Anchor Group Podcast: Episode 19
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Podcast Transcript:
Caleb (00:00)
On episode 19 today, I go into wholesale distribution for NetSuite. I talk through the order-to-cash process, procure-to-pay, inventory management, a little bit of WMS, accounting, and often the integrations needed for getting sales orders into NetSuite in the first place. So whether you're someone looking at NetSuite for the first time or already live on it and just want to make sure it's set up the right way, this is going to be an episode for you.
I'll verbally walk through all the core processes in this particular industry and some of the notable features I’ve noticed people needing to add on or start implementing in future phases.
Coming into this podcast episode, Michael, today I’m wearing flannel. It’s flannel Friday for me. Being in the Midwest, it’s our common apparel. And you know what? When I was working in distribution and in the warehouse area—during my manufacturing days too—this was common apparel then as well. So it kind of matches the whole topic today.
Michael (01:02)
Even in Minnesota, flannel is not off-limits in the summertime. Even if you’re hanging out outside—I mean, our offices are cold, right? So it’s totally fair game in the upper Midwest.
Caleb (01:09)
Well, it’s been July. Even when it’s humid, flannel is still appropriate.
Let’s get into our first topic today. We’re going to cover a few things. I’m going to talk through the order-to-cash process, inventory management, the procure-to-pay process, and some accounting—what the controller and accountant might need to know. We’ll probably touch on a bit of the supply chain side and demand planning.
Very briefly, we talk a lot about B2B e-commerce on this podcast, but we won’t cover it much today. We’re mostly going to talk about the back office—those backend processes that NetSuite helps solve—and some of the related software that integrates with NetSuite for most of our customers. Probably 80% of our clients are in wholesale distribution and manufacturing, or pretty close to that range.
It’s a topic we’re constantly helping people implement in both e-commerce and ERP. So that’s what we’re going to cover.
The first part I want to cover is: where does it all begin? I always like to start with sales. Everything starts with sales. So we’re going to start at the sales order.
There are a few different ways a sales order might get into NetSuite. That’s the beginning of the order management process. It might come in through a phone call—very common in wholesale distribution environments where you’ve got sales reps taking calls or receiving emails with the purchase order attached. I’ve seen a few clients here and there still get faxes. That’s really rare nowadays, but it technically still exists. Those are the three primary manual ways I usually see in the distribution space.
There are a couple of other areas too, through integrations. The other two main methods for getting sales orders into NetSuite are via EDI—if their customers have an EDI requirement—or through an e-commerce website. Surprisingly, a lot of companies in wholesale distribution haven’t evolved much in terms of technology. They may still be using ERP solutions from 10 or 20 years ago and definitely aren’t using e-commerce platforms.
They’ve been struggling, and their customers and vendors are likely pushing them toward modernization—telling them they need better technology to stay competitive.
That pretty much covers how orders get into NetSuite. Now, at Anchor Group, we implement e-commerce solutions along with everything I just talked about. It's important to know that NetSuite handles the inputs of a sales order from all of these areas. That’s the first step in this process.
Michael (04:18)
Quick question for you, Caleb. How does PunchOut Solutions fit into that? How often are you seeing that in the wholesale channel?
Caleb (04:27)
That’s a good point. PunchOut could also come into play at this stage. You’d have a PunchOut solution that brings in the order right at this point too. That happens in some parts of the wholesale distribution space, but only in certain industries.
I see that more often with larger distributors—maybe they have government clients or serve much larger distributors while they themselves are a smaller entity. Those larger distributors often require a PunchOut solution. So it really depends on your industry and whether your customers are asking for that.
All the order-entry methods I described are pretty comprehensive. About half of them are going to be manual—like a phone call or an email—where someone is logging into NetSuite, going to the customer or creating a new customer record, and creating a sales order. They’ll add line items and quantities.
NetSuite already has price levels and customer-specific pricing. You’ve got SuitePromotions and other built-in functionality to make sure the correct pricing defaults in as you add lines to the sales order.
After that, the sales order will show whether you have quantity available. “Quantity available” is your actual stock minus the committed inventory. Once the sales order is approved—assuming you use an approval process—that inventory becomes committed, and your new total available quantity is updated in NetSuite.
If you have e-commerce integrations, like Amazon, eBay, or your own direct site, that updated inventory level gets synced with those channels. It’s not just what’s in your warehouse—it also subtracts what's already been committed to orders.
If you don’t have inventory available when you approve the sales order, two things can trigger: you’ll need to procure inventory that isn’t in stock. In the distribution space, that usually means either a dropship or a special order.
Let me describe the difference. A dropship means your customer needs an item that you don’t have in stock. So for that missing quantity, you go to your default vendor—you may have multiple, but typically there's a default—and you send them a PO. They ship the product directly from their warehouse to your customer.
