This article is relevant if you need a scalable NetSuite-based cash application manager that can be extended without recurring fees or obligations.

Background

Cash application can be particularly challenging for organizations, especially in business-to-business scenarios where suppliers issue multiple invoices as products or services are delivered over time. As the number of invoices sent to customers increases, so does the complexity of accurately applying cash receipts to corresponding invoices and credit memos. This challenge is further compounded as electronic remittance becomes more prevalent, reducing paper handling but creating complex data structures around payment information and related transactions.

Financial institutions and banks offer Lockbox services, a third-party cash receipt solution, to address these issues. These services consolidate and deposit paper check receipts and other cash receipts on behalf of companies, streamlining processing and bringing it closer to the banking institutions. This approach helps reduce processing costs and ensures accurate cash deposit accounting, leveraging the bank’s expertise and interest in efficient cash management.

However, using a third-party service introduces its own set of challenges. The general approach works well in single-invoice-to-single-payment scenarios.  However, it is generally weak in the more common multiple-invoices-to-single-payment model. Accurately identifying these transactions becomes crucial for proper cash application when a single customer payment covers multiple invoices and credit memos. Misapplying cash can obscure the financial narrative between suppliers and customers, potentially leading to extended cash payment cycles and increased financial and administrative costs.

When Celigo’s Cash Application Manager Faces Challenges

Celigo has garnered a strong following in the NetSuite community with its cloud-based service.  It facilitates connectivity with banks to integrate paper checks, ACH, wires, and credit card services into NetSuite. This tool significantly streamlines cash receipt processing for many users.

However, there are instances where the solution lacks sufficient flexibility or control. Our client encountered challenges primarily in two key areas:

1. Cash Receipt Matching: Celigo processed over 60% of transactions without matching related invoices. While it handled single invoices adequately, it struggled with multiple invoices, requiring significant manual intervention from the client. This extra effort greatly reduced the value of the Celigo solution. Celigo’s logic focused on single invoice scenarios, neglecting the complexities of multiple payments. Clients had to delve into Celigo’s raw file parsing to deduce the necessary cash application logic.   I have previously discussed a similar model where we give our clients an Excel tool to apply a payment to a single invoice.
2. Financial Institution File Exchange Concerns: Connectivity issues often disrupted file transfers from banks to Celigo and onward to NetSuite. These challenges necessitated IT workarounds and raised doubts about service reliability. During connectivity outages, our client had to manually retrieve and process transactions, adding to workload and frustration. Meanwhile, Celigo’s recurring service charges continued, prompting questions about the solution’s cost-effectiveness.

In response, our client sought a solution. Our analysis identified an approach using the NetSuite platform and tools available through our LABS initiative, which offers clients access without license charges.

Introducing an Extensible Prolecto Cash Application Manager

As a leading NetSuite Systems Integrator, our approach to addressing these challenges leverages the extensibility of the NetSuite ERP platform. This allows us to solve common cash application issues that often prompt organizations to seek third-party solutions. By adopting a “make vs. buy” strategy, organizations with the right expertise can develop solutions that harness the full potential of NetSuite while avoiding ongoing fees.

In my 2022 article on Contrast Platform vs NetSuite Point-to-Point Integration Options, I discussed the merits of opting for integrated point-to-point solutions between NetSuite and data sources. This approach eliminates the need for a third-party intermediary, empowering NetSuite-driven organizations with complete control over their processes.

In this article, I contrast a point-to-point solution against Celigo, highlighting how our approach emphasizes direct integration within the NetSuite ecosystem to enhance flexibility and reduce dependency on external tools and recurring costs.

