Managing your multiple branches and subsidiaries with NetSuite OneWorld
Managing your multiple branches and subsidiaries with NetSuite OneWorld
Managing multiple business units across different locations can be complex and challenging for global companies. With operations spanning various countries, languages, currencies, and legal frameworks, organizations face several obstacles in achieving effective management and coordination. However, advanced tools like NetSuite OneWorld offer comprehensive solutions to streamline and overcome these challenges.
Understanding NetSuite OneWorld
NetSuite OneWorld offers comprehensive capabilities for managing various aspects of multinational and multi-company businesses. It enables effective management of financials, customers, e-commerce, Services Resource Planning (SRP), business intelligence, and tax and compliance. Here is how it helps businesses.
Global Enterprise Resource Planning (ERP):
OneWorld allows for the management of financials by accommodating currency, taxation, and legal compliance variations. It facilitates adjustments at the local level while enabling regional and global business consolidation for real-time worldwide visibility.
Global Customer Relationship Management (CRM):
OneWorld supports the management of complex multinational sales organizations that operate in multiple languages and currencies. It provides global visibility into all aspects of CRM, including quotas, forecasts, sales, customers, partners, support cases, issues, leads, and campaigns.
Global E-commerce:
With OneWorld, businesses can conduct web-based operations globally. It enables creating and managing multi-language, multi-currency, multi-country, and multi-brand web stores within the NetSuite platform.
Global Resource Planning:
OneWorld streamlines the entire lifecycle of your resources, production, and delivery. It facilitates workflows from marketing to production and project management, quality and timely delivery of goods and services, billing, and revenue management, helping businesses drive repeat business from existing clients.
Global Business Intelligence:
OneWorld provides real-time visibility across the enterprise to effectively manage business intelligence. It grants access to financial, customer, and business data on a global scale, supporting multiple levels of consolidated reporting. Real-time dashboards display enterprise-wide key performance indicators (KPIs).
Global Tax and Compliance Management:
Addressing growing regulatory challenges, compliance risks, and complex tax compliance requirements, OneWorld offers robust tax and compliance management capabilities. It establishes a strong foundation for transparency, automation, simplicity, and controls in managing global tax and compliance responsibilities.
In short, NetSuite OneWorld empowers businesses with a comprehensive suite of tools for managing different areas of multinational operations. Its functionalities span financials, customer relationship management, e-commerce, resource planning and management, business intelligence, and tax and compliance, enabling businesses to thrive and meet the demands of a global marketplace.
Subsidiaries in OneWorld - An Overview
NetSuite OneWorld can manage data across a hierarchical structure of individual legal entities or subsidiaries. This structure is organized in a tree-like format, with a top-level parent known as the root subsidiary. Below the root subsidiary, other subsidiaries are arranged in the hierarchy. When upgrading to OneWorld, the existing data in your account is utilized for the root subsidiary.
The sale of subsidiary licenses is based on a per-country and currency combination. In NetSuite OneWorld, you can include up to 250 subsidiaries within your account, which includes the root subsidiary. If your business requires more than 250 subsidiaries, it is advisable to reach out to your NetSuite account representative for pricing details.
Now let’s look at Elimination Subsidiaries and Subsidiary Hierarchy Planning.
Elimination Subsidiaries
In the context of subsidiaries transacting with each other, eliminating the revenue and expenses at the consolidated level is often necessary to exclude the impact of these intercompany transactions. Elimination of intercompany transaction balances is typically required for various reasons, including:
- Sales and services between subsidiaries: When subsidiaries engage in sales or provide services to each other, the resulting revenue and expenses must be eliminated to avoid double counting at the consolidated level.
- Inventory transfers between subsidiaries: If subsidiaries transfer inventory among themselves, the associated costs and revenues must be eliminated to prevent consolidated financial duplication.
- Loans between subsidiaries: Intercompany loans can result in interest income or expenses, which should be eliminated at the consolidated level to present an accurate overall financial picture.
Subsidiary Hierarchy Planning
Before creating subsidiary records, planning the structure of your organization’s subsidiaries carefully is advisable. When setting up each subsidiary record, it is necessary to specify its parent, and NetSuite automatically establishes a hierarchical structure as you create multiple subsidiaries.
To ensure a well-organized subsidiary hierarchy, it can be beneficial to diagram the parent-child relationships. This visual representation should begin with the root subsidiary at the top. Mapping out the subsidiary hierarchy enables you to consider and strategize how to manage and consolidate data effectively for accounting and reporting purposes. It provides a clear overview of the relationships and dependencies within your organization’s subsidiary structure, aiding in efficient data management and decision-making.
Understanding Multiple Currencies in OneWorld
The Multiple Currencies feature in NetSuite allows transactions with entities using different currencies. Your company’s base currency manages its financials, while other currencies customers and vendors use are considered foreign currencies. This feature is necessary for NetSuite OneWorld, where each subsidiary can have its base currency. Check out the following points to better understand multiple currencies in OneWorld.