A special order is very similar, but the shipping method is different. In this case, your vendor ships the items to your warehouse so you can consolidate them and send everything to the customer in one shipment from your own location. That’s the difference between dropship and special order in an order management context.
Michael (08:29)
Caleb, I have a question for you on that. Both processes seem similar but different. My question is: is the process, in its entirety, manual? Or within NetSuite, is there a way to automate it so when that flag is triggered, automation kicks into place and you don’t have to manually go through so many steps? How does that work?
Caleb (08:56)
You don't have to manually create the purchase order if you're out of stock. The way NetSuite works—or can be configured to work—is that when there's a need for a dropship or a special order, it will automatically trigger the purchase order. That demand is generated without you needing to manually track everything.
You can have it appear in a feed for your procurement team, showing all the inventory demand that needs to be fulfilled from current orders, including dropship requests. Or you can have it automatically notify the vendor with a purchase order and ask them to proceed. That’s the main way this process works—mostly automatic—and you can even take it further with enhanced workflows. So it's pretty straightforward.
Michael (09:51)
Yeah, that's helpful.
Caleb (09:52)
So now, at this stage, ideally you've either told your vendors that you’re dropshipping or placing a special order. But what about the inventory you already have in stock? At that point, you go through the pick-pack-ship process. You can also just mark it as shipped. There's a record in NetSuite called the item fulfillment record. This is a GL-impacting transaction, and the beauty of a full ERP—versus something like QuickBooks—is that your accounting is live and updated throughout the order management process.
When a sales order comes in and cash is received, it hits your GL. When inventory is fulfilled and shipped, it automatically reduces that inventory from your books and updates your GL as well. These are automatic transactions, which gives the accounting team real-time data.
Now, focusing back on operations: I’ve got a sales order, and I need to go pick these sales orders. So I have a list of everything that needs to be picked. That’s tied to the item fulfillment record. At this stage, the warehouse team has a dashboard showing all orders pending shipment with inventory in stock. They go pick the products.
They’ll look at the list and see something like, “Product A, quantity of three, located in this bin or location in the warehouse.” They pick it, pack it, and mark it as shipped. Some companies with lower volume may skip the individual steps and just immediately mark it as shipped to complete the fulfillment. So there are a few variations.
There’s another layer to this beyond what I just described—that’s the more basic pick-pack-ship process in NetSuite. When you’re doing higher volumes, it makes sense to add the NetSuite WMS module or integrate a third-party WMS that connects with NetSuite. Either way, they all interact with the same item fulfillment record—just through different user interfaces and with additional features.
WMS gives you more robust scanning functionality and things like put-away strategies. For example, you might want full cycle counting. Now, you don’t need full WMS to do inventory counts—you can still use an inventory adjustment worksheet right out of the box.
When we help someone evaluate NetSuite, I always try to put myself in their shoes and figure out what they actually need right now. For wholesale distributors under $20 million in annual revenue, advanced inventory management—without the full WMS module—is usually enough.
Advanced inventory management gives you reorder points, serialized and lot items for traceability, bin and location tracking, and the basic pick-pack-ship process. The full WMS adds that next layer of high-volume handling—put-away strategies when receiving products, cycle counting beyond simple adjustments, and more advanced scanning features for picking, packing, and verifying that everything's in the shipment.
That added functionality becomes valuable when you're handling larger volumes. But for a company doing a manageable number of fulfillments per day—maybe multiple pallets per order, 20 pallets total—it’s often more than enough to stick with advanced inventory.
It really depends on volume. I always make sure to explain the difference between advanced inventory and WMS, because if I don’t, people often assume they need the full WMS. But at least 60% of the time, once we talk it through, they realize all they need is advanced inventory management.
And that saves them a lot—on licensing, implementation costs, and unnecessary complexity. It’s important to go in phases and educate along the way. So, a lot covered so far.
Michael (14:44)
That's right. Now, quick question for you, Caleb, on that. You just talked about when a company might not need the full WMS solution. But when should they consider upgrading? If a company doesn’t have WMS now and they’re wondering when the right time to move to a full system is, what are some red flags? What should they look out for in their business that signals it’s time to consider WMS?
Caleb (15:21)
It’s a little hard to pinpoint exactly, but if you're already live on NetSuite and using that pick-pack-ship process, you know what your current workflow looks like. Once you start realizing it's taking too long, and you're doing high enough volumes where scanning would make a massive difference—then it's probably time to consider an upgrade.
For example, if you're a $20 million business shipping a lot of $50 to $100 orders, that’s a very different scenario from someone whose average order value is $10,000 to $30,000. In wholesale distribution, it’s more common to have a much higher average order value. That’s why many companies have dedicated sales reps taking phone calls. If you had reps entering $50 orders, your margins would be wiped out just from paying their salaries.
