SC Corner E3: Everything an SC should know about closing the books

I'm Becca Smith, a solution architect at NetGate. I'm a CPA and started my career at Deloitte in their business Tax service Group. My legendary co host, Chris Miller is our VP of Product Strategy at NetGate. He was at NetSuite for over six years, solutioning with some of their largest enterprise clients. He's a CPA and has served in roles such as controller, director of finance and cfo. So let's jump in and tackle today's topic. Okay, well, excited that you get to join us today. Adam, you were a controller in NetSuite. You've got audit experience so you've really got a good background. So we're excited to kind of have you on the show.

Awesome, thanks. I'm glad to be here.

Yeah, perfect. Well, I think we're going to be talking about the close process today because you guys both worked as controllers and so you've actually closed the books before, right?

Yes, yeah. And I think it's an interesting contrast between the two of us. So I worked for a couple of different publicly traded mining companies here in Denver. Here in Denver. We're in Lehigh, in Denver. And then Chris, you worked for a large private company, a private equity backed company. Right. So kind of a different emphasis on, I mean we were heavy controls related and I think yours was more, I would, I would guess more operational, operational.

Management, reporting and a lot of times what did you do with our money?

Yeah, so, yeah, yeah. So I guess with that. So you have all kinds of different backgrounds with closing the books, but you both actually have experience of going through this kind of like monthly close process. So I guess what are some of the key aspects that you have to like if you're a client looking to get netsuite, what are you looking for when you say what do you have to close the books?

So that's a good question because we, I don't know about your experience, Chris, at NetSuite, but when I was at NetSuite, so we were part of the Finance center of Excellence in and we would typically sit in on demos where there was a heavy focus on accounting like deep accounting functionality or finance functionality. And so this question would come up a lot when we were in the room and oftentimes especially with the newer scs, you would see they would get excited and they would say, yes, I'll show you exactly how to close the books in netsuite and they would go to the close checklist in netsuite and quickly go through, you know, the different areas that you can shut down the foreign currency adjustments and locking down the rates, and they'd be really excited to show them. And then the prospects would typically kind of give a blank look and ask a few questions about, can I modify that schedule? We do other things, can we add that into the list?

And it was always such a set, like five things that you can go through, but then there's no flexibility around it.

Exactly. And so that was always the answer. No, no, no. Right. And so it opens up a big question like, what is the close? And why is the close checklist not kind of a sufficient close for month end for accountants? And so as controller, like we. This like dates me, but we used to have a binder, a physical binder that we would, we would create a new one every month. Wow. And a big part of the binder, it was really our reconciliation binder, which is one key aspect of the close. And so we would, we had Excel spreadsheets, we had other systems we were using, and then we were using QuickBooks, and then we moved on to JD Edwards for a general ledger. And so it was interesting how so we would take the reconciliation is you take the detail in those spreadsheets or third party systems and you would compare the balance in those systems to what you have on your general ledger. And so we would actually print out our general ledger. We would print out the documents in Excel or third party systems.

Like a truth, Like.

Yes, yeah, yeah, yeah.

Originating location of whatever actually happened.

Exactly. We would print those out and then we would three hole punch them, put them in, and we had a cover sheet with the balances. We tick and tie and sign off on it. And then the CFO would sign off on it as well. And so we had that like, as a control to show that, yeah, the subledger equals the general ledger. And we even had subledger systems inside of JD Edwards that. And it sounds weird being in the NetSuite ecosystem, but the JD Edwards subledger didn't always equal the general ledger. There were issues that could crop up, batch posting errors and things like that.

That happens in netsuite too. Right. You go and you look at journal entries sometimes and they're not posted. And so then you get like the inconsistencies.

Yeah, that's. That's a good point. Like fam, you can have differences, but between the FAM subledger and the general ledger. Yeah. So anyway, that's the reconciliation side, and that's a key control for us as a public company. I would imagine a large private company would go through that Process as well.

Yeah, we would do recs a lot less frequently, but it was mainly because we had what I call the intergalactic spreadsheet of all of our clothes. So we had, you know, almost 100 subsidiaries that had to have, like, the same things, you know, done to them. And so we'd have, like, assignments and things like that. And it's funny that you would say that, because I probably use that phrase probably 5,000 times over the NetSuite, but when the SC would have that confused look, like, that's not what I want, I would say to help them out. Be like, you're looking for the intergalactic spreadsheet, right? That helps you get it done. And they're like, yeah, that's what I'm looking for.

