This article is relevant for those managing intercompany sales and fulfillments, particularly if you require accurate costing and accruals for NetSuite dropship purchasing processes.
Background
NetSuite is a robust platform for inventory management and financials, particularly suited for distribution companies. However, many organizations are surprised to encounter inherent challenges in costing and accruals with dropship flows—where goods move directly from the manufacturer to the customer, bypassing traditional distribution channels.
In my 2016 article, “Solved: NetSuite Drop Ship Purchase Accruals”, I explore the complexities of accounting that arise in matching revenue with costs and creating accruals to address timing discrepancies. Additionally, in my 2018 article, “Learn how to Reliably Measure NetSuite Gross Profit and Margin”, I provide guidance for organizations struggling to accurately measure item margins. We address these challenges with our license-free Drop Ship Purchase Accruals bundle, as demonstrated in another 2018 article, “NetSuite DropShip Flows with Proper Accrual Accounting Demonstration”.
A client approached us with a more complex scenario involving multi-entity considerations. They asked: How can we ensure accurate dropship costing and accrual functionality while operating within an intercompany fulfillment logistics framework?
NetSuite Intercompany Fulfillment with Dropships
In this specific client setup, one entity handled sales while another managed fulfillment. The sales and fulfillment operations were closely integrated, allowing the sales entity to monitor the fulfillment entity’s inventory and decide when a dropship was necessary to complete an order.
The client aimed to leverage the benefits of accurate costing and accruals, which we addressed with our Prolecto Drop Ship Purchase Accruals Bundle. However, they required these solutions to be applicable across two NetSuite entities and to function harmoniously together.
Essentially, the client needed our dropship accruals to operate automatically and synchronously across these entities. After thoroughly understanding their business operations and accounting needs, we identified that we could integrate our dropship accrual functionality across paired entities with the right setup and some minor adjustments.
Consequently, the client could efficiently plan their sales orders once and manage the entire fulfillment logistics just once—even though it spanned two entities. Moreover, when the dropship supplier delivers the goods directly to the customer, the system seamlessly connects the packaging details across all item receipts and fulfillments between the two entities.
Please click on the image for a full-screen visual representation of these workflows.
Concept Intercompany Dropship Purchase Accrual Video Discussion (5:34)
To help make these concepts clearer, I interviewed Elie C., Senior Technical Analyst in our Technology Services, to discuss the concepts and flows related to the accompanying illustration.
Click here to see the video (5:34).
Work with Superior NetSuite Leadership to Drive Streamlined NetSuite Flows
The concept above illustrates how we add value to help our clients optimize their NetSuite configuration. Because we are strong in Operations and Accounting and have recognized deep NetSuite technology platform skills, we can take care of our clients’ fundamental logistics concerns while properly producing accounting and costing information. We frequently bundle our algorithms and offer them to our clients, license-free, to help accelerate a solution.
In this case, we leveraged our Dropship Purchase Accruals and then wired them to work across entities, giving maximum control but ensuring we maintain quality costing information throughout the entire transaction flow. These types of logistics and accounting are tricky, and it takes a strong analytical mind to help streamline the flow.
If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you seek streamlined NetSuite dropship flows and are ready to work with accomplished professionals, 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.
More Posts - Website - Twitter - Facebook - LinkedIn - YouTube
Hi Marty,
That was an excellent pictorial presentation of the use case for the customisation done here. Quite Informative.
Thanks,
Bhavin