This article was originally published on LinkedIn.

Most business problems don't announce themselves. They accumulate.

A small data entry habit becomes a reconciliation backlog. A process shortcut becomes an inventory mystery. A reporting delay becomes a cash flow surprise. By the time these issues surface in a board meeting or audit, they've already done damage — to accuracy, to trust, to the time your team spends fixing what should have been caught months ago.

The pattern is almost always the same. Someone knew something was off. They flagged it, or meant to flag it, or assumed someone else would handle it. Weeks passed. The small problem became a medium problem. The medium problem became the reason your controller is working weekends before close.

The good news: NetSuite gives you the visibility to catch these problems early. The platform is built for transparency. The data is there. The reports exist. What's often missing is the habit — a regular rhythm of review that catches small issues before they compound into expensive ones.

This isn't about becoming a NetSuite power user. You don't need to run your own reports or master saved searches. But you do need to know which questions to ask, which signals should prompt a deeper conversation with your team, and what "normal" looks like for your business so you can recognize when something's drifting.

The Real Cost of Late Detection

Before diving into specific red flags, it's worth understanding what's actually at stake.

Late detection costs you in three ways.

Direct financial cost. Errors compound. An unreconciled bank account doesn't just mean uncertainty — it means potential fraud has time to hide, duplicate payments go unnoticed, and cash forecasting becomes guesswork. Inventory discrepancies don't just affect one order — they cascade into overselling, emergency purchases, and expedited shipping costs to cover mistakes.

Operational drag. Every problem that festers becomes a fire drill eventually. And fire drills don't just consume time — they consume attention. Your best people end up working on problems that shouldn't exist instead of improvements that create value. The team that's constantly fixing yesterday's issues never gets ahead.

Credibility erosion. This one's harder to measure but arguably more damaging. When your board sees restatements, when your auditors find surprises, when your operations team can't trust the inventory numbers — confidence erodes. And once stakeholders start assuming the data might be wrong, they stop using it to make decisions. That's when you've lost the core value of having an ERP system at all.

Early detection isn't about catching every mistake. It's about catching the mistakes that compound — the ones that get more expensive to fix with every week that passes.

Financial Red Flags

Finance teams live in NetSuite, but executives often only see the polished outputs — the monthly close package, the board deck, the summary metrics. These outputs are designed to communicate results, not surface problems. The warning signs hide in the details underneath.

Here's what to keep on your radar, and what each signal actually tells you.

Aging receivables that aren't moving

A healthy accounts receivable aging report shows invoices flowing through the system. New invoices appear in current. Older invoices get collected and drop off. The whole thing moves.

What you're watching for is stagnation — the same customers, the same invoices, stuck in the 60+ or 90+ day columns month after month. This isn't just a collections problem. Stuck receivables usually point to one of three underlying issues:

First, there might be a dispute you don't know about. The customer received the invoice, disagreed with something, and stopped paying. But nobody documented the dispute in NetSuite, so it just looks like a slow payer.

Second, the invoice might have been wrong from the start. Wrong amount, wrong PO reference, sent to the wrong contact. The customer can't pay it even if they want to because their AP process can't match it to anything.

Third, the customer might be in financial trouble. They're paying other vendors first. You're sliding down the priority list.

Each of these requires a different response. But you can't respond if you don't notice, and you won't notice if you're only looking at AR as a total number rather than examining what's actually inside the aging buckets.

The question to ask your team: "Walk me through the ten oldest open invoices. What's the story on each one?"

Bank reconciliation backlogs

Bank reconciliation is boring right up until it isn't. When it's current, it's just housekeeping. When it's behind, it's a ticking clock on multiple risks.

Here's why this matters more than most executives realize.

If your bank recs are weeks or months behind, your cash position is an estimate. You're making decisions based on what you think is in the bank, not what's actually there. That might work fine until it doesn't — until a large payment clears that you forgot about, until you realize that cash receipt you were counting on never actually arrived.

