Easily Convert NetSuite Credit Memos to Customer Deposits

This article is relevant if you have NetSuite Credit Memos and would like them to easily become Customer Deposits.

Background

For a recent client who works primarily with money in advance in their business operations, we streamlined their work procedures to ensure that all sales and fulfillment operations ensured customer deposits were captured and properly recorded. Naturally, we leveraged the tools we created in 2016 to solve for crafting invoices for accepting payments in advance of fulfillment.

As we worked with the client on their goods return and exchange operations, we helped them implement NetSuite-driven return authorizations. A return authorization is the planning record that helps set up a receiver to accept goods back to inventory stock. Once you have a goods receipt, you naturally issue a credit memo to impact the financial considerations. Credit memos can then be used in subsequent transactions.

Yet, in our client’s processing model, we want all operations to be customer deposit driven. Instead of setting up new sales and fulfillment operations that will be satisfied with an invoice that will be paid with the credit memo, we desired to convert the credit memo to a customer deposit.  We then could keep all of our prescribed operations and control structures uniform; this helps with user adoption and scalable record processing.

Tool to Automatically Convert NetSuite Credit Memos to Customer Deposits

Early this year (2022), I wrote an article for How to Convert NetSuite Accounts Receivable Credits to Customer Deposits. This article is applicable to demonstrate the general pattern for credit memo conversion. I recommend a review as we fully leverage the General Ledger Clearing Pattern described in our 2018 article to our advantage.

However, since our client wanted to streamline the business operation, developing a tool that could target credit memos to become customer deposits made sense. Here is what we did.

Three Modes to Drive NetSuite Credit Memos to Customer Deposits

We saw three use cases for solving credit memo to customer deposit conversion challenge:

1. On Credit Memo: every credit memo should have a simple button to convert it into a customer deposit. This way, for any reason a credit memo exists, the user could produce the conversion without worrying about all the details.  Click the image to see the button implementation.
2. On Customer: a customer may have several credit memos that need to be converted. Here, we supply a SuiteLet that allows for a customer-driven lookup of all open credit memos. Then a single customer deposit record can represent the consolidation and conversion of many accounts receivable credits. Click the image to see the Suitelet implementation.
3. On Mass Update: because our prescribed procedure was to move all sales and fulfillment operations using customer deposits, the client had a legacy of many outstanding credit memos that needed to be converted. It was straightforward to take our algorithms and allow them to run on the Mass Update tool. Hence, we could generate customer deposits in one shot across many customers.

Keeping Credit Memo to Customer Deposit Conversion Under Control

The pattern uses a general ledger clearing account. Thus, we dedicated a cash-based balance sheet account (we needed the account to be cash-based because customer deposits come into existence with a debit to cash). Here, we run saved searches to notify administrators (dashboards or email alerts) if any time our designated clearing account does not have a zero balance.

Get the NetSuite Credit Memo to Customer Deposit Conversion Tool

The tool was built to be configurable. We included the tool with our Prolecto Customer Deposit Generator accelerator bundle, free from license charge to all our clients.

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 work with an expert firm that has demonstrated NetSuite customer deposit accounting accomplishments, let’s 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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