Client Requirement: ABC Company, an e-commerce retailer, imports various products from international suppliers. They have recently started experiencing issues with their landed cost calculations, which are affecting their profitability analysis and financial reporting. They want to ensure that landed costs are allocated accurately to each product and transaction. Additionally, they need the flexibility to allocate landed costs differently for certain high-value items. ABC Company has requested assistance in configuring NetSuite to meet these requirements.
Solution with the Landed Cost Allocation per Line Preference:
Step 1: Understanding the Requirement: In this case, the client wants to allocate landed costs on a per-line basis for most transactions to ensure precise cost allocation. However, they also require flexibility for high-value items to allocate landed costs differently when necessary.
Step 2: Configure Landed Cost Allocation per Line:
- Navigate to Setup > Accounting > Preferences > Accounting Preferences in the NetSuite account.
- Click the “Order Management” subtab.
- Check the “Landed Cost Allocation per Line” box to enable this preference.
- Click “Save” to save the preference settings.
Step 3: Addressing Flexibility for High-Value Items:
- When entering transactions (e.g., item receipts, credit card charges, vendor bills, or checks) for regular products, the system will automatically allocate landed costs on a per-line basis as per the client’s preference. This ensures accurate cost allocation for most items.
- For high-value items where the client wishes to allocate landed costs differently (e.g., on a per-item or lump sum basis), the accounting team can simply clear the “Landed Cost Allocation per Line” box when entering the transaction. This allows them to override the default allocation method for those specific transactions, providing the required flexibility.
Outcome: By configuring the Landed Cost Allocation per Line preference in NetSuite as described, ABC Company can achieve the following:
- Ensure precise landed cost allocation for most products, improving accuracy in cost accounting.
- Easily override the default allocation method for high-value items when necessary, providing flexibility in cost allocation.
- Enhance profitability analysis and financial reporting by accurately tracking and managing landed costs in NetSuite.
This solution directly addresses the client’s requirement to improve their landed cost calculations and offers the necessary flexibility for specific scenarios, ultimately contributing to better financial control and decision-making.