And you're talking about, like, both a task list and the reconciliations and like the tick and ties that you're doing all just in one location.

Yeah, exactly. And we did fewer tick and ties mainly because we would. We didn't necessarily have the. The man the resources to do that, and we weren't public at the time, and the. And the private equity group didn't necessarily require that, but we had to do all kinds of reporting that kind of, in the course of doing all this variance reporting, you ended up kind of reconciling in the sense that every line you pretty much had to explain. And then we drill through and people like, what's this charge? So you'd have to be prepared to explain it.

Right. Well, that's like going through and having to look at your list of transactions saying, like, everything over a certain dollar amount you need to explain essentially.

Exactly Right. And so kind of we focused on kind of that third pillar of the flux analysis. That's really where I spent most of my time, instead of like on the Rex, but, you know, when you're public, you need all three. And, and as we have grown, as we had grown, you know, the. The company is still a NetSuite customer today. They do all of this stuff, you know, and there's no way around it. They've just reached that level of complexity where it needs to be, where they have to do the wrecks, the close process, the audit, everything, you know, and it's a.

It's a major undertaking and we've kind of hit on it. There's a few areas to the close, like key pillars. So one is the reconciliation. And I think it's interesting that Blackline, that's kind of where they were born, was in the reconciliation. So what we were doing in the binders Blackline. And this was of course during, like when, when SOX came out in 2004, it, it was a bigger issue. And having the binder, an electronic signature is so much more valuable from a control perspective than having these just manual signatures inside of a binder done. The timestamp, I think, anyway, I'm not sure why, why, but the people like digital signatures. And so Blackline allowed you to do effectively what we did in that binder in their system. And so you could do a system, you know, you'd of course export your gl, you'd export or import your information from these spreadsheets or whatever subledger data you had. But then you could do the digital sign off in Blackline. And so they kind of hit at an interesting point in time where SOX was going live. These controls were far more important post SOX than they were before. And so Blackline, its roots come from that reconciliation process. So that is one of the key pillars, I think, to the close are the reconciliations. The second is tasks. So every company's different. Every company has, it's always unique.

Like I feel like every company has a different set of tasks that they're going through and it's always in some Excel sheet or in a Monday.com or they've got it external somewhere and sometimes it's just like a sticky note that everyone has on their desk.

Exactly, exactly. And I think about like Net Gain and what we did internally, right. And that was, it was more sticky notes and like we've got our credit card transactions, we got to settle, we've got any accruals we need to book. Like there's, there's different things that we need to do to close the books. And, and so that goes on the task checklist and you can do an Excel spreadsheet. But a lot of these tasks are, have dependencies tied to them. And so Monday.com or, or more, you know, specific software like Flo Cast, I believe Blacklane has. So you can take and build this out almost like a container construction project where you've got to do certain activities. So you've got to close AP before you book your bad debt. Or sorry, it would be your, you got to close AR before you book your bad debt expense accrual. Right. Like your estimate for bad debt against that. So there's a sequence that you have to follow. And with that task, like with a proper tool, you can properly sequence it. So you know, you may be doing the accrual, I may be closing out ar, but you can't start till I'm done. And so you'll get a system notification that I'm done, so, you know, you can properly start your next phase. But, yeah, the task checklist is another key pillar, and then a third key pillar is the flux analysis. And that's what we'll throw out, really, what we're looking for, like transactions that are booked in error. So we can look and see what the variance is period over period. And as you're explaining, you can dig in and see what the. Is the underlying detail, and that. That it really helps with the accuracy of the financial statements. So I'm sure you did a lot of that with all these hundreds of subsidiaries.

Yeah, it was a bunch. It was a bunch. And, you know, the funny thing is when you talk about the binder, I was thinking back, and I remember that because I didn't do the public accounting route, I was like, one of those people that went right into industry. And we had These auditors from EKS&H come in, and they were like, chris, we need your rec binder. And I didn't have any idea what they were talking about. I was, yeah.

Well, I feel like sometimes, like.

