netsuite

Zuora NetSuite Integration - An Overview

Overview

The Zuora NetSuite Integration (aka Connector) is an optional solution that leverages the core capabilities of both the Zuora and NetSuite applications. Zuora manages complex subscriptions and NetSuite is a hosted General Ledger (GL) System.

Features

Zuora NetSuite Connector combines Zuora's subscription billing capabilities with NetSuite's ERP/Financials solution with bi-directional integration across every core application module to seamlessly combine the two applications.

This solution is a pre-defined, out-of-the-box integration that synchronizes transactions between the two applications. Zuora provides NetSuite Connector customers with an integration console in the Zuora Billing user interface which is used to set up the integration, control and monitor the synchronization of data, and view any error or success logs from the synchronization.

Integrating Zuora with NetSuite allows you to use Zuora's applications to:

  • Manage complex pricing and packaging models
  • Align charges with existing subscriptions
  • Consolidate billing
  • Streamline renewal patterns

Advanced Pricing Configuration

Configure any type of subscription pricing, packages and bundles (including one-time, recurring, usage and metering charges, volume tier pricing, and overage pricing) to link Zuora's Product Catalog and NetSuite's Item. For example, simple or complex subscription pricing can be configured in Zuora, such as a cellular phone plan or a data plan with usage, and synchronized to NetSuite's product catalog (e.g. items in the same hierarchical structure).

Customer Account Mirroring

Synchronize Customer Accounts, Billing Accounts, and any customer account hierarchies to provide a single view of all customers whether the data is in Zuora or NetSuite. For example, an address change in Zuora is synchronized with the corresponding account address in NetSuite (and synchronized from NetSuite to Zuora).

Bi-Directional Payment Operations

Manage the Invoice to Cash process in either Zuora or NetSuite with the two-way integration of Zuora Payment Operations with NetSuite's Accounts Receivable module. For example, a customer is issued a refund in Zuora when a subscription is cancelled and the refund is applied to the appropriate payment in NetSuite.

Revenue Recognition Integration

Manage revenue recognition by mapping Zuora's subscription details, including revenue recognition codes, trigger conditions, revenue start dates and revenue end dates to NetSuite's revenue recognition templates and Advanced Revenue Management Module.

Subscription Metrics

Drive key business decisions by using Zuora's subscription metrics, such as Contracted Monthly Recurring Revenue, Total Contract Value, Renewal Rate and Churn.

NetSuite customers can leverage NetSuite's cloud ERP/Financials solution in mixed cloud application environments, including using the Zuora CPQ solution which seamlessly connects Salesforce CRM and Zuora's subscription commerce platform.

Deciding to Use NetSuite Connector

Use NetSuite Connector to solve the following business problems:

  • You have are using NetSuite for one line of your business, but you want to leverage Zuora for subscriptions
  • You have customized NetSuite for subscriptions, but you have reached the limit of the NetSuite customization
  • You are using QuickBooks and want to upgrade your accounting system.
  • You want to have all transactions in your general ledger for a full reporting view in NetSuite.
  • You want NetSuite to handle your revenue recognition.

Recurly for NetSuite Integration at a Glance

Recurly for NetSuite

To optimize your subscription business and get the most out of your customer data and other metrics, you need strong financial reporting that adheres to compliance guidelines. Financial reporting for subscription based-businesses presents unique requirements as these metrics have an emphasis on customer-centric data such as customer renewal rates, churn and lifetime value.

Recurly merchants can seamlessly integrate their billing and subscription data from Recurly with their accounting and financial data through our new integration with NetSuite, a leading cloud-based business software for accounting and ERP. Through this integration, Recurly merchants can effectively and accurately manage recurring revenue data using NetSuite’s best-in-class, automatic, GAAP-compliant revenue recognition and standard financial reporting.

Requirements:
The NetSuite integration is available to merchants who are on the Recurly Enterprise pricing plan.

In order to take advantage of the integration, merchants need the following functionality enabled within NetSuite:

  • NetSuite ERP
  • Revenue Recognition Module
  • Sandbox Account (for testing and verification of data)

Sync Details:
The Recurly/NetSuite integration is a one-way integration which syncs the following records between Recurly and NetSuite:

  • Plans, Add-Ons, and Setup Fees
  • Customer Accounts
  • Invoices
  • Transactions
  • Credits

The process runs every two hours by default, and will sync any records that have not yet been synced between the two systems.