But the bigger risk is fraud. Most payment fraud schemes — whether external check fraud or internal manipulation — are caught during bank reconciliation. That's when someone notices a payment the company didn't authorize, or a check that was altered, or a deposit that never made it from the register to the bank. Every week that reconciliation is delayed is another week for fraud to continue undetected.

The third issue is error accumulation. Small mistakes in recording deposits or payments snowball when they're not caught quickly. Reconciling a month-old bank statement means untangling dozens of small discrepancies that would have taken minutes to resolve when they were fresh.

What "behind" looks like varies by company, but here's a reasonable standard: bank accounts should be reconciled within five business days of the statement date. If your team is consistently outside that window, something's broken — either process, capacity, or access to the information they need.

The question to ask your team: "As of today, what's the oldest unreconciled bank statement?"

Unusual journal entries

Manual journal entries are necessary. That's not the issue. Accruals, reclassifications, adjustments — these are normal parts of accounting. The issue is patterns that suggest journal entries are being used to compensate for broken processes or, worse, to manipulate results.

Here's what should trigger a closer look:

Late-period adjustments that materially change results. If significant journal entries are being posted in the last few days of a period — or after the period has technically ended — that's a sign that the close process isn't capturing transactions accurately as they happen. It might be innocent (late invoices, timing issues). It might not be.

Round-number entries without clear explanations. An entry for exactly $50,000 to adjust an expense account should have a clear rationale. If the explanation is vague ("to true up marketing spend"), push harder. Legitimate adjustments usually have specific, traceable causes.

Entries that bypass normal workflows. Most transactions should flow through NetSuite's standard transaction types — invoices, bills, payments, receipts. When you see journal entries doing the work that transactions should do (like recording revenue through a JE instead of an invoice), ask why. Sometimes there's a valid reason. Often there's a process gap that should be fixed.

Top-side entries during close. These are adjustments made to force numbers to balance or to hit a target. They're not always problematic, but they should be transparent and documented. If your team is making material top-side entries every month, the underlying data isn't doing its job.

The question to ask your team: "Show me the ten largest journal entries from last month. What drove each one?"

Revenue recognition timing issues

Revenue recognition errors rarely show up immediately. They accumulate in deferred revenue accounts, in unbilled revenue balances, in the gap between what's been delivered and what's been recorded. And then they surface all at once — usually when an auditor asks questions, or when a new system implementation forces a reconciliation.

For executives, the key is understanding the basic principle: revenue should be recognized when the performance obligation is satisfied. That usually means when the product is delivered or when the service is performed. Recognizing revenue earlier than that inflates current-period results at the expense of future periods. Recognizing it later creates a misleading picture of current performance.

What to watch for:

Deferred revenue balances that seem disconnected from reality. If you have $2 million in deferred revenue but your team can't clearly articulate what future obligations that represents, there's a problem. Either revenue is being deferred that shouldn't be, or the balance contains historical errors that nobody's cleaned up.

Revenue recognized before delivery. This is the more dangerous error. If your fulfillment report shows orders that haven't shipped, but your revenue report shows them as recognized, something's wrong in how the two systems connect.

Inconsistent treatment of similar transactions. If your team recognizes revenue on delivery for one customer segment but on invoicing for another, you need to understand why — and whether that difference is defensible.

The question to ask your team: "Walk me through how we determine when revenue is recognized, and show me how the deferred revenue balance ties to our actual obligations."

Margin erosion without explanation

Gross margin is the vital sign of your business model. When it's healthy and stable, many things can be forgiven. When it starts to slip, everything else gets harder.

The danger with margin erosion is how gradually it happens. A half-point drop one month doesn't trigger alarms. But six months of half-point drops, and you've fundamentally changed your economics.

When you see margins compressing, resist the urge to accept the first explanation offered. Push for specifics.

Is it pricing? Are discounts increasing? Is competitive pressure forcing price concessions? If so, where — which products, which customer segments, which sales reps?

Is it cost? Have input costs risen? Are you seeing more spoilage, more rework, more warranty claims? Have shipping costs spiked?

Is it mix? Are you selling more of your low-margin products and less of your high-margin ones? That's not necessarily a problem, but it is a strategic question worth understanding.