Currency Records:
When setting up your subsidiary hierarchy, it’s essential to establish the base currency for your main subsidiary and determine the base currencies for all other subsidiaries. Additionally, make sure to configure the currencies used in transactions within NetSuite.
Currency Exchange Rates:
NetSuite utilizes exchange rates to convert foreign currencies into base currencies for transactions. These rates serve as default values and are expressed as the number of base currency units per foreign currency unit. To enable this functionality, you must create a NetSuite currency exchange rates list. Additionally, there is an option to activate the Currency Exchange Rate Integration feature, which automatically updates the exchange rates on a nightly basis.
Consolidated Exchange Rates:
NetSuite employs a separate table for consolidated exchange rates to generate consolidated reports. This table converts the amounts from child subsidiaries into consolidated amounts for the parent-subsidiary.
Budget Exchange Rates:
In reports that involve both budget and actual amounts, such as certain financial statements, a distinct table for budget exchange rates is utilized to translate budget amounts.
Exchange Rate Variance Amounts:
As exchange rates fluctuate, the value of foreign currency transactions can be impacted. NetSuite handles this by automatically computing and recording exchange rate variance amounts for transactions that conclude within each accounting period. Furthermore, before closing each period, it is necessary to revalue open balances to account for any variances.
Tax Features for Nexuses
Advanced Taxes Feature -
The Advanced Taxes feature must be enabled in NetSuite OneWorld. It enables the management of taxes across multiple tax jurisdictions.
Tax Agency Vendors -
Tax Agency Vendors in NetSuite represent the taxing authorities to whom you pay collected taxes. When you create a tax nexus, the system automatically generates a corresponding tax agency vendor.
Multiple subsidiaries can make tax payments to a shared tax agency. When a new subsidiary shares a tax nexus with an existing subsidiary, the system duplicates the preferred tax vendor associated with that nexus. The duplicated tax vendor is then linked to the new subsidiary. This duplication is necessary because a tax agency vendor cannot be shared among multiple subsidiaries. However, it is possible to share non-tax agency vendors across multiple subsidiaries.
Tax Control Accounts -
Tax control accounts are specific accounts categorized under Other Current Liability Accounts, which can be configured in your general ledger. These accounts are responsible for recording and monitoring tax collection and payment transactions.
Tax Types -
Tax types serve as categories that connect tax codes or tax groups and tax control accounts. The selection of available tax types depends on the country associated with the tax code.
Tax Codes and Tax Groups -
Tax codes and groups are essential to managing taxes. A tax code represents a specific tax collected from customers in a particular geographic area, paid to the relevant tax authority. The tax code is determined based on a predetermined percentage rate. Additionally, tax groups can be created to combine taxes from multiple tax jurisdictions relevant to a transaction.
Tax Schedules -
Tax schedules are crucial in calculating taxes on items for different nexuses. With the Advanced Taxes feature enabled, the system automatically generates tax schedules corresponding to each tax code. This allows for customized tax calculations based on the specific tax requirements of different nexuses.
Tax Reporting Periods -
Tax reporting periods can be established to monitor tax reporting independently from accounting periods. In NetSuite OneWorld, these tax reporting periods are standardized across all subsidiaries utilizing the feature.
Key Capabilities NetSuite OneWorld
NetSuite OneWorld offers the following capabilities to strengthen your multinational business with a number of branches and subsidiaries operating in different segments across the world:
- Accounting and Financial Consolidation of all your units and subsidiaries
- Tax and Regulatory Compliance for all business locations, irrespective of the location and applicable regulations
- Customer Relationship Management
- Shared or Unique Web Stores, bringing in cost efficiencies
- SuiteCloud to allow you access all your business data at your fingertips – anytime, anywhere
- Reporting and Search to enable real-time insights and analytics to make informed business decisions.
Cloudio Technologies – Partner in your global business journey with NetSuite OneWorld
NetSuite OneWorld allows you to oversee multiple subsidiaries, business units, and legal entities while providing corporate and divisional leaders with comprehensive insights into various levels of business performance, from high-level summaries to detailed information. You can harness the power of a cloud-based ERP system, eliminating the need for expensive on-premises IT infrastructure and resources and enabling seamless management of both corporate and subsidiary operations.
All this is possible if the solution is implemented efficiently with the help of trusted NetSuite implementation partners like Cloudio Technologies. We are NetSuite consultants supporting clients across various UAE and USA business segments to implement customized NetSuite solutions to address their business-specific needs. With our team of experienced professionals, we impart training to businesses on the effective utilization of the implemented NetSuite software, and we are there to support them in resolving the issues, if any, post-implementation as well.
With NetSuite OneWorld, unlock the full potential of your global business!
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