With NetSuite Expense Allocation, you can allocate:
From one account or from multiple accounts
To specific departments, classes, or locations within expense accounts
From one account to multiple accounts
In this example we’re going to see how we can allocate our rent expenses to the different departments that we have within our organization.
NetSuite has two methods of allocating expenses:
1. Fixed-Rate Revenue and Cost Allocation Capability
2. Dynamic Allocation using Statistical Accounts
In this blog post, we’ll see how to use the Fixed-Rate Expense Allocation method and we’ll have a follow-up post on how to use Statistical Accounts for Dynamic Allocation.
In the Fixed-Rate Expense Allocation method, we define the weightage of each allocation manually.
For example, let’s say we have a vendor bill for our rent expenses for the month of September. On the vendor bill line level, we have assigned one department, the Head Office, to the expense item.
Instead of having multiple expense lines with different departments for the same rent expenses, we can use the fixed expense allocation feature of NetSuite to distribute or “allocate” these expenses to different departments.
In Fixed-Rate Expense Allocation, you need to define the weightage of distribution manually. For example, you can either evenly distribute all expenses across all your departments or you can add specific numbers.
Fig 1: Allocate expenses equally across all departments, Source: Own Representation
Fig 2: Allocate expenses by specific weightage across all departments, Source: Own Representation