The NetSuite Accountant

Segment Structure Basics in NetSuite

Paul Giese Apr 6, 2020 8:00:00 AM
Paul Giese

intheBlk consulting provides data conversion services for organizations implementing NetSuite. Check out our NetSuite data conversion page to see the options and pricing and our NetSuite implementation resource page for additional help articles.

The segment structure is the backbone of the organization’s financial reporting function. NetSuite’s segment structure is robust compared to QuickBooks and flexible enough to handle most needs. Setting up the segment structure is one of the first implementation tasks. NetSuite segments are general ledger (GL) accounts, departments, classes, and locations. Organizations can also add custom segments.

Setting up a segment structure is more art than science. There is no one right way to set a segment structure, although there are wrong ways to do it!. In general, keep it simple, especially if the organization is growing rapidly. There are several reasons for this:

  • Segments can be changed, so no decision is final. Investing time to get this precisely right when implementing NetSuite isn’t as important as making the segment structure scalable.

Related Article - learn how to build a segment map file from a legacy system to NetSuite. Use the map file to import historical data during the implementation process.

  • Accounting teams often require end-users to code transactions. More accounts often result in inconsistent coding. A best practice is to write simple, one-sentence definitions for each segment.
  • Don’t overuse segments because they can become meaningless if not maintained well. We had a client that had seven segments in their legacy system. Every transaction required a user to make seven coding decisions. This structure can result in a poor user experience and too much data for teams to assess correctly.

Here is my overview of each segment:

  • GL accounts - GL accounts, or the chart of accounts, represent the functional activity of the revenue or expense. The GL account grouping should match how the organization reviews spending. This setup is the most crucial consideration when organizing the income statement. Use the ‘Summary’ option when creating GL accounts in NetSuite. See my blog post on common biotech operating expense structures.
  • Department - Departments represent the cost centers of the organization. We recommend mirroring who the organization’s budget owners are. If there isn’t a budget owner for the department, you might be able to avoid creating an unnecessary department. I also recommend using the department segment to track GAAP expense classifications instead of GL accounts.
  • Class - Classes represent revenue streams within the organization. Classes can also be re-configured for other purposes, such as programs in the biotech industry. The out-of-the-box segments are included as filters on most reports.
  • Location - Locations allow users to track information about employees and transactions for multiple offices or warehouses. For example, you can create sites for the corporate office, sales offices, and warehouses. Most of my clients only use locations if they are using NetSuite’s purchasing module.

With the segment structure finalized, users can then pivot data between the different segments, depending on how the organization reviews their historical financials and budgets. See an example below for a custom report using a matrix-style transaction report.


Building a logical segment structure for your business requires experience and an understanding of the organization to ensure success. If your team is looking for additional help with using NetSuite’s segment structure, contact intheBlk.

Topics: NetSuite, Implementation, Segments