Yeah.

Oh, man.

Yeah.

Yeah.

I feel like sometimes it's like an sc, like dealing with clients. That's how you feel when they talk about the clothes process. You're like, I don't know what you're talking about.

I was like, rec binder. I was like, I can go make you one real fast. And literally, I thought they just want me to print the stuff out. And so it was a funny thing. You know, I had to really catch up on that piece because when. When they were taught, you know, I was like, all right, well, let's sit down and talk about it. But essentially, you know, the audit is. Basically, it's a balance sheet audit because the, you know, in the industry, you focus so much on the P and L, but the audit, it's all about the balance sheet, and the P and L is really just the changes. So I never thought of it that much from that perspective. And so going in through that was, like, kind of the first time. It opened my eyes to, like, you know, this is the. The. The really important thing.

So with those kind of reconciliations that you're doing, then you are doing it with, like, a bunch of different subsidiaries at once. Right. So you're tracking all of this at the same time. Sorry, you can. You can keep going with what you were saying.

Yeah. And so, you know, as we. As I learned, kind of it was important. You know, the CFO there, he, he, I was like, why are we doing this? And he's like, well, he says, let me just give you some really good career advice. He said, the skill that travels across all the places is understanding how the balance sheet is built and how it, how it's constructed and how you make sure. He says, you can find all kinds of people that are bookkeepers, basically tracking revenues and the ins and outs. He's like, the skill that travels is being able to manage a balance sheet as a cfo. And I, I took that as a like really good. I was like, okay, then, you know, and, and his name is David Walter and he had done some really smart things. And I was like, okay, so I'm going to learn from that. And that kind of set me off on this path to figure all this stuff out and bring it in, you know. But the hardest thing was, and Adam and I were running this at NetSuite and we would kind of tell people is in the early days, a really well run close checklist needs to look a lot like a project. If you're a good project manager, you do that. And so like a lot of people kind of just hack something together because they don't really have the skills. And so what we would do is when people would say, okay, the see would usually be like the intergalactic spreadsheet. I don't have one of those. And then that's where lots. We would come in and be like, okay, this is how you would do it in netsuite, using like the project management module. Because you could, because. Oh, that's interesting.

Yeah, yeah. We have seen people use the project management module for tasks. Yeah, yeah.

Cause you want to do that in there.

And then because native netsuite does have tasks as well. It does, but it doesn't. It's just not connected right. To anything else.

I'd love to get Adam's thoughts on this. What we ran into is Project manager is kind of like the beginning. It's like project management principles, but in the close it runs a little different. Like when, if we were running a consulting project, we'd have these day like when we're doing implementation, you got to hit this task on this date and here's the dependencies and you got to deliver it. But in a close, everything's like a relative date. You know, it's a day plus one depending on this thing. And I want to move as much as I can into the pre close. Well, I don't do that.

On holidays and weekends impact your days, your specific days. Yeah.

That's why our tasks are developed. To be able to be offset by work calendar.

Exactly, exactly. Yes.

Project management principles. But then you have to apply the right kind of filter or lens against that to make sure it really resonates with what you need for a. An accounting close checklist versus one to build a, you know, a consulting project.

Which is where I think for a bigger organization, one with multiple subsidiaries around the world, and as they try to close it, it may make sense to build that out in using NetSuite native projects where. But it would take some effort every single time. Yeah. It wouldn't roll forward. So you'd need to. To build those days in and the dependencies in. But if you're big enough, I think. I think it may. May justify spending that kind of effort to build it out in projects if you don't have another close tool, which. Which gets to, I think, the last kind of point in the close. So there's the flux. It's interesting because your point is, right, the balance sheet is the most important. And then you get into the flux, which is it catches a lot of errors. Between those two balance sheet reconciliations and a flux, I feel like you capture the majority. And I always worked. It was interesting. Your cfo, I had a CFO that I worked for that talked about. There's a scalpel account accountants, and then there's chainsaw accountants. And I think in the real world, in the big leagues, it's chainsaw accounting like that we're dealing with. Right. To go through every transaction and make sure every single one was booked. Exactly. Right. For a lot of organizations is an impossible task. And so you look at the top level to make sure it's, you know, that you're. You're comfortably directionally correct. And the flux does. It goes a long way that way. And so then the last piece, though, I think the last pillar for close are these closed controls. And so now we come full circle back to the closed checklist, because some of those items on the closed checklist represent close controls. So now you can lock down.