So the big differentiator is order volume.
Michael (16:27)
What I hear you saying is that if revenue starts to get impacted because of how much time it's taking the warehouse to manage everything, then it's probably time to add the WMS solution—to upgrade.
Caleb (16:43)
Yeah, that's right. And ultimately, I'm going to ask a lot of questions to figure out whether the NetSuite WMS module or a third-party solution is the best fit. Don’t be afraid of third-party solutions—there’s real value they can provide, and we often guide people through that evaluation. I'm a big fan of evaluating two to three WMS options before making a selection, and I’ll walk clients through that process if they ask.
So we’ve now gone through some of the core order management flow. I didn’t really talk about the cash piece yet. In wholesale distribution, it’s most common for customers to be on terms—which means you haven’t collected any payment upfront.
That said, there are cases where you do collect payment at the time of the sales order. If there's a credit card or bank info on the customer record, or if payment is collected when the order is created, you can input it right then. The most common outcome is that it creates a cash sale linked to the sales order—meaning you've received the payment.
Now, let’s say your customers are on net 30 terms. In that case, the sales order goes through the fulfillment process first. Once fulfillment is complete, it’s ready to be invoiced. You can invoice directly off the sales order. There’s a table that shows all sales orders with the status “pending billing.” That status reflects where the order is in the process.
For example, the sales order goes from not approved → approved → pending shipment → pending billing. Once fulfillment is complete, it moves into that “pending billing” status and shows up in the list of orders ready to be invoiced. Then you create the invoice and send it out.
Now, I’ve seen people copy the invoice PDF and manually email it from Outlook. That’s something we really try to fix. It’s very common post-Go Live because people do what they’ve always done. But during managed services, we always address this.
You can modify the PDF templates in NetSuite—down to the HTML and FreeMarker level. In some cases, the data you want to show isn’t available on the invoice, so we’ll use a workflow or even a script to move that data onto the invoice so it prints properly.
There’s also an option to email the invoice within the body of the email instead of as an attachment. Both methods are available—it just depends on your preference. But I always recommend sending the invoice directly from within NetSuite. That’s best practice.
Most payment processors we advise integrating with NetSuite support invoice-level payments. That means you can include a payment link on the invoice. When your customer receives the invoice—whether as a PDF or inline in the email—that link allows them to pay directly. I like to automate this to save your AR team time.
If the customer doesn’t pay on time, there are a couple of core tools you can use. NetSuite has a Dunning module, which manages follow-up sequences for overdue invoices. But honestly, a lot of companies handle this manually—and it’s a waste of time, especially when you’re dealing with dozens or hundreds of invoices.
Even without the Dunning module, you can set up a simple workflow. That’s what we did in our own NetSuite environment. It sends recurring reminder emails from a specific employee record, with slightly more assertive language as the invoice gets closer to or past due. Just gentle nudges.
So if you’re a client getting those emails—yes, the language escalates a bit—but it’s just a workflow, not an actual person sending those manually. It’s a great way to keep people on track.
From there, the customer pays the invoice. If they use the “click to pay” link, most integrated payment processors will automatically create the payment record and tie it to the invoice—so it’s reconciled right away. This saves the accounting team a ton of time.
If they pay by check, then you receive the check and manually create a payment record. You go to the invoice, select “create payment,” enter the amount, and note whether it’s partial or full.
What I just described is the full order-to-cash process.
A little bit wordy, but I wanted to go into detail.
So, moving into the next topic—let’s touch a little more on the procure-to-pay side. We briefly discussed it with dropship and special orders, but what about reorder points?
Advanced Inventory Management, which comes out of the box with most wholesale distribution editions of NetSuite, includes basic demand planning. When people say “demand planning,” they usually mean reorder points.
There is more advanced demand planning—like time-phased or seasonal forecasts based on historical procurement data—but when someone is going live with NetSuite, we’re not diving into full MRP or material resource planning. We’re just setting up reorder points.
During item record setup in NetSuite, we configure things like landed costs and proper costing—but also: what’s the reorder point? That value tells NetSuite when inventory available (after subtracting committed stock) drops below a certain level.
Once it hits that threshold, NetSuite alerts the procurement team to order more. It calculates how much needs to be ordered to reach your desired stock level again.
That means the procurement team doesn’t need to manually analyze inventory every day or every week—they’ll automatically know how much of each product to buy and can generate purchase orders accordingly.
It’s incredibly helpful because if you get this wrong, you end up tying up a lot of cash in inventory that doesn’t match real demand.