Is it unrecorded costs? This is the sneaky one. Sometimes margins appear to erode because costs that should be hitting COGS are landing elsewhere — in operating expenses, in other income/expense, in inventory adjustments that happen after the fact. The margins aren't really worse; they're just being measured wrong.

The question to ask your team: "Our gross margin is down from X to Y over the past two quarters. Break down for me what's driving that change."

Intercompany balances that don't clear

For companies with multiple subsidiaries in NetSuite, intercompany accounting is both a necessity and a trap. The transactions that move inventory, allocate costs, and share services between subsidiaries should balance out. When you eliminate intercompany activity in consolidation, it should be a wash.

When it isn't — when intercompany receivables and payables don't match, when elimination entries don't zero out — your consolidated financials are misleading in ways that can be difficult to detect.

Here's how this typically goes wrong:

One subsidiary records an intercompany charge, but the other subsidiary doesn't record the corresponding payable. Maybe there was a miscommunication. Maybe the transaction was recorded in the wrong period. Maybe someone decided to "deal with it later."

Transfer pricing isn't applied consistently. Goods moving between subsidiaries are valued differently by the sending and receiving entities.

Intercompany transactions are recorded in different periods. One subsidiary accrues a charge in March; the other doesn't record it until April. For that one month, the balances don't match.

These discrepancies accumulate. And because intercompany accounts often aren't scrutinized as closely as external-facing accounts, the accumulation can go unnoticed for quarters.

The question to ask your team: "Do our intercompany accounts balance? If not, how big is the discrepancy and how old is it?"

Operational Red Flags

Financial red flags often have the advantage of precision. Numbers either reconcile or they don't. Operational issues are harder to pin down. They show up first as friction — fulfillment is slower, customers are complaining more, the warehouse is working overtime — before they show up in metrics.

The key is knowing which operational signals deserve attention before they become obvious.

Inventory discrepancies

Inventory accuracy is the foundation of operational trust. When the system says you have 50 units and the shelf has 50 units, everything works. Orders fulfill correctly. Replenishment triggers at the right time. Customer promises get kept.

When the system and reality diverge, everything breaks — often in ways that aren't visible until a customer is disappointed.

Two specific signals warrant attention:

Negative inventory quantities. These should be impossible, but they happen constantly. A negative inventory balance means the system has recorded more outgoing inventory than incoming. The most common cause is sequence errors — a shipment is recorded before the receipt that makes it possible. But negative inventory can also indicate theft, unrecorded spoilage, or data entry errors that have compounded over time.

NetSuite can be configured to prevent negative inventory, but many companies don't enable this because it creates friction in the warehouse. If your system allows negative inventory, you need a regular process to review and resolve it.

Significant cycle count variances. If your team is doing cycle counts (and they should be), the variances tell a story. Small variances are normal — units miscounted, items in the wrong bin location. Consistent variances on the same items suggest a systematic problem: maybe the unit of measure is wrong, maybe there's a location the cycle counters are missing, maybe there's shrinkage that needs investigation.

The question to ask your team: "How many SKUs have negative inventory right now, and how many items showed significant variances in last month's cycle counts?"

Fulfillment backlogs

In NetSuite, orders waiting to ship live in the "Pending Fulfillment" status. Some backlog is normal — orders received today will ship tomorrow. What matters is whether the backlog is growing, stable, or shrinking, and whether orders are sitting in pending status longer than your committed lead times.

When fulfillment backs up, investigate in layers:

Is it a demand spike? Sometimes backlog is good news — you're selling more than expected. But if that's the case, the question becomes whether you're scaling capacity to meet demand or just falling further behind.

Is it a supply problem? Maybe you can't fulfill because you don't have inventory. The order is stuck waiting for a PO to arrive or a production run to complete. That's a planning problem, not a fulfillment problem.

Is it a process bottleneck? Perhaps inventory is available, but picks aren't getting completed. This could be a staffing issue, a warehouse layout problem, or a training gap.

Is it a data issue? Sometimes orders are stuck in pending fulfillment because of data problems — a missing ship-to address, a hold code nobody knows how to release, an item that's not set up correctly. These are the most frustrating because they're completely avoidable.