Right. Going through looking at your currencies and doing your elimination journal entries. Those are more on the control side. Right. To make sure that everything's consolidating correctly.

Yeah. And then locking down the general ledger at the end of the day. Right. Getting it all locked down.

Making it so you can't post in prior periods that your numbers are locked so that you're not running into issues.

Yeah, yeah.

And the right way to think about when NetSuite does like that the accounting period checklist is. It's. It is. Is not necessarily that, because you can't. It's too. It's too big. You can't use lock, AP lock, AR to manage your cutoff because as soon as you do that, you need an inventory transaction that hasn't been reconciled. You got to open it back up. And so you have. There's a difference between managing cutoff that requires a specialized tool. Maybe we'll talk about that. But the way you should phrase it or think about it is that's the checklist necessary to lock down the NetSuite database for the month. It's more of an IT thing. And.

Yes, I call it like system lock.

Yeah.

And then I call it like the more granular version, like a soft lock that you're able to, like, use as you go through the steps of the close.

Exactly. So it holds like the thread. Three kind of big key things. The consolidation is really its main purpose because you want to do that right before you lock down the books, because usually you don't know the currency till the end of the month. And that's really. Its job is to make sure that someone doesn't close the period without running their consolidation algorithm. But that's basically not the checklist. It's really the place where you run the consolidation algorithms to do it. And so it's kind of misnamed and you need something that says, go to the consolidation tool and. And execute it.

So critical.

But yes, but a smaller piece, like when a client comes and says, what do you have to close the books? Like, that is a very small piece of what they're asking about overall.

Yes, exactly. So I don't know. So we've talked about the close. There's different tools available for the clothes.

Yeah, we've mentioned a bunch of them, so we should probably mention ours.

Yes, yes. So we've got Netclose, that's built for NetSuite. Right. Native and addresses obviously all aspects of the close. FLO Cast is another one that I think is big in the NetSuite space. And then there's Blackline. You're kind of the expert in this space. What are the different tools? What are the strengths and weaknesses that you see? Sure.

If you talk about the ones with like, say, the most market share, the one who clearly has the most mental market share would be blackline, mainly because they've been around the longest and they've been doing it and they have really tended to Focus on larger corporations.

I would say I think of Blackline and I think of like Fortune 500 public.

Yeah, yeah. I mean, the majority of where they find their business is SAP. SAP is their big partner and they are the closed tool for SAP. The reason why is because SAP kind of runs more on that legacy general ledger module. When you run an SAP thing, you have all these sub ledgers, you know, your sales subledger, your procurement subledger, and those all have to be summarized now into the general ledger for the reporting. And now you have to have a tool that their primary purpose. Like a lot of times in a netsuite, when we talk reconciliation, a lot of times we're trying to find that, yes, it matches, but then we also want to find, you know, we move pretty quickly to the explanations and we can have a lot of this automation that says, yep, the detail and the general ledger match because it's all kind of in one place. But in SAP, you spend a lot of time making sure that those posting rules have happened properly into the general ledger, that it ties to your subledger. And so that's where they will do a lot of time. And then other things that Blackline will do is like prepaids and stuff like that. They call them their templates and then you'll book the journals back in, but they become the place to manage kind of all of those.

They're giving you the journals that you're then going and posting in the system.

Yeah. And a lot of times what Adam, Nate and I will talk about is there's this. Nate's got a cool triangle, but you've got kind of like you're managing your cash at the base level, you know. Yeah. And then, and then you've got your transactions kind of like the accruals. But a lot of what we're doing here is to essentially bring what we're just measuring in transactions into like this actual GAAP rules that we have and, you know, adjust everything. And so that's kind of what, what their templates are meant to do or anything we do. And then.

Well, so, so that's. It's interesting that SAP with the inherent limitation like having the sub ledgers in the general ledger and the need to tie those together, that they're relying on a third party system. To be fair, I think almost everybody relies on a third party tool to execute those reconciliations. In the close workday, though, you, you worked over at workday for a little while. They're one of the few that have brought it into the Core, right?

