Historical Trial Balance Methodologies Comparison

When handling Historical Trial Balances (HTB) with a Client’s NetSuite environment there are two methodologies we can follow.

1. Net Change

2. Point-in-Time

Prior to following an approach for HTB data migration, users need to understand how Retained Earning is calculated and displayed within NetSuite. Our Retained Earnings is a system-generated account that automatically rolls the prior fiscal year’s Net Income balance into the current year’s Retained Earnings.

Regardless which approach we decide to use during an implementation will need to ensure that client has prepared/extracted the data for us and have provided signoff on the opening balance and at least the first three-month journal entries.

Net Change Approach

This approach is when we would load the opening balances for the first month and after that the remaining entries we import/create will be the net change between Year 2 and Year 1.

With the Net Change Approach, we eliminate the need to create a manual reclassification journal entry for the prior year’s Profit and Loss (P&L) activity to Retained Earnings. In addition, we do not need to recreate any reversing journals with this method.

However, we may encounter some challenges such as a high volume of transactions which can cause an issue when exporting the data from the Legacy System and importing to NetSuite.

Point-in-Time Approach

This approach is when we would load the monthly balances and reverse them in the following month. For example, if we import a journal entry in March 202X, therefore it will be reversed in April 202X.

With this approach, we will need to create an additional journal entry that is prepared at year-end. This additional journal entry takes all the open income statement accounts to be reversed into the Retained Earnings account.

Throughout my own experience of utilizing both methodologies I prefer the Net Change approach due to the simplicity of importing the journals and displaying the data within the financials. It’s an efficient methodology to utilize when importing Historical Trial Balances into NetSuite environments, regardless of if its Production and/or Sandbox.

If anyone has any questions and/or would like a deeper breakdown, please reach out to Esmeralda Vitan (Esmeralda.Vitan@rsmus.com).

Erin OSullivan