Bitcoins, this is a very repeated concept nowadays, still a big discussion whether this crypto-currency will finally find the acceptance in business and in the markets.
NetSuite, the fastest growing international ERP has included Bitcoin as a Payment Method and a form of currency, not only for company operations but also for eCommerce.
Due to the discrepancies from country to country, the legal use of Bitcoins is still uncertain and should not be treated by the system as normal currency. As I said, for legal reasons, Bitcoin is a form of currency but it is listed as an asset.
Although it looks a bit complex, the development has found a simple way to use Bitcoins by creating Multiple items, for expenses, for paying suppliers, etc.
There are a few customizations to do in NetSuite to comply with legal and accounting requirements. Main set up is duplicating the COGS, Assets and Income accounts for Bitcoin (i.e. COGS Bitcoin) to minimize impact on the monthly P&L. Reports will merge the two COGS accounts mapped this way.
So, NetSuite does support Bitcoin as payment method. The greatest advantage in my opinion is the Mining process. This is, you can not only buy Bitcoins, but you can increase the number of Bitcoins without necessarily buying them. This transaction is made possible and easy through an inventory adjustment. The process for selling Bitcoins is very similar but on the receivable side. So YES, you can pay and get paid with Bitcoins easily.
The value of Bitcoin is changing wildly over time due to currency exchange rates, but also to changes on the blockchain processes and over the last months due to the speculation on the Bitcoin split, therefore it is necessary to adjust the value of this and other crypto-currencies before paying.
The easiest way in NetSuite would be to perform an Inventory Worksheet on the Bitcoin item allowing you to keep the balance at zero between the Income and the COGS and reset value at a specific date and thus leverage the average cost.
A key step is to create a new Account to hold the adjustment value that should be named as Profits(Losses) for Bitcoins account. The Profit/Losses account for Bitcoins can be monitored in order to evaluate currency fluctuations and the value on a specific date thanks to a simple saved search. The last accounting requirement to balance the previous scenarios is a Journal Entry at the last day of the period debiting the amount to the Inventory account and crediting the Bitcoin Profit(Losses) account with a reversal date on the first day of the next period with the Defer Entry box unchecked.
NetSuite has developed a way to make use of the crypto-currencies. Nowadays it is only described for Bitcoins which is the most regulated cryptocurrency and holds 80% of the value of all the digital currency combined.
In my opinion, the big discussion about the confidence in Bitcoins is coming to the end, Bitcoin has split into two currencies, creating the Bitcoin Cash to make this digital money more usable and therefore better designed to hold a higher number of transactions in the future, in addition a very important event occurred in March 2017, the value of a Bitcoin, at $1,268, exceeded that of an ounce of gold ($1,233) for the first time. Finally, the acceptance in the businesses environment after NetSuite gives the possibility to work and trade with Bitcoins, so just missing the acceptance from the capital markets to become a currency with all the legal rights, it might be a matter of time but until then make sure you implement NetSuite to be able to work with Bitcoins!
Is your ERP ready? Contact us if you have NetSuite ERP and want to include cryptocurrency for your financials.