The following diagram details how records are integrated between the two systems:

Plans, Add-Ons, and Setup Fees

Once plans, add-ons, and setup fee records are integrated with NetSuite, they will be Non Inventory Items for Sale in the NetSuite product catalog. From there, merchants can assign Deferred and Recognized Revenue accounts against each product so that when invoices are integrated, revenue will be recognized appropriately.

Customer Accounts

Customer accounts within Recurly are integrated with the Customer and Contact record types within NetSuite. Merchants can utilize NetSuite reporting to aggregate their financial records by customer once this information has been integrated.

Invoices

Invoices in Recurly are integrated with Invoices in NetSuite. The header information will be defined based on the NetSuite configuration of each merchant. The line level information will define revenue recognition rules: the periods that are defined on invoices within Recurly will populate NetSuite revenue recognition schedules that will drive revenue recognition. Merchants have the option to manually edit.

Transactions

Transactions within Recurly are integrated with Payments and Refunds within NetSuite. When a payment is integrated to NetSuite, it will close the accounts receivable on the invoice to which it is associated.

Credits

Credits in Recurly are integrated with Credit Memos within NetSuite. As with invoices, this will utilize the built-in revenue recognition functionality within NetSuite to properly recognize revenue and handle accounts receivable.

Custom Fields

Because every NetSuite implementation is different, Recurly is able to integrate with custom fields that a merchant has in a NetSuite. This customization can be defined during a conversation with the Recurly team.

Setting Up Zuora Connector for NetSuite and NetSuite ARM Module

The intent of this article is to outline the steps associated with setting up Zuora Connector for NetSuite Bundle in NetSuite and the NetSuite Advanced Revenue Management Module.

The assumption is made that you've decided on using NetSuite for Revenue Recognition as opposed to Zuora's RevPro offering. This is generally a finance team choice as to what system to use; do you prefer to see the deferred revenue and downstream reporting in NetSuite or Zuora? If NetSuite, the high-level configuration steps are below.

Steps Outlined:

1. Install the Zuora Z-Suite bundle in NetSuite. Bundle Id (12071)

2. Setup the Z-Suite Bundle according to Zuora's Knowledge Center Steps listed here.

3. Update the NetSuite Revenue Recognition Field Mapping

4. Finish configuring NetSuite Advanced Revenue Management Module

It is as simple as associating the revenue field mappings with the fields that are populated when invoices syncronize from Zuora to NetSuite.

  • Zuora Services Start Date => Start Date
  • Zuora Services End Date => End Date

How do I recognize revenue with Z-Suite and without NetSuite ARM?

Overview

Zuora powers the revenue recognition used for the Z-Suite integration to NetSuite.

Many of the hardest challenges for revenue recognition are managed by Zuora, including the proration and calculation of the revenue recognition start and end dates.

Zuora has robust functionality where you can define a Revenue Recognition Code per Charge in the Zuora Product Catalog.  Each Charge can also have a separate revenue recognition trigger date that can trigger revenue such as a recurring charge to start when the Service is activated.

Z-Suite has extremely powerful revenue recognition capabilities and powers all the information NetSuite needs to build the revenue schedule.

This article explains how you can recognize revenue using Zuora Z-Suite.

Solution

In the Zuora Product Rate Plan Charge, you can define the Revenue Recognition Code, which equates to the name of a Revenue Recognition Template in NetSuite.

You can also define the type of Revenue Template you are using in NetSuite:

  • Standard templates: These templates take the invoice item amount and recognize it over the revenue recognition start and end date.
  • Variable templates: These templates are used for percent complete revenue recognition when you use NetSuite Projects.

Z-Suite supports both standard and variable Revenue Recognition Templates. And since these are on every charge, you can have one charge in a rate plan use a Variable Template and another use a Standard.

Variable Revenue Recognition

Variable Revenue Recognition is primarily used for milestone-based revenue recognition for projects, such as a fixed-price project.

When using Variable Template, the NetSuite Project Code entered on the Zuora Subscription is used as the project. If this field is not populated, the invoice will not be synchronized to NetSuite - so the recommended best practice is to create the project in NetSuite first, which will give you the needed project code.

When Variable is selected as the NetSuite Revenue Recognition Template Type and the NetSuite project is populated on the Zuora Subscription, the invoice will be synchronized to NetSuite using the Revenue Recognition Template and in NetSuite, the Revenue for the Invoice Item amount will be placed on hold.

In NetSuite, you can track the project, enter milestones and take the revenue off hold and recognize it.

Standard Revenue Recognition

Standard Revenue Recognition uses the start and end dates entered on the Product Rate Plan Charge.

You can define the Revenue Start and End Dates when you define your product catalog and automatically populate these dates based on what is entered on each subscription (Contract Effective, Service Activation, Customer Acceptance). 