The question to ask your team: "How many orders are currently pending fulfillment, what's the average days they've been waiting, and what's blocking the oldest 20?"

Order-to-cash cycle time creep

Order-to-cash cycle time measures the full journey: from when a customer places an order to when cash is in your bank account. It encompasses order processing, fulfillment, invoicing, and collections.

This metric matters because it's a composite indicator. When it starts creeping up, the cause could be anywhere in the chain — and often it's multiple places. Teams that watch order-to-cash as a KPI catch problems earlier because they're looking at the whole picture rather than individual handoffs.

What constitutes "good" varies enormously by business model. A company selling in-stock products direct to consumers might measure order-to-cash in days. A company selling custom-manufactured equipment to large enterprises might measure it in months. The absolute number matters less than the trend and whether it aligns with your customer commitments.

If cycle time is increasing, decompose it. How much time are orders spending in entry and review? How long in fulfillment? How many days between shipment and invoicing? How many days to collect? The bottleneck usually lives in one or two stages, not uniformly across the whole cycle.

The question to ask your team: "What's our average order-to-cash cycle time, how has it trended over the past six months, and which stage is contributing most to delays?"

Work order variances

For manufacturers, work orders are where planning meets reality. The work order specifies what materials should be consumed, how much labor should be required, and what overhead should be absorbed. When the work order closes, actuals are compared to expectations.

Variance is normal. Estimates are never perfect, and production is inherently variable. What matters is the pattern.

Consistent unfavorable material variances might indicate: bills of materials that don't reflect actual production requirements, scrap or spoilage that isn't being recorded properly, or material being consumed on work orders that isn't being tracked.

Consistent unfavorable labor variances might indicate: routing times that are unrealistic, inefficiencies in the production process, or labor being charged to the wrong work orders.

Consistent favorable variances can also be problematic. If actuals are consistently coming in below estimates, your standard costs may be wrong — which means your inventory valuation is wrong, which means your gross margins aren't real.

The question to ask your team: "What were our total work order variances last month, and which products or work centers had the largest variances?"

Return and credit memo volume

Returns and credit memos are inherently diagnostic. They represent something going wrong in the customer's eyes — either the product didn't meet expectations, the order was wrong, or there's a billing dispute.

Small volumes are inevitable. The signal is in the trend and the composition.

A spike in returns might indicate: a quality issue with a particular product lot, a fulfillment accuracy problem (wrong items being shipped), or a change in customer expectations (often driven by sales overpromising).

A spike in credit memos might indicate: pricing errors, billing mistakes, or sales reps fixing problems after the fact by issuing credits instead of addressing root causes.

What you want is categorization and pattern recognition. Why are returns happening? Which products? Which customers? Which sales reps or customer service reps are issuing the most credits, and why?

The question to ask your team: "What was our return rate last month, and what were the top three reasons? What was our credit memo volume, and what were the top three causes?"

Data quality decay

This one is insidious because it doesn't trigger alarms. Bad data doesn't announce itself. It just quietly undermines everything that depends on it.

Customer records missing key fields mean marketing can't segment, sales can't prioritize, and finance can't assess credit risk. Item records without proper categorization break reporting, inventory planning, and product analytics. Vendor records missing payment terms create AP chaos.

Data quality tends to decay over time because creating records is easy but maintaining them is tedious. Someone creates a customer in a hurry to process an order, leaves half the fields blank, and moves on. Nobody goes back to fill in the gaps. Multiply this by hundreds of records and years of operation, and the database becomes unreliable.

The fix is assigning ownership and creating accountability. Someone needs to be responsible for data quality in each major record type, with the authority to enforce standards and the time to audit compliance.

The question to ask your team: "What percentage of our customer records are missing critical fields? What about items? What about vendors?"

Building Detection Habits

Knowing what to look for only matters if you actually look. The biggest enemy of early detection isn't ignorance — it's busyness. Everyone intends to review the reports, ask the questions, dig into the anomalies. But the urgent crowds out the important, and the review that should have happened in May gets pushed to June, then July, then never.