Yeah.

What do you see?

Yeah, absolutely. So when you think of like SAP, like Oracle Cloud is really the same. They call it subledger accounting. They operate off the same general principle. But workday and netsuite actually almost came from like the same thought, you know, that that Evan had and Anil must have had at the same pretty close. And so in workday there aren't this concept of the traditional subledger either. And so you can very quickly identify things that are in it. And then what they've done is build a close tool essentially around all this. So they do the account reconciliations, they do the certifications, they have a close tool built in that because they've, what they look at is the way over with them. They really want to be kind of what is for the office of the cfo, we're the, you know, where are the tools. And Sometimes it's funny, NetSuite can be very transaction based because of their ERP nature on inventory movements and things like that. So we tend to like go from the bottom and kind of come up. Well, Workday is much more of a just financials and so they're more of a top down. So when they think of things like this that's they want all of that to really be in the financial system. So even though they have bought some other things, it's tended to be around planning and budgeting or these other ancillary things. But the core thing of management reporting, making sure that you've got the close done the whole quarter report, they want that done in the core financial system because for the same reason it would, it's great to have it done in netsuite when all the information is in one place, that's the ideal place to do it.

And that's what's interesting with when you get to. So a traditional close tool, you export your general ledger. Now there's integrations I'm sure, and there's things that make it, make it a little bit more eloquent. But you're pushing data into the close tool from your efp, you're pushing the GL data and then your spreadsheets or your third party tools, you've got to push that data into the close tool as well. And then so you've taken it in the case of fixed assets is easy, right? You've got fixed assets in NetSuite and you've got your fixed asset balance in NetSuite. You got to kick both of those out to a close tool, do the comparison and then bring them back in and then, yeah, certify it out there. And then if there's any adjusting entries or whatever, you push them back in. It inherently feels like the wrong place to be executing the close. And so it's interesting that Workday has recognized that and brought it into the core so that it can all be executed in one place. And that's like what we feel strongly about with Net Close is it executes the close inside of NetSuite instead of pushing it out to the third party tools.

So one that maybe in the NetSuite world they don't work with a lot, but as I've been on the outside of the Netsuite ecosystem that comes up is like OneStream. And now OneStream is still kind of its own. You know, it's not necessarily an erp, it's not running transactions. But what they do, one stream has.

Its roots in Hyperion.

Right?

Yeah.

Founders of Hyperion.

Okay. So then they moved and created a consolidation engine is what their core is.

Right. And what they do, they.

That I.

And they work with ERPs like Netsuite.

Yeah. So what. What they do though, that I think is really good is like if you look at a lot of the other kind of quote unquote close tools, there are none of them do like, like reconciliations or flux is more like a reporting or even task management. What one stream is doing that I think where they're kind of stepping into this where you could only do it like say like in a net close. It's part of the RP is they're reaching down and saying what functions for record to report could we do in our system to be complete. So they do consolidation, they do planning and budgeting, they do lease accounting, they do tax provision, they do, you know, on top of all of these things.

They do reporting, meaning they would Effectively treat the ERP solution like NetSuite or Intact or whatever's running underneath. They would treat that as almost like a sub ledger. Right. That is bring that data in. They would impose some top side journal entries to adjust it and get it ready for consolidation and gap reporting. Right? Yeah, at the top level. And close is part of that.

That's exactly right.

Stack then.

Yep. And so they become that stack and it's a really great for. So for companies that have like multiple ERPs or something like that or different systems, it's actually very compelling because most of the time that consolidated view exists only in a data warehouse or you know, the analytics people will do that. But the analytics people are not the same as the Financial close people. You know, you can have graphs that are great, they run sales, but that's not my consolidated view of the financials I have to produce.

But when the auditors come, the auditors hit one stream and not that is, I mean they would drill down obviously for supporting data, but like the auditors would hit, everything they need is in that location.

Going back to what we talked about, the balance sheet is in one stream. All of the adjustments to the balance sheet are in the one stream. And the audit trail of everything they did to get there is also there. So it's, it is. And so, you know, they find themselves doing more and more actions that you might traditionally do in an ERP that would belong to the accounting department for month end.

