Introduction

Every now and again, NetSuite Pros will receive a request that they have never had to deal with before and they are tasked with figuring out how to solve that request in the most effective and efficient way.

Companies running NetSuite may be involved in mergers and acquisitions (M&A) activity, either as a result of being acquired by another company or by acquiring another company.

There are of course other scenarios to consider, but keeping it simple for now let’s assume the company we work for is being acquired by another company and our company uses NetSuite as its ERP. You then receive a request from your company Controller regarding the financial statements that need to be prepared.

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The request

After receiving communication that your company is going to be acquired by another company, your company Controller informs you that they will need the ability to easily distinguish between financial records both before and after the acquisition. Simple enough, if the acquisition date fell nicely at the beginning of a month, quarter, or better yet a fiscal year. In this case, the acquisition date falls in the middle of a month.

Here are the requirements:

1. We need the ability to report our financial statements through August 15th, 2023 so they are locked in as of the company acquisition date.
2. We need the ability to revalue our financial statements and perform consolidation through August 15th, 2023 in the most efficient way possible.
3. We need the ability to continue to run our financial statements from August 16th, 2023 as usual and close the books on August 31st as we normally would have.

With these requirements, how should you think through NetSuite custom solutions? Let’s explore.

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The thought process

As I read through the requirements there are some key things that catch my attention.

1. Financial statements need to be split within a specific accounting period. Can I split a base period in NetSuite?
2. The financial statements need to be locked in i.e. unable to be edited in the future.
3. We typically use the month close checklist to revalue specific GL accounts and perform a consolidation, but you can run the revaluation process outside of the month close checklist and consolidations can be performed manually (although not recommended).
4. Users need to be able to operate NetSuite “business as usual” once the acquisition accounting has been taken care of, so we need to minimize the impact on our end users wherever possible.

One option to consider would be to manage a separate set of accounting books in order to clearly separate the financials both pre and post acquisition. This would certainly allow for ease of comparison between the financials before and after the acquisition, however this was not one of the requirements. Instead, there is emphasis on the ability to run revaluation and consolidation mid-month.

With that in mind, it makes more sense to split the August 2023 base period to account for activities before and after August 15th, 2023. We will be able to run the revaluation process for this split period and well as run a consolidation in the middle of the month. It also has the added bonus that once the newly created base period is closed, your end users can operate as they normally would in NetSuite when closing the books for August 2023.

Salto Tip: Keep it simple. With NetSuite there are often many ways to deliver the required outcome(s), so optimize for simplicity, especially when there will be a direct impact to your end users.

Now that we have thought through the requirements, it’s time to execute the plan.

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The execution

Step 1 - Playback requirements

For any NetSuite enhancement it is important to playback the requirements to your end users. Challenge these requirements if needed and offer multiple solutions with pros and cons to each. This is where NetSuite Pros add value to the business they support.

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Step 2 - Solution design

Given the accounting period falls in the middle of an accounting quarter, we will first need to edit the existing Q3 2023 accounting period and rename it to something such as “Pre Acquisition - Q3 2023 (thru 8/15). Next you will need to create another quarter period that covers the remainder of the quarter i.e. 8/16 thru 9/30.

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We then need to repeat this process for the August 2023 accounting period, to split it between pre and post acquisition periods. Don’t forget to assign each period to the appropriate accounting quarter.

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Once we have the account periods set up as required, we need to ensure the process for revaluation of GL accounts and the consolidation of accounts runs smoothly for the “Pre Acquisition” accounting period.

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In summary, the solution requires the following customizations:

• The creation of two new accounting periods.
• The modification of two existing accounting periods.

It really is as simple as that. Review the solution design with your stakeholders before moving into the build phase of the project.

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Step 3 - Execution and deployment

Now that you are ready to deploy your reporting solution, you need to ensure that appropriate communication is sent out to all users who may be impacted by this change. Specifically, it will be very important that transactional data for August 2023 is coded to the correct accounting period and that cut-off processes and procedures are enforced on August 15, 2023. Consider all of the steps that your business undertakes when closing the books for a regular accounting period and now apply those to the mid-month accounting period close. You may also want to consider running this process in a Sandbox prior to executing in Production, especially if this will give your end users additional comfort as to how this will look come acquisition date.

In this case, the technical solution is far simpler than the execution of the process required to get this right from an accuracy and completeness perspective, so early and frequent communication is key.

Typically, deploying NetSuite solutions manually can take a significant amount of time and you’ll be best to leverage a tool to manage the migration process. For this particular use case that will not be necessary, but that should still be a conscious decision for all NetSuite customizations.

Now that you have deployed the solution to Production, the final step is to support your end users in working through the August 15th period close, so that they can continue “business as usual” from August 16th onward.

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Useful references for this custom solution

• SuiteAnswer ID 79248
• Accounting Period Management
• Mastering NetSuite Financial Data

For more information on expanding your NetSuite toolkit and how to think like a NetSuite Pro, check out Salto’s blog posts that explore some of the things that NetSuite Developers and NetSuite Administrators should be leveraging within the NetSuite ecosystem.

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Final thoughts

As with many NetSuite customization requests, there are a number of different ways to get to the right outcome for your end users. Make sure you consider ease of use, system performance and plan to leverage native NetSuite functionality where possible. This will set you up for success and set your end users up for success. If you have M&A activity coming your way soon or in the future, now you know how to manage your financial reporting directly in NetSuite.