Expense Allocations using Dynamic Weights
At one point or another, every NetSuite customer faces a situation where the need arises to allocate expenses, or any account type, in their GL either as a restate or populating missing financial segments like Department or Class. For the most part, people reach for a standard journal and perform this as needed, over time this ceases to be an exception process and becomes a standard one – where someone tracks in an excel or a report in NetSuite and manually creates the journal. There’s nothing wrong with doing this, but there are alternatives and perhaps one that could save you time at month/year-end.
Allocations Schedules in NetSuite
This is a long-standing feature in NetSuite that allows you to reallocate balances from a source account(s) (including segments) and distribute across destination account(s) (including segments), by creating a journal entry automatically based on a frequency that you define. Some clients of mine don’t take advantage of this feature because there’s a notion that you can only allocate based on a fixed weight that is defined on the schedule. The idea that one had to adjust the schedule each and every period turned folks off from using this as they found it was faster to determine the allocation amounts in excel. But this notion is untrue, there is a way.
Let’s look at this simple example of distributing some overhead expenses that your organization incurs on a monthly basis. When the payable is entered into NetSuite it is booked to an expense account and your general administration department. Let’s say, as part of the departmental budgeting you wish to distribute this overhead expense across them based on the number of employees reporting to that department, where the headcount determines the weight of the allocation. This is possible.
You’ll need to set up the above:
- Statistical Account – based on a unit of measure of ‘each’, this will store your current headcount by department in a non-monetary ‘sub-ledger’.
- Statistical Schedule – using a save search summarizes the headcount of employees in each department that will be included in the allocation. This gives you great control to determine the numbers you will post to the Statistical Account.
- Statistical Journal – this piece takes your Statistical Schedule and creates the journal into the ‘sub-ledger’, where you can update the balances of the headcount by department as an update or true ‘absolute value’. The latter overwrites the amount with each execution, but the former would provide you with a change of the balance in the statistical account over time for reporting purposes if needed.
- Allocation Schedule – finally your allocation schedule, where the Allocation Mode will be set to ‘Dynamic’ and the weight source will be your Statistical Account. Set your source and destination, you’ll notice your destination weight column is now greyed out as the system will determine the true weight upon execution or manual update if you hit the ‘Update Sample Weight’ button.
Give it a try, consult SuiteAnswers, and if you’re stuck don’t hesitate to contact one of our highly skilled NetSuite Consultants.