Everything you need to know about financial consolidation in NetSuite

This article aims to provide an in-depth understanding of the consolidation process in NetSuite, its benefits, and how to go about it.

Could NetSuite work for your consolidation needs?

When you have subsidiaries that you own 100% of, consolidating in NetSuite is like smooth sailing.

You can drill down to source transaction details, and consolidation postings are done automatically, and unified reports (P&L/BS/Elimination sheets) are available in real time.

But when you have a more complicated structure with partial ownership or complex intercompany agreements, you may find it difficult to configure NetSuite to handle all scenarios correctly.

To sum it up – you can either consolidate directly in NetSuite, using customized automation in NetSuite, in excel or using an external consolidation software. Regardless of which consolidating route you chose, it’s worthwhile investing time and energy to get it setup correctly from the start.

Greenstep has set up clients that consolidate using NetSuite’s native solutions. We’ve developed our own advanced automation of intercompany transactions and eliminations. We’ve also implemented consolidation software AARO, and other external consolidation software for multiple clients.

The NetSuite OneWorld consolidation process, step-by-step

Configure your OneWorld setup

Start by setting up your OneWorld and associate vendors, employees, customers and partners to subsidiaries. Tax codes also must be set up globally and associated to subsidiaries/nexuses.
Complete the accounting

The brilliance of working in NetSuite is that all companies within the same group share the same NetSuite database. Each posting is booked from the company that paid for it to the company where it belongs. NetSuite automatically generates intercompany transactions on the fly.
Close the month: Locking Periods

Locking periods can be done through the “Manage Accounting Periods” section in NetSuite. Locking can be done: Independently by subsidiary - For General Ledger - Accounts Receivable - Accounts Payable - Payroll A normal locking process should include the following tasks: - Lock Accounts Receivables - Lock Accounts Payables - Resolve date/period mismatches of transactions - Review negative inventory - Review Inventory cost accounting - Create intercompany adjustments - Revalue open foreign currency balances - Calculate consolidated exchange rates - Eliminate intercompany transactions - Close We’ll gladly dig deep into all these consolidation tasks in a short demo, but here’s a bit more information on the most important stages:
Currency revaluation

NetSuite has a built-in month-end currency revaluation tool, which can be used to revalue the open balances, and book unrealized gains or losses. To calculate consolidated exchange rate, NetSuite by default suggests using the current month end spot exchange rate, average or a historic rate, but you can also manually edit the exchange rate.
Intercompany eliminations

Intercompany accounts are automatically revaluated, and journal entries are posted to eliminate any potential balance sheet and income statement items. NetSuite supports transfer pricing setups directly and will also eliminate possible inter-company sales margins. It also provides the ability to drill down to see the elimination journal entry lines posted to the intercompany accounts. The posting will automatically be reversed at the beginning of the next period.
IFRS / GAAP corections

It is possible to follow the good accounting standards directly in NetSuite for all companies of the group. But in some cases, it doesn’t make sense for all subsidiaries and many companies complete their IFRS & GAAP reports as part of the consolidation process. In this case, you can do it manually or use Aaro. The most important corrections tend to be related to benefits (IFRS 2), Financial instruments (IFRS 9), Revenue recognition (IFRS 15) and leasing (IFRS 16). At Greenstep, we have a team dedicated to IFRS reporting who would gladly help you. For more information, please see our IFRS services pages.

The benefits of using NetSuite for consolidating

Improved Accuracy and Compliance

NetSuite’s financial consolidation functionalities help ensure accuracy and compliance with various accounting standards, such as GAAP, IFRS, and others. Automated intercompany eliminations and currency conversions reduce the likelihood of errors, while built-in compliance features ensure adherence to regulatory requirements.

Enhanced Financial Visibility

The platform provides a comprehensive view of your company’s financial health through consolidated financial statements. This visibility allows for better decision-making and strategic planning, as executives can quickly identify trends and areas needing attention.

Time and Cost Savings

By automating many of the manual tasks involved in financial consolidation, NetSuite significantly reduces the time required to close the books. This efficiency translates to cost savings, as finance teams can focus on higher-value tasks rather than repetitive manual processes.

Streamlined Multi-Entity Management

For companies with multiple subsidiaries or business units, NetSuite simplifies the complexities of managing diverse financial data. The platform supports multi-currency, multi-language, and multi-subsidiary operations, enabling seamless consolidation and reporting across the entire organization.

Customizable Reporting

NetSuite offers powerful reporting tools that allow users to create customized financial reports tailored to their specific needs. These reports can be generated in real-time and shared across the organization, ensuring that all stakeholders have access to critical financial information.