The solution is creating structure — habits and cadences that make detection automatic rather than aspirational.

Establish a weekly financial pulse check

This doesn't need to be a meeting. It can be a standing fifteen-minute slot on your calendar where you review a short dashboard. The goal is pattern recognition across a small number of critical metrics.

What to include:

• AR aging summary: Is the 60+ bucket growing?
• Cash position: Any surprises?
• Bank rec status: Any accounts behind?
• Revenue versus plan: Are we on track for the month?

The discipline is consistency. Every week, same time, same metrics. What you're building is a baseline sense of "normal" so that anomalies stand out.

Conduct a monthly operational review with your ops lead

This one should be a conversation, not just a dashboard. Bring your operations leader into a room (or a video call) for thirty minutes to discuss what's working and what isn't.

Questions to cover:

• What's our current fulfillment backlog, and is it healthy?
• Any inventory issues I should know about?
• What's slowing us down right now?
• Are there any customer-facing problems brewing?

The goal is surfacing issues that haven't hit the metrics yet — the things your ops leader knows in their gut but hasn't escalated because they're trying to handle it themselves.

Question the adjustments

Every month, ask your controller to walk you through the significant journal entries and adjustments from the prior close. Not because you don't trust them, but because the explanations are educational.

When you understand why adjustments are being made, you understand how the business works — and you often discover process gaps that can be fixed. "We had to accrue for this expense because the bill came in late" is an opportunity to improve the bill collection process. "We had to reclassify this revenue because it was booked to the wrong subsidiary" is an opportunity to improve transaction entry procedures.

Track trends, not just snapshots

A single month of unfavorable variance is noise. Three consecutive months is a signal. Five months is a pattern that demands action.

Most NetSuite reports can be configured to show trend data — this month versus prior month, this quarter versus prior quarter, year-over-year comparisons. Use those views. They're more useful than point-in-time snapshots because they show direction, not just position.

Assign data quality ownership

This is an organizational decision, not a personal habit, but it's critical. Someone needs to be responsible for the completeness and accuracy of each major record type in NetSuite.

For customers, that might be the sales ops lead or the credit manager. For items, that might be the product or inventory manager. For vendors, that might be AP.

Ownership means defining the standard (which fields are required, what formats are acceptable), auditing compliance on a regular basis, and having the authority to reject or correct records that don't meet the standard.

Create a problem log

When issues surface — a reconciliation discrepancy, an inventory mystery, a customer complaint traced back to a system problem — log them. Not in email threads that disappear, but in a shared tracker that persists.

The value is pattern recognition. One return is an anecdote. Fifty returns with the same root cause is a process failure that needs to be addressed. But you won't see the pattern unless you're tracking.

A Note on What Not to Do

It's worth acknowledging that good detection habits can be taken too far. Paranoia isn't the goal. Micromanagement isn't the goal.

If you're questioning every journal entry, second-guessing every decision your team makes, demanding explanations for every small variance — you're going to create a culture of defensiveness that makes problems harder to surface, not easier.

The balance is engaged but trusting. You're asking questions because you want to understand and help, not because you're looking for someone to blame. You're reviewing metrics because you want to spot opportunities to improve, not because you assume something's wrong.

When you find issues, the first question should be "what can we fix?" not "who made this mistake?"

The teams that are best at catching problems early are the ones where people feel safe raising concerns. That culture starts at the top.

The Long Game

Early detection is ultimately about building a machine that corrects itself.

In immature organizations, problems fester because nobody's looking. They surface as crises, get fixed in fire drills, and then the cycle repeats.

In mature organizations, there's a rhythm — a cadence of review and conversation that catches problems while they're still small. The same issues might arise, but they get addressed in days instead of months. The cost is lower. The stress is lower. The team has time to focus on growth instead of constantly cleaning up messes.

NetSuite gives you the data. The reports are there. The dashboards can be built. What you provide is the attention — the discipline to look, the curiosity to ask questions, and the leadership to create a culture where problems are surfaced early rather than hidden until they explode.

It's not glamorous work. But it's the work that makes everything else possible.