But the issue coming back using OneStream is an example. But bringing it back to NetSuite, obviously NetSuite's a very robust system and if you don't have other general ledger tools, I, I think you wouldn't need one stream. Right. You can embed a lot of this stuff inside of NetSuite.

Oh yeah.

And you close the books and consolidate all inside of NetSuite while booking these topside entries.

So one stream is doing, you can essentially do in netsuite.

Exactly. And I think that's the power power of netsuite. I think it's an untapped, the untapped capabilities that netsuite has. I don't think a lot of people.

Use that as well.

I mean you could even, you could even use NetSuite if you were running other ERP solutions. I've seen clients that have started with, you know, they'll have like a US operation and then they'll have a bunch of international operations and they'll start implementing NetSuite in either the US or even a small international sub. And then they'll just roll in the data from these other ERP tools into NetSuite and use NetSuite as a consolidation engine. And so with some of these apps that you can embed inside of Netsuite, including Netclose, you can effectively replicate what OneStream is doing at, interestingly enough, at a fraction of the cost. OneStream is really not even Fortune 500. OneStream feels like Fortune 100. Like they're. Well, it is very high performance tool.

The funny thing is OneStream for the most part exists only as an on premise. Like they do have a hosted version, but the hosted version doesn't. You, you can't access like their Excel reporting and things like that. So there are quite a few limitations. Now like everyone, they'll get smart and they'll improve that. But you know, as it exists today, you know, it's still very. It's a very much non cloud based tool.

So.

So you.

But it's a true statement to say that like if you're looking for something like one stream, we can create that for you inside of NetSuite.

Oh, there's a such there. That is the, the great untapped horizon of netsuite. Is it becoming this close tool and where you could even bring in data for multi erps. Like, like. I mean I, you know, when we're at the fc we had. There's several large customers that bring in their foreign subsidiaries.

You know, got all the foreign currency consolidation rules. Yeah, yeah. Multi book even. Right. That you can apply inside of NetSuite.

Exactly right. You bring in the raw trial balance and NetSuite essentially now do the remeasurements and the translations and then.

And then all over the world in the sense that you would still be maintaining books for the foreign subsidiaries externally or you're bringing everything into netsuite. Running netsuite as the full year in a dream world.

You would want everything to be inside a netsuite however, because that's where the bigger the footprint, the more powerful nuts it becomes. And there's nothing you can't do in one stream inside a NetSuite if you have it. You know. But there are lots of countries where they're seeing. France is one. There's always this local French dude who wants to. Yeah. That wants to run it in his system.

So when you're, when you're doing a demo and they mention a French subsidiary, I. Yeah.

Just like just know that that one might have to be external.

It's a mess. Yeah, the French, I remember doing French demos with you, Chris. And anyway the French do accounting a little bit different.

I've run into it where they, they have their own set of rules and they would like everything to be in their own set of rules.

I love France too. Like it's nothing against France. I love like the food, the. But accounting I could do without.

I got enough clashes. I swear if I go to the border they're going to detain me. Somebody has put something out on you.

But ask a lot of why, why, why? You know, that's, that's an interesting question. Why would you guys think about even doing that? Yeah, they just do it in France.

Yeah, yeah. And so, but that's a good example, Becca. You'll bring in the data at whatever level detail from what they're doing. Maybe it's just trial balance, maybe it's trial balance plus some detail. It all depends. But then that could come into netsuite then and do all of the close functions there inside of.

That's where you're then able to use like net close to make sure that you're taking a tie and everything. You're going through the list of going and pulling off that data correctly and putting into your system and in this case and then going all the way.

But it's even more like you could so pull in just a trial, like a simple trial balance. And then you can run your YouTube, your consolidation using, you know, with the form PACS. Right. Bringing that in, you can book topside adjustments, fixed assets or like lease accounting, whatever you need to do to, to get your GAAP financials. And then we have clients that use.

Like our leasing software where they're doing their France books externally, but then they're still doing IFRS 16 leasing and so they bring that trial balance into NetSuite and then they do all their leases for that French subscriber. Are you still inside of netsuite?

Yep.

Yeah, exactly.