Enhanced Collaboration

With cloud-based access, NetSuite facilitates better collaboration among finance teams, regardless of their location. Teams can work together on financial consolidation processes, share insights, and ensure alignment on financial goals and strategies.

Multi-Book vs Adjustment Only Book?

The Multi-Book feature is very powerful, but NetSuite also has an alternative called Adjustment-only books. Here are the main differences between the two:

Feature	Multi-Book	Adjustment Only Book
Allows for a different base currency in Secondary/Adjustment Book	✓	x
Requires the running of Historical Transaction Processing (will create secondary book entries for all your history)	✓	x
Ability to run most reports in Secondary/Adjustment Book	✓	✓
Comparison Balance Sheet and Income Statement available for Primary vs. Secondary/Adjustment Book	✓	✓
Ability to consolidate financial statements in Secondary/Adjustment Book	✓	✓
Ability to Amortize Expenses differently across books	✓	x
Ability to Recognize Revenue differently across Books using Advanced Revenue Management	✓	x
Creation of Book Specific Budgets	✓	✓
Ability to post transactions to different accounts in different Books	✓	x
GL Audit Numbering by Book	✓	✓

This is how Greenstep can help you improve your NetSuite Consolidation process

We've helped hundreds of customers improve their NetSuite consolidation process, here are a few of the problems we've seen and our solution to them.

Problem	Description	Solution
1. Complexity of Initial Setup	Data Migration and Integration: Migrating data from legacy systems to NetSuite can be complex and time-consuming. Ensuring data accuracy and integrity during this process is crucial, but it can also be a significant challenge.	Customization needed: This often requires expertise in both accounting principles and the NetSuite platform. At Greenstep, we have a team dedicated to reporting and data migration who would gladly help you.
2. Learning Curve and Training	User Training: Finance teams may require substantial training to effectively use NetSuite’s consolidation functionalities. The system’s comprehensive nature means that users must become familiar with various features and processes, which can be a hurdle for some organizations.	Ongoing Education: As NetSuite updates its features and functionalities, continuous learning and adaptation are necessary. Greenstep helps its customers keep up with these changes.
3. Intercompany Transactions Management	Intercompany Eliminations: Although NetSuite automates many intercompany eliminations, setting up these processes correctly can be challenging. Ensuring that all intercompany transactions are accurately recorded and eliminated requires careful planning and execution. Complex Ownership Structures: Organizations with complex ownership structures may find it difficult to configure NetSuite to handle all scenarios correctly, particularly when dealing with partial ownership or intricate intercompany agreements.	A few options: You can consolidate manually in excel and create the elimination postings yourself. We have some customers where the main accountant finalizes the consolidation in excel. For them, the monthly closing process takes only 3-4hours including calculating in excel and inserting the postings to NetSuite even there are many entities in the group. Alternatively you can customize your NetSuite to support your groups peculiarities. A third option is to use an external consolidation tool like Aaro. We can help by integrating your NetSuite to Aaro so that data is imported to Aaro, and elimination postings are created in NetSuite once the consolidation is complete.
4. Integration with Other Systems	System Compatibility: Integrating NetSuite with other business systems (e.g., CRM, HR, inventory management) can present challenges. Ensuring seamless data flow between systems often requires custom development and ongoing monitoring. Our dedicated team of technical analysts will review all the options to optimize the system’s architecture.	Data Consistency: Maintaining data consistency across multiple systems is crucial for accurate consolidation. Discrepancies in data can lead to errors in financial reports, which can be difficult to detect and correct.
5. Regulatory and Compliance Challenges	Keeping Up with Regulations: As financial regulations change, ensuring that NetSuite’s consolidation functionalities remain compliant can be challenging. Organizations must stay informed about regulatory changes and update their processes accordingly.	International Compliance: For multinational organizations, complying with various international accounting standards (e.g., IFRS, GAAP) adds another layer of complexity. Configuring NetSuite to meet these diverse requirements can be challenging. At Greenstep, we have a team of experts dedicated to IFRS reporting who address these concerns.

Conclusion – contact Greenstep if you want to consolidate in NetSuite!

In conclusion, consolidation in NetSuite is a powerful tool for businesses with multiple subsidiaries or divisions. Once set up correctly, your consolidation process should be smooth sailing. To set it up correctly we strongly advise that you contact someone who has seen multiple consolidation setups in NetSuite. Greenstep has helped hundreds of companies to consolidate quicker using NetSuite and will gladly help you too.