This article is relevant if you need to support a gift card program in NetSuite and you are using an external system to issue and redeem gift certificates.
Background
In our NetSuite Systems Integration firm, we are called upon to solve complex NetSuite business scenarios. A common retailing selling pattern is to use external point of sale systems or eCommerce platforms to merchandise — yet the desire is to have scalable centralized accounting and fulfillment operations driven by NetSuite. Gift card programs are a great way for marketers to build brand awareness while at the same time promoting future revenue. Yet, gift card programs introduce more complex payment situations.
We often see companies institute a gift certificate program on their point of sale or eCommerce system with add-in technology often driven by the marketing department. Yet, I witness limited connection to the NetSuite system for proper accounting and control. Oftentimes, I have seen companies try to transform their gift cards into “store credits” as a means to facilitate processing and accounting. This practice actually obscures away the very nature of gift cards which properly should be accounted for as liabilities that are subject to government escheatment demands.
While many folks select an integration platform, such as Celigo, Boomi, or Workato to drive their NetSuite integration requirements, those supplied tools built-in NetSuite connectors often do not address more complex payment requirements.
In my 2018 article NetSuite Split Tender and Gift Card Programs, I discuss the pattern to support multiple payments on a sale. NetSuite does not support this pattern natively. However, with proper modeling, the ability to apply an unlimited number of payments to an order can be achieved.
Activating NetSuite’s Gift Certificates with Multiple Payment Methods
NetSuite’s native gift certificate system has the built-in capacities to support gift card sales and redemption. The model is powerful because the sub-ledger system will properly account for gift card liabilities while accounting for gift card redemptions against earned (invoiced) revenues.
Yet, in an integrated order flow, the sub-ledger needs to be driven in a manner that properly records gift card sales and redemptions. By the very nature of accepting gift cards for payment on orders, you are driven to address split tender requirements.
Modeling for Split Tender in NetSuite Transaction Processing
The key to opening up NetSuite’s split tender capacity is to build a custom payment method sublist that is coupled to sales order and invoice logic. In a recent client implementation, we lead the modeling of their transaction pattern for orders that can reference multiple credit card payments, store credits (credits derived by returns on previous sales that can be applied to future orders), and gift card certificates.
As an order is placed, a sublist of all the payment methods is recorded that were used to tender the sale. Using our pattern to create rule-based scalable sales order practices, a sales order is not released for fulfillment unless all the validated payment methods properly cover the sale.
Click the related images to help understand the pattern.
Gift Card Sale Controls
During the sale of a gift card (certificate), a unique token is verified that it has not been used before and then subsequently recorded against NetSuite’s gift card ledger. We properly raise errors to drive business processing flows should counterfeit or already used certificates are presented. We developed a SuiteScript library that we give to our clients free of license charge to call out the verification and recording. The sales are relatively straightforward as they can be represented as an item (SKU) on a sales order — just as any other traditional product is represented.
function buyGiftCard(salesOrder, giftCard, amount) {}
salesOrder = Sales Order Record
giftCard = Gift Card Unique Token string
amount = amount of Gift Card
Gift Card Redemption Management
Gift Card redemptions are more complex. By the very nature of presenting a gift certificate for payment, we need to determine first if it is valid (not counterfeited), and then determine if there are sufficient funds available to satisfy payment. Likewise, we developed a license-free SuiteScript library to support lookup verification functions which then are recorded in the payment method sublist to drive rule-based order processing flows.
Once all the payments in the sublist are validated, the order is released for fulfillment. After fulfillment, an invoice is automatically generated (see my 2019 article on Best Practices for Automating NetSuite Invoice Generation) so that revenue is earned. We then pay (apply gift certificates, credits, and credit card-based customer deposits) for the earned invoice using all the validated payment listed funds.
function redeemGiftCard(salesOrder, giftCard, amount) {}
salesOrder = Sales Order Record
giftCard = Gift Card Unique Token string
amount = amount to redeem
NetSuite Gift Card Ledger Reporting
Once we have proper gift card accounting recorded in NetSuite, all the benefits of the built-in sub-ledger become available. Instead of relying on the “front end” (e.g., eCommerce) system to account for gift card sales, we now have centralized control and accounting where it belongs — in the financial system.
With centralized gift card control, we unlock the marketing department’s desire to create promotional gift card programs. In a multi-channel (omnichannel) decentralized sales environment, as long as we can be sure that we have a unique token for each gift certificate, we are safe. With this model, we are protected to avoid fulfilling any transaction unless it passes our control checks. We also then have the ability to expire gift cards and account for statutory gift card revenue and escheatment requirements.
Properly Drive NetSuite to Account for Complex Business Practices
NetSuite is the leading general-purpose ERP system for a reason. Its power comes from its robustness. The key to a powerful and satisfying implementation is to first model the business challenge. Too often, my firm is asked to come in to diagnose NetSuite processing concerns. The deeper issue usually points to poor considerations in the implementation design. Likewise, the NetSuite platform can be unlocked to fit requirements very well. The key is to combine a firm understanding of business operations, accounting, and NetSuite technology enhancement capacities. It’s important to think straight and plan carefully.
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If you have a challenging NetSuite eCommerce systems integration and you are not satisfied with the leadership offered to you, perhaps it makes sense to have a conversation.
Marty Zigman
Holding all three official certifications, Marty is regarded as the top 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 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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