NetSuite Vendor Bill Variance Journals

Note: Please also see my later article describing how to craft a Saved Search that can support Vendor Bill Variance maintenance

“IRNB” Clearing account

Readers of this blog with experience in using NetSuite’s advanced receiving feature (which separates billing and receiving to separate transactions) may be familiar with the Inventory Received Not Billed (“IRNB”) account. That account is a system account which acts as the “clearing” account for Item Receipts and Vendor Bills. Item Receipts credit this account, and Vendor Bills debit the account. When the value billed equals the value received, the account nets to zero and all is well. Often, however. the transactions do not equal. When this happens, a mechanism is needed to correct any errors, and ultimately to write off variances, with the goal of clearing out the IRNB account.

Vendor Bill variances

NetSuite has a great tool that in my experience is not widely used, which automatically calculates variance amounts and posts Journal Entries for the differences. The tool is called “Post Vendor Bill Variances” and can be found either in the Payables menu or the Purchases menu, depending on which “Center” the user’s role is configured to use.

There are two ways to use the tool, and these are well documented in NetSuite help and in SuiteAnswers Article 11157

Deficiencies

The tool is great and solves an important accounting problem, but has two drawbacks which lessen its usefulness. This article will show how you can use out-of-the box functionality to overcome these drawbacks.

1st Drawback: Know before you post

The first drawback is that the tool does not provide visibility into what the variance amounts are for a given Purchase Order prior to posting the variance journal. It merely provides a list of Purchase Order Lines which have variances, and the user can select the ones that need write-offs generated. There is no way to tell within the tool how the resulting JE’s will impact the Variance accounts.

Solution

To surmount this problem, we can create a saved search to identify the POs with variances so that users can review the amounts before posting the variance Journals. A recommended search should use the “Special Account Type” criteria to identify Inventory Received Not Billed account(s) and should summarize by grouping the “created from” fields. See Marty Zigman’s article “Explaining NetSuite’s Inventory Received Not Billed Account” which describes how such a saved search can be used. Prolecto provides the saved search as part of our Financial Saved Search Library (we provide the bundle free of charge to our clients). A well-crafted saved search can mimic the list of POs that the variance tool provides.

2nd Drawback: Trace Variance JEs back to the source

The second drawback with the tool is that the resultant Journal Entries do not have a native link or sublist back to the POs that were the underlying cause of the variances.

Solution

Fortunately, there is a native “created from” value that is linked to the Variance Journal Entries. The tricky part is that this field, although available in Saved Searches, is not a Header Field, and thus is difficult to expose on the Journal Entries. There does not seem to be a way to expose the field on the JE Lines either.

There is a solution, though. We can create a custom sublist based on a saved search and add it to the Journal Entry form so that users can see the underlying POs and variance amounts that the Journal Entry represents.

Step 1: Create Saved Search

First, create a search that will display the results desired on the Journal Entry sublist. The key here is to set “Internal ID” as an “Available Filter”. This will be the way NetSuite’s custom sublist feature understands which results to show on each Journal. The checkbox “available as sublist view” also needs to be checked. See below images for recommended criteria and results.

Step 2: Create Custom Sublist

The next step is to create a custom sublist which can be made visible on the Journal Entry forms. The navigation in the “classic center” view would be Customization > Forms > Sublists > New.

Assign the Saved Search created in Step 1 as the related Search, and select “Journal” as the transaction type to apply the Sublist to. See image below, and see SuiteAnswers Article 10120 for general Custom Sublist guidance.

Conclusion

What I like most about this use case is that it does not require any advanced development work, and is low cost. All we did was combine some native tools with a little customization, and we’ve greatly improved how Purchase Variances are posted. If you’d like to learn more about ways you can combine features to get the most out of NetSuite, I’d be happy to hear from you!