Growth opportunities, such as opening new subsidiaries, taking on vendors with different currencies, or perhaps requiring different accounting treatment due to industry-specific rules, all catalyze the need for expanded financial functionality.
This is standard practice in which a company maintains a variety of accounting records with a single set of financial transactions and, by extension, maintains multiple accounting standards at the same time. This often results in different reporting outcomes.
To report accounting financial results within compliance based on multiple simultaneous accounting standards, accounting teams have to issue their statements in accordance with whichever accounting standards are required. This consumes an exorbitant amount of time unless your business utilizes NetSuite Multibook Accounting, which allows you to report your finances under different financial standards with ease.
The most basic explanation of multi-book accounting is that it's a practice of keeping several sets of books to meet various accounting requirements, offering greater flexibility in how transactions are recorded and reported. This is incredibly important for businesses that operate in diverse regulatory environments or those businesses that require reporting under different financial standards.
This introduces the concepts for primary and secondary books, enabling businesses to maintain comprehensive primary books while the secondary books reflect adjustments specific to those different accounting standards.
Multi-book solves two main issues: it allows the companies to maintain their books across their entire operation and eliminates the need to spend an exorbitant amount of time dealing with Excel spreadsheets just to conform to a secondary Accounting Standard including Tax Adjustments, IFRS reporting, ASC 606 Retrospective Reporting, or Industry specific reporting.
NetSuite is a cloud-based ERP solution, and its multi-book functionality is basically an automated accounting rule-driven engine that eliminates the need for manual data entry, thus reducing human error and data entry duplication in your accounting.
The full multi-book feature allows users to establish different rules for each of the accounting books, thereby ensuring complete and comprehensive compliance across all accounting standards within a unified system.
This allows transactions to be recorded in one accounting book and selectively replicated in another with the necessary adjustments such as currency and taxes, streamlining operations and ensuring consistency among different accounting.
A company that operates in different global areas that are subject to different financial standards keeps its books subject to those standards. However, all transactions from the secondary book are re-adjusted and recorded into a primary book, where they're all recorded using the company's standard accounting methodology, maintaining a unified financial record.
Being a cloud-based enterprise resource planning solution, NetSuite multi-book accounting offers a number of different benefits to businesses and NetSuite accounting teams.
The biggest benefits are compliance and time savings, as the platform pulls data from different integrations, thus reducing the need for error-prone manual adjustments between different books and accounting standards.
This allows businesses to still create and record transactions, which automatically post the activity across all books efficiently, in accordance with the appropriate accounting standard associated with each book.
The NetSuite platform is known for its reporting capabilities, which also applies to its multi-book capabilities. It offers financial reporting and analysis for each of the books your business keeps. The intuitive user interface dashboard doesn't really require any technical knowledge.
It's worth noting that unlike most financial software options, NetSuite's financial reports are available out of the box for both internal- and external reporting, and also as customizable saved searches and dashboards to analyze and manage KPIs.
These comprehensive reports are often very insightful; they provide insight into your financial and operational performance, as well as your sales and any KPIs that you might've previously established. Such comprehensive analysis and reporting provide you with the necessary knowledge to make more effective business decisions.
This is where multi-book excels, since a business that operates in several different countries records transactions using book-specific currencies. Fortunately, multi-book keeps track of exchange rates, and is capable of automatically calculating the general ledger impact for all books, including both AP and AR amounts, as well as transaction amounts. This allows the business to present financial data to its primary financial system and provides insight into other country-specific foreign currency management regulations.
NetSuite multi-book allows your business and its subsidiaries to create custom forms, records, and workflows that support your business's various financial processes. However, what makes this so beneficial is that the customization support comes integrated with a powerful set of scripting capabilities, which allows your accounting team to customize and automate financial processes as the accounting rules change. This is paramount in maintaining compliance with different rules and regulations governing different region-specific businesses.
As a cloud-based solution, NetSuite is completely scalable to meet the needs of your business, which results in significant cost reductions for your company, namely because it easily accommodates new regulatory requirements, additional currencies, and more complex organizational structures.
All of this is achieved without extensive system modifications, which provides a clear advantage over typical on-premise solutions that call for expensive hardware to scale adequately. On-prem solutions also require maintenance staff, which also implies onboarding and maintenance expenses for your business.
Traditional systems often require third-party applications for different accounting standards, leading to integration challenges. NetSuite offers a unified solution that manages multiple books within the same platform, enhancing data consistency and access.
|
Aspect |
Adjustment-Only Books | Full Multi-Book Accounting |
| Implementation | Can be set up by NetSuite Administrators using standard functionality. Professional help is recommended but not required. | Requires the help of a NetSuite consultant and should not be implemented by in-house staff. |
| Data Handling | Overlays adjustments on the primary book's financials without duplicating data. | Copies the GL impact of transactions from the primary book to secondary books using Historical Transaction Processing (HTP). |
| Number of Books | Multiple adjustment-only books are allowed. Does not count towards the five active book limit. | Typically, only one or two additional books are needed despite the five-book limit. |
| Ease of Setup | Quick and simple setup. Requires less data maintenance. | Requires system configuration and data validation. |
| Functional Currency | Must use the same functional currency as the primary book. | Allows financial reporting in different functional currencies. |
| Accounting Period | Must align with the same accounting period as the primary book. | Flexibility in setting different accounting periods. |
| Fixed Asset Module | Supports separate depreciation methods. | Supports separate depreciation methods. |
| Prepaid Amortization Entries | Created only from book-specific journal entries, not from vendor bills or credits. | Created from source transactions like vendor bills and credits. |
| Revenue Recognition | Separate arrangements only from book-specific journal entries, not from sales orders or invoices. | Separate arrangements can be created from source transactions like sales orders and invoices, with different recognition rules. |
Adjustment-Only Books:
Full Multi-Book Accounting:
This comparison highlights the core differences and considerations for implementing either Adjustment-Only Books or Full Multi-Book Accounting in NetSuite, helping businesses choose the best approach for their accounting needs
If your company's subsidiaries are operating in a different country, then you're already familiar with the concept of multi-book accounting and the numerous benefits it brings to the system. If you're interested in upgrading your financial operations by automating your accounting and your multi-booking operations across your entire organization through the use of a comprehensive enterprise resource planning solution, reach out to ScaleNorth today.
