Create NetSuite Customer Deposits from Opportunities or Estimates

This article is relevant if you run NetSuite lead and prospecting sales operations that require monies paid-in-advance before starting actual work.

Background

A fundamental question for any business is the amount of credit risk it will undertake when transacting with its customers. For many organizations, monies must be paid in advance before work will commence. We have clients that demand 100% deposits due in advance before they will start work. Other clients want to know their customers have “skin-in-the-game” and ask for partial monies to be paid. More commonly, others simply demand that a credit card be accepted at the time an order is taken. Each of these credit risk decisions affect accounting operations and NetSuite usage.

For any NetSuite driven business that wants to work with monies in advance, they generally will become concerned with the customer deposit record. A customer deposit is effectively a liability (some say deferred revenue) that is held on the books until the funds received are earned through a fulfillment on a promise. I speculate that many companies would welcome lowering their credit card transaction charges if they had an easier way to receive monies in advance.

I have written a number of articles on NetSuite customer deposit accounting:

  1. Solved: NetSuite Customer Deposits and Advance Payment Accounting
  2. Applying NetSuite Sales Order Customer Deposits on Independent Invoices
  3. Converting NetSuite Customer Deposits to Credit Memos
  4. Using NetSuite Payment Methods to Drive Customer Deposits
  5. Yes You Can: Generate a NetSuite Customer Statement on an Invoice with Customer Deposit Accounting

Because of my strong accounting background, I think fundamentally in debits / credits and assets and liabilities. As soon as I understand our clients want to minimize risk and receive monies of any type ahead of delivery, I think about Customer Deposits. In this conversation, we have clients that work heavily with NetSuite Opportunities or Estimates. Most of the time, they don’t want to move to a Sales Order until deposit money has been received. A Sales Order generally means a commitment; our clients know their customers are committed when a deposit is received on an opportunity or an estimate.

NetSuite Offers No Capacity to Make a Customer Deposit Request

NetSuite offers no basic way to make a request to a customer for a deposit. The customer deposit record starts with the actual deposit; but we need some type of other request record to initialize the action. The general approach we have seen in the NetSuite community is for users to mockup an estimate record that prints out with language as-if it is an invoice so that a corporate customer can take it through its formal accounts payable process. This can work. But the real breakdown in this approach is as follows:

  1. No Invoice or Aging: You can’t age the deposit requests from a traditional invoice outstanding standpoint; thus it is hard to predict deposits cash flow.
  2. Off-the-Books-Accounting: There is no record to receive monies against once the payment arrives. Thus accounting is off-the-books and disjointed.

Prolecto Advance Payments Customer Deposit Bundle

We have solved for all of these concerns. The key to this innovation is to create a balance sheet only “Advance Payment” invoice which is designed to distribute to the customer, age like any other receivable, yet when the cash is actually received, it will automatically create a native NetSuite Customer Deposit that can be used to hold monies in advance of fulfillment / earning.

Connection to NetSuite Opportunities and / or Estimates

At any point in the customer sales lifecycle, an Advance Payment invoice can be created which will be linked to the originating coordination transaction. That coordination transaction can be an Opportunity, Estimate, or Sales Order. Further logic can be implemented to prevent linked Sales Orders from being approved unless the related deposit invoice is fully paid. Our clients can now design the credit risk practice they desire and support a streamlined implementation in the sales operation.

Watch Video of Customer Deposits Flows against a NetSuite Opportunity

In this 4:20 Minute video, one of our senior consultants, Sean G., illustrates the use of our bundle between an Opportunity, Advance Payment Invoice, a Cash Receipt Payment, a subsequent Deposit, a Sales Order created from the opportunity, and a linked earned invoice that ultimately is satisfied by the automatically generated customer deposit.

In this video, you will watch how we helped our client learn how they will gain significant relief from their non-managed “Estimate as an Invoice” customer deposit practice.

Get the Customer Deposit Bundle

The customer deposit bundle is available to any of our clients without a license charge. Our only request is that we engage in a support relationship to ensure success in the configuration, implementation and ultimate day-to-day use. If you have a NetSuite customer deposit requirement, let’s have a conversation.

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Marty Zigman

Holding all three official certifications, Marty is Southern California's NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 25 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to setup a conversation.

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| Category: Accounting, ERP, NetSuite | 2 Comments

2 Comments

  1. Posted October 29, 2017 at 9:03 pm | Permalink

    Do you know if there’s a way for customers to accept an estimate by clicking on it, and then sending payment, automatically? The way it works now, WE need to process the estimate if/when the customer approves it – the customer can’t move the ball forward on their own…. Thanks!

  2. Posted November 11, 2017 at 3:57 pm | Permalink

    Hi Ben,

    I suspect this solution may be easier.

    You can send an email to a customer, they can then click and link to pay and we record a customer deposit. It would be pretty simple then to turn the opportunity or estimate to Sales Order as closed/won. Send me a note here for specific implementation planning.

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