For the NetSuite Revenue Recognition Start Date, you can select either the Charge Period Start or the Rev Rec Trigger Date.  This means you can use the standard start date from the charge or use one of the delayed dates that you define as your revenue recognition trigger. This is standard Zuora functionality as described in How do the invoice and revenue recognition triggers work in Zuora?.

For the NetSuite Revenue Recognition End Date, you can select Charge Period End or the Subscription End Date. The Subscription End Date is often used when you want to recognize a one time charge over the subscription term.

Examples

If you want to recognize each invoice item using the charge service period, which is common for straightforward recurring revenue, such as quarterly or annual billing, you would set the following:

  • NetSuite Revenue Recognition Start Date=Charge Period Start
  • NetSuite Revenue Recognition End Date=Charge Period End

If you want to use delayed revenue recognition where you invoice on contract effective and trigger revenue on either the Service Activation or the Customer Acceptance, you would set the following:

  • NetSuite Revenue Recognition Start Date=Rev Rec Trigger Date
  • NetSuite Revenue Recognition End Date=Charge Period End
  • Revenue Recognition Trigger=either Service Activation Date or Customer Acceptance Date

Z-Suite will automatically create the invoice in NetSuite on Contract Effective Date and will put revenue on hold in NetSuite if the Service Activation or the Customer Acceptance is not known.  When these dates are entered, Z-Suite will automatically take the revenue off hold in NetSuite.  Pretty cool stuff!

If you want to recognize a charge, such as a one time, using the subscription end date when you have to recognize a one time or professional services fee over the life of the subscription and not the service period, you would set the following:

  • NetSuite Revenue Recognition Start Date=Rev Rec Trigger Date or Charge Period Start
  • NetSuite Revenue Recognition End Date=Subscription End Date
  • Revenue Recognition Trigger=either Service Activation Date or Customer Acceptance Date depending

Z-Suite will use the subscription end date as the revenue recognition end date and you can use this feature with delayed Rev Rec as well.

So, there it is. Z-Suite has extremely powerful revenue recognition capabilities and powers all the information NetSuite needs to build the revenue schedule.

All-in-one Systems: The simple case for why you should always consider the source

Customers often come to us and ask, "are there any better billing systems out there? I hear billing system xyz really solves all of our problems."

Our simple answer to that question is to consider the source. Are you being sold something or is someone offering their unbiased opinion?

The Unbiased Approach

After having worked with and evaluated Recurly, NetSuite Billing, GoTransverse, Salesforce Billing, and all of the other systems in between, each will sell you on their fancy kitchen, gold-plated faucets and all of them will fail to deliver in some area. It's their job to sell you on their solution.

The important consideration is: what billing solution will get you 80% to your goal without having to build your own billing engine and which solution will allow you to scale without re-work.

As unbiased as we are, we still have not seen anything that compares to how far evolved Zuora is and the breadth of their solution. We may have had a different tone prior to their acquisition of RevPro as revenue recognition is a key element of the subscription business model.

Will we recommend Zuora every time? No. Will we recommend other solutions? Yes.

There are a few arguments out there from the platforms such as Salesforce and NetSuite that offer:

  1. We are an all-in-one system
  2. Our platform scales with you

The first argument is a fair one for customers with simplistic needs; however, most businesses aren't simple and the way they want to price and package isn't either. This was a common marketing tactic back in 2005-2010 where productized integrations were still on the horizon but not as evolved as they needed to be to make disparate systems scalable. NetSuite called it 'the hairball'. Salesforce called it whatever they wanted and people bought it.

Fast forward to 2018, integrations are productized and scalable; integration platforms are a common way to get all of the functionality you need in addition to the customizations that matter when you need data to flow seamlessly from system-to-system.

The second argument is also outdated. All systems, integrated or not, will take work to have it scale with you. Period. To think that a system like Salesforce can be 'out-of-the-box' and a company can scale on it without major work is irresponsible. No matter what solution it is, disparate or not, it will take significant work and iterations to grow a business on a business system.

LeadTo has focused on Salesforce, Zuora, and NetSuite as it is the most evolved cloud business system bundle with the most flexible and extensible integration points. It allows customers to choose systems that are excellent (not just ok) at what they do without compromising user adoption and the needs of the business.

Arguably, Salesforce is the best at CRM, Zuora is the best at Billing, and NetSuite is the best ERP.

The next time you are sold, "yes we can do that", it will benefit you and your organization to do the deep due diligence needed to choose the best systems for your business.