Best Practice for Reclassing General Ledger Account Segmentation

What is Segmentation in Netsuite? Segmentation or classification are ways to categorize entity (Vendor, Customer, Item) records and transactions amounts in NetSuite.  For instance, you may want to see your Income Statement separated out by Location; Location will be a classification field on your transactions.  There is native reporting function that will automatically break up your Financial Statements in segmentations.  

NetSuite has a couple ways to classify transactions.  Natively, there are 3 classification segments: Department, Location, and Class; you can rename these classifications to meet your business needs.  You can also create Custom Segments; Custom Segments allows you to addition classification segments to add to your transactions and entity records. 

How Do You Reclass Amounts to Different Segmentation 

From time to time, you may need to allocate transactions or general ledger balances to different categories of your segmentation.  For instance, in the example below, you need to move expenses from Class: Industrial Electronics to Class: Computing and Peripherals.  The best practice is to go back to the original transaction and change the segmentation at the transaction level.  However, there are cases where that level of detail change is too time consuming.  In which case, you may decide to use a Journal Entry to move the balances.  

Best Practices for Reclassing Amounts to Different Segmentation 

As mentioned, the best practice is to change the segmentation at the transaction level.  This will ensure the reporting will be updated correctly.  You will need to open closed periods to make edits to transactions.  When using Journal Entry to move balance, it is very important to move amounts with all the appropriate segmentation.  See above screenshot.  This Journal Entry is moving amounts between Class but need to make sure both the debit and credit have the other segmentation.  If amounts are moved without all the related segmentation then you will double count the amount at segmentation level.  See example below.

Example: 

• Assumption:  2 segmentation types -  Department and Class
• What we are moving: amount from "Class: Industrial Electronics" to "Class: Computing and Peripherals"

Correct Way to Move Segmentation

• Action: Journal Entry
  • Credit: 
    • Department: Sales 
    • Class: Industrial Electronics 
  • Debit:
    • Department: Sales 
    • Class: Computing and Peripherals 
    * Note: all classifications remain the same except for Class
• Result: Income Statement 
  • If choose Department view, no change to the amounts 
  • If choose Class view, you will see the amount move from one class to another 

Incorrect Way to Move Segmentation

• Action: Journal Entry 
  • Credit: 
    • Department: Sales 
    • Class: Industrial Electronics
  • Debit: 
    • Department: [Blank]
    • Class: Computing and Peripherals
• Results: Income Statement
  • If choose Department view, you will see amount from Sales to No Department column. This is not the correct behavior. You only want to move Class without impacting how the other segments are allocated.
  • If choose Class view, you will see the amount move from one class to another.

To fully assess the right segmentation strategy for you, please contact us.  We are happy to provide an initial assessment.

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