In the world of e-commerce, dealing with returns is a crucial (and time consuming) part of business operations. Within NetSuite, businesses have the capability to register returns through the Return Authorization transaction. The follow is done by transactions like Item Receipt, Credit Memo, Customer Refund, and/or Cash Refund. This process covers basic accounting needs by reversing the impact on general ledger accounts for sales, cost of goods sold, and inventory.

 However, this approach comes with a challenge: your revenue account may not accurately reflect your actual sales volume since it’s the combination of sales and returns. To reconcile the sales account, you'll always need to consider return volumes. This is especially crucial in e-commerce, where sales can fluctuate significantly during peak periods like Black Friday and Chinese New Year, leading to corresponding fluctuations in returns.

 Fortunately, NetSuite offers a practical solution to differentiate between sales and returns in your accounting. The tool is user-friendly and meets the standard requirements of e-commerce businesses. By utilizing the functionality of the Sales Return Accounting bundle, any transaction can be reclassified, channeling the accounting impact from your sales account to a designated sales return account. This way it provides you clarity in both business operations and reporting, enabling you to effectively manage and analyze sales and returns data.

 To get it up and running, limited configuration is needed that consists of two steps:

1️⃣ Configure your sales return account mapping

2️⃣ Configure the GL Plug-In

While NetSuite's Sales Return Accounting bundle offers significant benefits, it's essential to acknowledge potential limitations. One notable downside is the lack of support for custom accounting segments. Unfortunately, this means that custom accounting segments won't be considered by the GL plug-in. This limitation can pose challenges for businesses that rely heavily on custom segmentation for their accounting practices. It's crucial for users to weigh this limitation against the benefits offered by the bundle and consider whether alternative solutions may be necessary to accommodate their specific accounting needs.

As with any software solution, it's essential to evaluate both the benefits and limitations to determine the best fit for your organization. For any questions on this topic, just reach out via our website or leave a comment.

Curious about how to do the same for Cost of Goods Sold and related return? I will explain it to you in the next blog. 💥

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