&L).
Despite the benefits, using Expense Allocation Schedules isn’t always the right choice. The schedules are capable of significant flexibility, but each unique combination of source and destination dimensions requires another schedule to be created.
Depending on your company’s allocation needs, and how many schedules that translates into, just creating and maintaining the Expense Allocation Schedules could be prohibitive. Many records can be imported to NetSuite in bulk by using NetSuite’s native import tool, but Expense Allocation Schedules are not included. This results in creating and updating Expense Allocation Schedules one at a time in the UI, which could be very time consuming.
There also isn’t an easy or dependable way to run Expense Allocation Schedules in bulk. It is possible to create a batch of schedules that run-in sequence, but this also has limitations. You can manually run multiple Expense Allocation Schedules where the result of the first allocation is the source pool of the next allocation, and up to ten allocation schedules in a batch. That said, if any of the schedules in the batch fail to run, for example because there weren’t any expenses to allocate in that schedule for the month, then the whole batch will fail.
Let’s say you’re ok with creating 10, 20, or even 30+ Expense Allocation Schedules manually. The schedules will need to be replicated for each subsidiary you have, which can quickly make things unsustainable. At SquareWorks, we’ve had customers who, once we translated their current processes into Expense Allocation Schedules for all their subsidiaries, would have needed 200 schedules. This is an extreme example, but the number of needed schedules is a common reason our customers choose not to use NetSuite’s allocations.
NetSuite’s Expense Allocation Schedules are a great tool to automate expense allocations across accounts, departments, classes, locations, and even subsidiaries. But at the end of the day, the number of unique allocation combinations may be a limiting factor when deciding whether or not to use this tool. If you find yourself needing unique allocations, sometimes it might be easier to just use Excel.
Interested in learning more about Expense Allocation Schedules in NetSuite? Send us your questions at firstname.lastname@example.org. Stay tuned for more blog posts about Expense Allocation Schedules where we will dive deeper into examples of fixed, dynamic and batch schedules.