Michael (25:18)
Yeah, and then when you do go count up your inventory, the resets can be a little bit harsher, right? Because eventually you realize you’ve over-purchased over the weeks or months.
Caleb (25:34)
Yeah, I’ve known people who’ve spent millions and millions in POs they didn’t realize they needed. Their demand plan was off, they made a big mistake, and now they have to go sell all this inventory with their cash completely tied up. It can really damage the business financially if you make a mistake on your purchase orders.
Okay, so on the procure-to-pay side—we’ve generated our purchase orders either based on demand or as standalone POs for new products we’re offering. Those then need to be received. There’s an item receipt in the warehouse, which moves that inventory onto your books. You’ll also get an invoice from your vendor that you have to enter into NetSuite as a vendor bill.
NetSuite has a module called BillCapture, and there are a number of other AP automation solutions for NetSuite that use OCR to extract invoice data from emails and automatically create vendor bills. The ROI here depends on your volume of vendor bills. As a rule of thumb: if you’re doing fewer than 20 a week, it’s manageable manually. But if you’re doing more than 20 a week, you probably want an OCR solution to streamline the process and keep payments on schedule.
At that stage, NetSuite offers something called three-way match, which ties together the vendor bill, purchase order, and item receipt to ensure everything aligns. That’s really the full procure-to-pay process, with the vendor bill being the final step that initiates payment to the vendor.
We're making it through! I’ve got one last topic to cover today, and I’m going to briefly touch on the accounting side. I've hinted at a few accounting aspects throughout the order-to-cash and procure-to-pay processes—like creating invoices and receiving payments from customers, or receiving vendor invoices and paying vendors. Accounting is woven throughout.
Michael (27:32)
That's right.
Caleb (27:59)
One thing I haven’t mentioned yet is the bank feed SuiteApp, which allows you to reconcile your bank transactions. It’s compatible with a large number of banks—something like 14,000. When we’re setting up a new NetSuite environment, we always double-check the list to ensure compatibility. There are some small, local banks that might not be compatible, but there are third-party apps—very affordable, usually just in the low hundreds—that can enable compatibility.
All major national banks are compatible, and having those bank feeds helps tremendously with reconciliation.
So, we’ve really covered the main processes now. Of course, NetSuite includes chart of accounts, multi-subsidiary entities—you can have one NetSuite instance, toggle between subsidiaries, roll up financials to a holding company, and segment your data using custom segments, classes, departments, or locations.
There’s a lot of financial power in being able to manage your books in NetSuite—especially for multi-entity businesses. It’s much easier than juggling multiple QuickBooks instances and logging into different environments. With NetSuite, it’s all consolidated. You can even handle intercompany transactions and automate them if needed.
Say your wholesale distribution company is the vendor for a sister company—NetSuite can handle those intercompany accounting processes. You can run journal entries as needed, manage expenses, and integrate expense management tools with NetSuite’s records.
It’s a very robust system. We’ve done other episodes comparing QuickBooks and NetSuite, and dug into the pros and cons in more detail there.
So, that was a lot of me talking, but I think we covered it.
Michael (30:29)
That’s okay. It’s all good information. And if you’re someone in the wholesale distribution industry thinking about using NetSuite—or already using it—I think a lot of this could be really helpful. What it shows is that NetSuite is an incredibly powerful tool with a lot of built-in capabilities these companies can leverage. And on top of that, there are modules you can add to build out your ERP infrastructure the way you need.
Caleb (31:10)
That’s right. Whether it’s during implementation or post-Go Live, we’re helping our customers every step of the way—setting things up and optimizing as their business evolves. A lot of people think once they’re live, they’re done. But if your business isn’t evolving, your processes probably aren’t either—and that’s not a good sign.
Yes, we train our customers, but they get busy. That’s where we step in to give them the bandwidth and expertise they need. We have deep experience and a strong internal knowledge base, which helps us paint a picture of what’s possible. We bring a fresh perspective to help clients make great strides in automation and efficiency, even if they’ve already been live on NetSuite for a while.
I love solution design—thinking creatively, thinking outside the box, and helping clients through that process. And I know our entire team across our Midwest offices enjoys that work, too.
So, we covered everything we needed today: order-to-cash, inventory management, some WMS insights, procure-to-pay, and accounting. I think that wraps it up nicely for this episode.
Michael (32:30)
That’s right. You did a great job explaining everything—thank you for that, Caleb.
Caleb (32:36)
No problem. Looking ahead to upcoming topics, I know we’re going to be talking more and more about e-commerce. I’m sure a lot of people in wholesale distribution who are considering NetSuite—or already using it—are looking to take their e-commerce to the next level, or even get started for the first time. We’ll keep having those conversations because e-commerce is one of the key channels for wholesalers and distributors to break into—and one they’re often behind on.
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