Defining Cost Tracking Strategies for Use in NetSuite OpenAir

Accurately and effectively running your professional services organization involves a lot of financial management and reporting. One of the keys to ensuring accuracy and profitability is proper cost tracking.

It’s the word “proper” that can be the sticking point. Cost tracking and reporting are far more than timesheets and simple bill rates. Expenses, third-party purchases, variable bill rates, target bill rates, overtime – all of these contribute to costing and can be a complex and nuanced element in running your PS organization.

If you’re using NetSuite’s OpenAir as your professional services automation solution, you have a lot of options to help you understand and track costs. But, using those options is tied closely to your business’s cost strategy. To get the most out of OpenAir’s cost tracking features, you need to define the strategic elements and consider them in the context of your PSA.

Cost Types

So, if cost tracking isn’t just about timesheets, what is it about? The answer to this question involves identifying the appropriate cost types you use and how they apply to your business and will be the foundation of your cost tracking strategy and how you’ll set up OpenAir.

There are three main cost types to consider.

Labor costs: It’s true that cost tracking for a professional services organization isn’t just about timesheets – but labor costs are largely part of it. However, labor costs can be a lot more nuanced than simply an hourly rate. They can include variable rates for both full-time resources and contractors, historical rates, target billable rates, and so on. OpenAir offers a variety of ways for logging and reporting on these different labor costs and rates.

Expenses: While travel expenses haven’t been prevalent in the last year, there are still other project and customer-related expenses that need to be tracked and accounted for. In OpenAir, costs can be attached where needed, including to customers or projects.

Third-party expenses: While it’s an easy one to forget about, third-party purchases and expenses are as important as the first two categories. Whether it’s equipment rental to complete a project, legal fees, or a more substantial purchase that requires a purchase order, these costs must be considered as a part of your tracking strategy as well. The purchasing module for OpenAir is separately licensed but provides options like Quick POs and full purchase order process support for tracking these kinds of expenses.

Bundling Costs

There are a few ways to bundle costs together for clarity and reporting within OpenAir. The first is using a cost center. The second is tracking at the user level. There are valid use cases for each of these methods, and both can be implemented in OpenAir by using tags.

Cost centers typically come from timesheets and receipt entries. Using a cost center within NetSuite OpenAir requires setting up a tag aligned with multiple objects in the platform. These cost centers can be assigned to users, clients, projects, tasks, and more, and rules can be set up to define a hierarchy for cost assignment. For instance, when a user enters time, you may want that assigned first to a task, but if there is no task, then assign it to the client, and so on. We provide more detail on configuring cost centers in our webinar; Cost Tracking Approaches with NetSuite OpenAir.

Alternatively, costs can be bundled, creating a cost center using user entity tags. These custom tags within NetSuite OpenAir have date parameters, allowing for present and previous cost values. Unlike the previous method, these can only be used at the user level. They are handy if you only care about the user’s costs or costs for the user’s department but have no inheritance and are only available at the user level. Again, we dive into deeper detail in our webinar on how and when to use user entities for cost centers.

The Role of Roles in Cost Tracking

Role-based access to cost tracking information is a crucial element that can be missed when you’re planning your strategy. Because access to cost information is needed to run some reports in OpenAir, role and access governance also need to be part of your strategic planning.

OpenAir offers three cost levels. This provides protection around more sensitive information, like salary-related cost factors, while providing a mechanism for more generally available cost visibility.

The level one – or primary costs – for a user reflects the more highly sensitive data information and should be restricted to those who typically have access to HR-type information, like salaries. For instance, you may want to restrict access to this level of cost reporting to directors and above.

Another level, such as level two, could then be used to provide a more abstracted or blended rate for project or client cost reporting. This level could then be made available to project leads and project managers.

This is key when it comes to reporting. If a project manager doesn’t have access to some level of cost information, they won’t be able to view some of the reports within OpenAir pertaining to project costs. At the same time, it’s unlikely that you’ll want project management staff to have access to specific salary information. OpenAir’s cost levels make it possible to protect that information while still letting your teams do their jobs.

Clear cost tracking and reporting rely on establishing the right policies and procedures for your business and then using your PSA to facilitate tracking and viewing that data. Like with many elements of OpenAir, costs are a customizable and flexible facet of your PSA that you can adapt to your organization’s particular needs. Setting your strategy is just the tip of the iceberg. We discuss leveraging OpenAir for cost tracking in greater detail in our webinar; Cost Tracking Approaches with NetSuite OpenAir.

If you have questions or need assistance defining your cost tracking strategies and implementing those in NetSuite’s OpenAir, Top Step can help. Whether it’s with our best practices and quick tips, our recent webinar on cost tracking, or engaging with us to get your cost tracking configured and aligned with your professional services, Top Step has extensive experience and knowledgeable resources that can help you get the most out of OpenAir.