Components for a Scalable NetSuite Cash Receipt Application Manager

Through our Prolecto LABS initiative, we expedite client solutions without recurring costs by leveraging our extensive library of tools built on the NetSuite platform. A robust Cash Receipt Manager requires the following core capacities to effectively operate:

1. Secure Financial Institution File Exchange: Utilizing our Prolecto sFTP solution, we swiftly establish connections between NetSuite and banks, facilitating seamless file transfers into NetSuite. Learn more about our approach in my 2020 article on how to transfer sFTP files easily using the Prolecto sFTP Connector.
2. Parse and Import Complex Data: Once files are in the NetSuite file cabinet, a powerful tool is essential for automated and reliable data parsing and processing, ensuring complete control over business logic. Explore our license-free Record Import Export Utility (REIM) in my 2020 article on Fully Automate Complex NetSuite Data Imports.  Last week’s article on Streamlining BAI2 Parsing for NetSuite Driven Integration Solutions provides insights into parsing cryptic BAI2 bank files.
3. Cash Application Manager: With data distribution plumbing and major parsing tasks addressed, the focus shifts to scalable cash application patterns. This component becomes the cornerstone of the solution, accommodating batch payments and additional customer-specific instructions for cash application to invoices.

In this discussion, I will delve deeper into these patterns for a scalable Cash Application Manager. Click on the image to see the application architecture.

Scalable NetSuite Cash Application Patterns

When implementing cash application solutions in NetSuite, several considerations must be addressed to effectively handle varying complexities and transaction volumes.  While NetSuite’s native Customer Payment / Cash Receipt functionality works adequately for simpler scenarios,  a scalable solution must be designed to address the following challenges:

1. Accepting Cash Without Complete Information: we need a method to accept cash upon receipt, even without certainty on how to immediately apply it. This approach ensures timely bank statement reconciliation. A “Suspense” dummy customer is a placeholder for receipts awaiting proper application.  The Suspense customer typically reflects a net credit accounts receivable balance, monitored through the Accounts Receivable Aging report.
2. Cash Application Staging Records: NetSuite requires each record save/commit to impact cash, accounts receivable, and/or customer deposits. To allow time to plan payment analysis before financial commitment, the staging record allows time for preparation and gathering of information for how to apply payment.  Once ready to fully commit, we introduce custom NetSuite financial transactions. These staging records create a sub-ledger control system to refine payment application strategies.
3. Learning-Based Matching Logic Pattern Definitions: each cash payment source follows specific data application patterns. Using regular expressions (REGEX), we define patterns in source data to identify related transactions behind the payment. The system suggests payment application logic automatically, with user review and confirmation. Refinements during use allow the system to learn and apply patterns automatically in subsequent transaction matching.
4. Cross-Customer Cash Applications: flexibility is crucial for scenarios where payments span multiple customer records.  Simply, there are times when the way the customers are modeled in NetSuite do not reflect the way the payments are received.  The system supports natural lookup and matching across customers to create comprehensive payment narratives, disregarding NetSuite’s native restrictions. Once ready, the system structures proper NetSuite payments while respecting customer boundaries.
5. Automation and Controls: establishing robust automation and controls is critical. Saved searches are tailored to create a financial and management control environment where cash managers can trust that business applications and staff adhere to prescribed processes.
6. No Lock on Logic: clients have full access to application source code, enabling them to enhance and refine functionalities without restrictions.

By implementing these patterns, our solutions optimize cash application processes within NetSuite, accommodating diverse needs and enhancing operational efficiency without recurring costs.  Click on the images to get a sense of the application.

Watch the Cash Application Manager in Action

In the following two videos, I interview Jeff D., Technology Analyst, to learn how he and the team crafted the Cash Application Manager for our client.

• Video 1 BAI2 File Parser (6:43): as the subject of last week’s article, Streamlining BAI2 Parsing for NetSuite Driven Integration Solutions, we discuss the solution that parses the bank data and presents it in a standard format. See below or click here to see the video.

• Video 2 Cash Application Manager (20:43): this focus is on the Cash Application Manager and the logic used to help drive scalable cash application independent of any cash source.  See below or click here to see the video.

Get the Prolecto Cash Application Manager

This article exemplifies our LABs initiative. As seasoned NetSuite Systems Integrators dedicated to our craft for a decade+, we offer a model where all our intellectual property is provided to clients without license charges. This commitment aims to enhance the value of our clients’ NetSuite investments. Similar to open-source principles, our model ensures complete transparency in logic, coupled with leadership that listens attentively, validates requirements, devises solutions, implements software patterns, and supports clients in adopting best practices to maximize their NetSuite utilization effectively.

If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you have a concern about a challenging NetSuite-based cash application, 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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