A/R Collections in NetSuite: What Most Firms Get Wrong

Tracey Wisner
Jul 4
3 min read

Ask any CFO if they trust their A/R aging report and most will say yes. Ask them when they last audited the setup behind it and the room gets quiet.

Having spent years inside NetSuite itself, I can tell you the problem is almost never the report. NetSuite calculates exactly what you tell it to calculate. The problem is that most firms never verified what they told it.

Here are the five issues I find most often when I audit A/R for clients, and how to fix each one.

1. You are aging by the wrong date

NetSuite can age receivables by due date or by transaction date, and the difference is not cosmetic. An invoice issued January 1 with net 30 terms shows as current on January 15 under due date aging and as 15 days old under transaction date aging.

Neither is wrong. What is wrong is when your controller, your collectors, and your lender each assume a different basis. Check your aging preference under Setup, then make sure every saved search and every report your team uses agrees with it. Then tell people. Write the convention down.

2. Unapplied payments are polluting your aging

This is the most common issue I see, and the most damaging to customer relationships. A customer pays. The payment gets recorded but never applied to the invoice. The invoice still shows open, the collections team calls, and the customer rightfully pushes back with "we paid that six weeks ago."

Run a saved search for customer payments and credit memos with an unapplied amount greater than zero. If the list is long, you do not have a collections problem. You have a cash application problem, and it is fixable in a week.

3. Credit memos are being issued but not applied

Credit memos are where good intentions go to sit. Someone issues a credit to resolve a dispute, everyone considers the matter closed, and the credit floats on the account for months while the original invoice keeps aging.

Every credit memo should be applied to its invoice at creation, or flagged with a reason it cannot be. Make application part of the credit approval workflow, not an afterthought.

4. Parent and child balances are hiding the real exposure

If you use parent and subsidiary customer relationships, look at how your team views balances. Consolidated views can hide a subsidiary sitting at 90+ days behind a parent that looks current. Individual views can trigger collection calls on a child account the parent already settled.

Decide where credit risk is actually managed, at the parent or at the child, and build your aging views and credit limits to match that decision.

5. Nobody owns the numbers between the report and the phone call

The report is a snapshot. Collections is a process. In most firms I audit, the gap between the two is ownership. Cash application belongs to one person on Mondays and a different person at month end. Dunning is manual, so it happens when someone remembers.

NetSuite has native dunning capability that most companies pay for and never turn on. Automate the first two touches. Save your people for the conversations that actually need a human.

The quick audit

If you only do one thing this week, do this. Pull your A/R aging summary. Then run three saved searches: unapplied payments, open credit memos, and invoices more than 60 days past due with no collection activity logged. If those three lists tell a different story than your aging summary, your report is lying to you, and now you know exactly where.

The NetSuite A/R Audit Checklist

This is the checklist I work through when I audit A/R for clients. Run it top to bottom and you will know exactly where your aging report and your reality disagree.

☐ Aging basis verified. Confirm due date or transaction date under Setup, and verify every A/R saved search and report your team uses agrees with it.

☐ Unapplied payments cleared. Run a saved search for customer payments with an unapplied amount greater than zero.

☐ Credit memos applied. Run a saved search for open, unapplied credit memos.

☐ Parent and child balances reviewed. Look at balances both consolidated and individually, and confirm credit limits match where risk is actually managed.

☐ Cash application owned. Confirm who owns it, and that payments are applied when cash is received, not held for a batch at month end.

☐ Dunning turned on. Check whether it is enabled, and automate at least the first two touches.

☐ Stale invoices assigned. Pull invoices more than 60 days past due with no logged collection activity, and give every one an owner and a next step.

Need a second set of eyes on your NetSuite A/R setup? That is exactly the kind of focused engagement Cobblestone Group was built for. Reach out at cobblestonegroupllc.com.