Here we’re going to explain what the new functionality includes, and also what additional enhancements can be expected with the 2014.2 release, which is currently being rolled out to all customers.
What is NetSuite’s job costing feature?
Important to any business that is project-based – particularly within the professional services industry – NetSuite’s job costing feature allows you to calculate costs for labour based on tracked time, and account for and report on those costs in your general ledger.
Job costing determines which account project costs are attributed to when time is posted for that project. When an employee enters time worked on a project into NetSuite, the cost of that time is calculated based on the employee’s labour cost and, for example, posting to a variance account which can drive much more detailed project cost reporting.
So what enhancements were made in the 2014.1 release?
Project costing
In NetSuite version 2014 release 1, new functionality was added to enable companies to capture actual labour costs and post them to the general ledger. This gives a general ledger view for the company accountants to review and track costs down to the detail for every project.
The project costing functionality allows companies to determine the type of project being worked on, link this type of project (for example, direct labour) to an account, and post transactions to the general ledger.
These new capabilities further help collaboration between finance and the project
delivery team to identify the most and least profitable areas to capitalise on strengths and address weaknesses. It will also help them quote new projects more accurately, and assist in managing jobs that are in-progress.
Profitability reporting
A new Project Profitability Report enables project managers to assess what has been billed and recognised as revenue, associated actual costs and profitability. Categories defined in project budgeting such as labour, expenses and suppliers can be used for sub-totaling purposes.
Budget vs. actual reporting allows project managers to compare their project and track budgets against actual transactions, including actual labour costs.
What can you expect from the 2014.2 release?
We can expect two new job costing features in NetSuite version 2014 release 2 which will provide greater flexibility and efficiency in project management and accounting.
Intercompany job costing
It is important for organisations with employees that are distributed across different subsidiaries to be able to harness the skills and capabilities of everyone in the organisation.
The new release introduces the ability to optimise resource utilisation by identifying and assigning resources from one subsidiary to another where the resource is needed, and account for cross-charging of costs with intercompany subsidiaries.
The functionality allows automatic transfer of the associated cost of a resource from one subsidiary to another via the posting time function. As an example, when time is tracked by a resource on a project from another subsidiary, the time is posted in the resource’s subsidiary and with closing of accounting period, intercompany adjustment is processed. This enables costs captured within the resource lending subsidiary to be transferred to the resource receiving subsidiary.
Job costing options
NetSuite has also simplified the creation of journal entries by providing the ability to group different time entries – options include classifications, project, employee and more. This reduces the number of journal entries created when using the job costing functionality which makes management easier and optimises the auditing process.
If you would like to find out more about NetSuite’s job costing feature, please don’t hesitate to get in touch with one of our experts.