Create vendor returns
Companies frequently return items to their suppliers when, for example, the goods are the incorrect size and/or color, the expiration date has passed, the products are damaged during transportation, or because of incorrect handling. In these situations, you would create a vendor return.
Vendor returns
Companies can issue vendor returns for various reasons, such as for damaged products or if the vendor shipped the incorrect product. You must issue a vendor credit note when items are returned to the vendor.
Vendor product returns are handled like purchase orders because they involve transactions in the Inventory management, General ledger, Procurement and sourcing, and the Accounts payable modules. Vendor returns can be created for stocked and not stocked items.
The Returned order purchase order type controls the return order process.
To create the return order lines and ensure that the correct markings for cost, return prices, and more are applied, you can:
Create a purchase order of the type Returned order and create a credit note.
Use a negative quantity - A purchase order line for an item with a negative quantity.
Copy the lines from the original purchase invoice - The credit note is created from the original purchase invoice.
Note
We recommend that you use purchase order type Returned order which will result in a debit note on the vendor side, and most vendors require you to include their Return Material Authorization (RMA) number in the purchase order at the time of return.
Create a purchase order of the type Returned order and create a credit note
The third method that you can use to issue a vendor credit note is to create a purchase order that uses the order type Returned order. This is the only method in the Accounts payable and Procurement and sourcing modules where you must enter an RMA number and a Return action.
The RMA number is a reference that is used for tracking purposes and is typically issued by the vendor when you return goods to them. This number acts as a preapproval number that you will use to return goods.
Scenario:
At the USMF company, the purchasing manager wants all purchasing agents to have a vendor RMA number that is associated with a return before any physical stock is moved because the vendor does not accept any returns without their issued RMAs.
To support this requirement, all purchasing agents must tag vendor return orders with the vendor RMA number and use the purchase order type Returned order when they create a return.
As an added benefit, the Returned order type checks that the quantity is negative. This minimizes data entry errors. We recommend that you use this method for all vendor returns because many vendors issue an RMA prior to accepting the return from your company.
Use a negative quantity
You can create a vendor return to specify a negative quantity on the purchase order line in a new or existing purchase order. Entering a negative quantity in the purchase order line has the same effect as if your inventory is being sold to the vendor that you want to return the items to.
Companies can use the negative quantity method, for example, when a return is made to a vendor and no reference to a specific purchase order or RMA number is required.
You can indicate a specific return action by going to the Setup tab on the purchase order line and selecting a return action in the Returned order field group, which is a mandatory field when you are using the purchase order as type Return order.
When the negative product receipt (packing slip) is posted, the system records the items as being removed from the system. To verify this, go to Inventory > Transactions from the purchase order line. Notice the negative quantity and that the Issue column is set to Deducted to indicate the items that are leaving inventory.
Copy lines from original purchase order invoice
Another method you can use to issue a vendor credit note is to generate purchase order lines by copying a previously posted purchase invoice. The copy feature is time saving because it prevents you from having to key in the original purchase information again.
This method is primarily used when you must match a credit note to an original purchase order. The original pricing is used when you copy the original purchase order. This eliminates any variance that might occur if the purchase price changes after the original order is invoiced.
Additionally, when you copy the purchase order, the system makes sure that the return quantity does not exceed the original quantity that was received from this purchase order.
You can only copy one invoice for each credit note by using this feature on the header. If you create a credit note by using the feature on the purchase line level, you can select multiple invoices.
Create vendor returns for serialized items
When you return a serialized item to the vendor, you must specify the item's serial and/or batch number on the purchase return order line. This ensures that the correct serial and/or batch number will be removed from inventory and also indicates to the vendor which serial and/or batch numbers are returned.
When you create vendor returns for serialized items, you can use the following options:
- Copy the original purchase invoice
- Returned order purchase type
If you only return one item or one batch where only one serial or batch number is required for the purchase order line, you can select these numbers directly from the line from either the Serial number field or the Batch number field.
After the returned purchase is processed, verify that the correct serial and/or batch numbers are removed from inventory. To do this, select Inventory > Transactions on the purchase order line. The Serial number field displays which serial numbers are selected and the Issue field displays the status as Sold.
Scenario:
The purchaser at the USMF company has ordered and received five lamp transformers from vendor US-103.
After inspection, four of the lamp transformers are found to be defective and they must be returned to the vendor.
These transformers are serialized because the identification of those being returned is important. By using the order type Returned order, the purchasing agent can generate the negative purchase order appropriately.
Note
In this case, you would not note the serial number on the purchase order line, because you can have more. You use the Pick page to capture the serial numbers.
Inventory pick
Instead of reserving products with the serial and batch numbers, you can also perform a pick by going to Update line > Pick from the purchase order line. The benefit of making a reservation is that the items that you want to return are reserved at the warehouse and the same items are not available for other people to reserve or pick.
If the item has Picking requirements selected in the inventory model group, picking must also be performed in a credit note.