Yeah, exactly. And this is where even the, the drag and drop becomes really good because in that case we bring the, the trial balance. You'd still bring over the sales ledger in an Excel file and drag it, bring it into netclose so you have the detail with the reconciling items to the trial balance that you just loaded. Yeah, so it's, it becomes.

Anyway, these are the deep thoughts. This is what we think about before we fall asleep at night. I do think that OneStream has got a great, like a great, you know, the product's on prem. There's obviously faults with the product itself, but like the idea that it's going is. Yeah, I really like that idea and I like the ability to use NetSuite for that. I agree that it's an undertapped utilization of NetSuite, but so I guess just.

To bring it back kind of more a little bit high level, we've obviously gone into the weeds on this like, because I would say one of the things that I hear when it comes to NetSuite is oh well, NetSuite doesn't use subledgers, so you don't need to do reconciliations. And so how. But.

I think the truth behind that comment is is NetSuite doesn't have sub ledgers. And so, so the actual transactions are what get summed up onto the financial statements, onto the Balance sheet. And so there is a truth that there's no batch posting errors, there's no issues between the subledger and the GL that you would get with some of these legacy systems with SAP. Those are real issues that go away with the use of NetSuite. But practically we make these adjustments in Excel. Like your fam entries may not equal what's in the general ledger. Right. And even beyond all of that, your auditors are still going to ask for the reconciliations. And so it's like how do you.

Modernize accounting towards this idea of you don't need to have a subledger while still giving auditors what they need?

So the answer to that question is obviously you don't need to print out the binder anymore. There's the different tools that are out there have these auto reconcile, auto reconciliation, the certifications I think is what Workday calls it. But the way that would work just in that close is you pull the GL balance and then you pull the underlying detail. The system will pull that right month over month and if it matches, it'll auto certify it. So the process doesn't go away. But it can be completely automated so that you don't have to go in as the accountant and actually touch it.

Takes care of like 90% of your reconciliations essentially by saying like, hey, that sub ledger in quotes. Right. Does tie to the gl.

Yeah. So as you modernize, like talk about modernizing accounting, what that effectively looks like is you're reducing the number of manual reconciliations that you have to intervene on. So in a perfect world you can automate 100% of it and there is no process. Right. But you still have, it's still been executed. It's just you didn't have any manual.

Rev rack, you know, when ASC606 came in. What do we have? We have a revenue arrangement that really represents the revenue, if you will, on the report. And then we have revenue recognition. Journal entries have to come in. Well, now we have a revenue sub ledger of revenue.

And it's funny that all of these kind of relate to one single concept where you have a transaction with a value on it and then you have the accounting treatment that is very different. You bought a truck and now you've got depreciation entries after the fact. Right. Rev recs the same lease accounting is the same. And where you've got that timing difference, you really do need that sub ledger worth of detail, right?

Absolutely, absolutely. And so and this is only get bigger, like, you know, all of our apps we build on the platform, but you go through suiteapp.com now and you could look. And even the ones that NetSuite's building.

Their latest release app is going to essentially create a sub ledger.

And since that's where all the innovation is coming from, that's what's going to.

Continue to be bigger and bigger.

Yeah.

But full circle back to your point. Even with these sub ledgers and, and becoming more and more common inside of NetSuite still.

That's why the reconciliation tool is side.

Of the system still. Yeah, this still doesn't require any intervention at month end and you can automate.

That process, which really just gives you the flexibility to continue to add additional suite apps. So that way you can really get your accounting correct inside of the system. But you're still not like expanding on your close process.

And it increases the value, I think, of having embedded apps inside of NetSuite because then you can do that auto certification process. Yeah, yeah, yeah, yeah, yeah.

I love that. Well, I think that was excellent. It was probably longer than normal and.

I'm sorry, I tend to.

No, it's great. I mean, we covered what a close actually looks like, what it looks like when you're the ones actually closing the books and what matters. And then we covered kind of the different systems that are out there and kind of how they all work together and Then also what NetClose can do inside of NetSuite and how NetSuite really applies that idea of a reconciliation. So I think that's great.

Awesome. Thanks for having me today.

Yeah, a lot of fun. Thanks for coming.

All right, well, I'm Becca Smith and I have been joined by Chris Miller. Thanks for listening to SC Corner. You can listen to us on any of your preferred streaming services or you can always look up our products at NetGain Tech.