Handling Returns

If a customer returns one or more of the items they bought, it can be for various reasons - perhaps the item was damaged or maybe they just changed their mind.

Regardless of how the physical stock is managed, a sales credit is required. A sales credit is used to process the received items, record store credit or a refund and importantly to reverse the original sale to correct sales revenue and tax values.

When the items are received back a decision will need to be made as to whether the item can be placed back into normal inventory, whether it has a reduced value and must be sold at a reduced price, whether it will be returned to the vendor (supplier) or maybe it will simply be written off as a loss.

Creating a sales credit

A sales credit can easily be created by cloning the relevant items from the original sales order. Alternatively they can be started from scratch at Sales > New credit .

Receiving returned items

The inventory items are received against the sales credit. There are three options when receiving returned goods:

RN_4_57_returns_processing

  • Return into on hand inventory
    If the returned items are in perfect re-saleable condition they can be received straight back into on hand inventory at the specified warehouse.
    If warehouse locations are in use, the items will automatically be placed into the default location recorded on the product record (to use a different location they can be first placed in quarantine or they can be moved after receiving).
    Receiving the items back into inventory will create an accounting journal to increase asset value by the price recorded on the cost price list assigned to the sales credit.
    If there is no price on the price list the items will be recorded with a zero value.
  • Write-off the items
    This option can be used when the returned items cannot be re-sold. Writing the items off means they are being disposed of. Writing the items off will create two accounting journals. The first brings the items back into the business, and the second subtracts the value of the stock. The account where this value is posted is configured in Settings > Company > Accounting: Account (Nominal) Codes .
  • Place the items in quarantine
    Quarantine is used for all other scenarios, or where a decision is yet to be made. Quarantined items are received back into the business but placed on-hold and not returned to normal inventory - the items cannot be sold. All quarantined items can be seen at Products > Inventory in Transit.
    Placing items in quarantine will create an accounting journal to increase assets, but the items will not be added into on hand inventory until they are released from the "in transit" screen. The items will be recorded with the value recorded on the cost price list assigned to the sales credit. If there is no price on the price list the items will be recorded with zero value.
    Learn more about handling quarantined inventory below.

Asset value of returned items

When items are received back into inventory or quarantine they are always added at the value recorded on the cost price list assigned to the sales credit, even if this is zero.

The value of inventory can be edited after it is received from the inventory detail report.

Handling quarantined inventory

The value of quarantined items is included on the balance sheet but the quantity is not included in available stock. The items will need to be released back into stock before they can be re-sold, written-off or returned to vendors (suppliers).

  • Releasing quarantined items back into inventory
    Quarantined items are released from Products > In transit. They can be released in batches or one at a time. If warehouse locations are activated, the items will be placed into the default location recorded on the product record. If multiple concurrent locations are being used, items are placed into default locations when batch released or items can be placed one-by-one into any chosen location.
  • Writing-off quarantined items
    Even if you need to write off an item it must first be released back into stock. Having done so, it can be written-off using an inventory correction.

Returning items to the vendor (supplier)

Returning items to the vendor (supplier) is a separate process.

In order to return items to a vendor (supplier) both a purchase credit and an inventory correction are required. The purchase credit accounts for the refund from the vendor (supplier) and the inventory correction is used to remove the item from stock at the relevant cost value.

Note that is is not possible to add stock tracked items on to purchase orders and then ship them back to vendors (suppliers).

Selling "blemished" goods

If an item is returned but not suitable to be added back into normal "new" stock at its ordinal value it might still be suitable for sale as a "blemished" item. In this case the item should be recorded in Brightpearl with a different SKU from the original "new" item and (normally) with a lower asset value.

In this scenario the sales credit should be edited - removing the original SKU and adding the "blemished" item SKU which is then received into stock instead.

Changing asset values

All items are received into stock with the value recorded on the cost price list which is assigned to the sales credit, even if this is zero. If this is not a true valuation of the items the value can be edited from the Inventory Detail report.

edit_cost_value

Exchanges

If the customer would like an item sent in exchange for the returned item, then a new sales order should be created and dispatched. The sales credit value can be allocated to the sales order in order to mark them both as paid. Alternatively, the sales credit can remain unpaid and the new sales order created with a zero price.

Restocking Fees

If you need to account for a restocking fee; then please follow the steps below:

How to account for restocking fees

  1. Setup a new service product called Restocking Fee
  2. Create a new account code related to stocking fees via Accounting > Chart of Accounts
  3. Create a sales credit for your customer
  4. Add the Restocking Fee product to the order
  5. Choose your new account code in the sales nominal code dropdown
  6. Insert a negative price value against this line on the credit (ie -10.00 to specify a negative value of $10)

Sales returns / credits

Sales returns/credits allow you to:

  • Record the refund  to the customer to create the accounting and update the customer account balance. This will create a SR type journal.
  • Post a credit note to create the accounting update the customer account balance. This will create an SC type journal and lock the sales credit record so that it cannot be edited.
  • Receive returned goods and either add them back into stock, place them in quarantine or write them off. This will update the inventory status on the return and create the accounting for inventory using a JJ type journal.
  • Print or email a sales credit document or RMA to the customer.

How to clone a sales order to a sales credit

  1. Search for and open the original sales order containing the items to be credited or returned. Alternatively, a credit can be started from Sales > New Credit .
  2. Select the lines that are being credited, or returned. Note that quantities can be edited directly on the credit later.
  3. Click the Clone to Sales Credit button just above the line items.
    RN_4_54_returns

How to complete a sales credit & create the accounting

Once you have created the sales credit (either by cloning the original sale, or manually) you will need to mark it as credited to create the accounting and update the customer account balance.

  1. Search for an open the sales return/credit.
  2. Click the Credit button.

Related how to guides - Sales Returns / Exchanges

How to clone a sales order to a sales credit

  1. Search for and open the original sales order containing the items to be credited or returned. Alternatively, a credit can be started from Sales > New Credit .
  2. Select the lines that are being credited, or returned. Note that quantities can be edited directly on the credit later.
  3. Click the Clone to Sales Credit button just above the line items.
    RN_4_54_returns

How to complete a sales credit & create the accounting

Once you have created the sales credit (either by cloning the original sale, or manually) you will need to mark it as credited to create the accounting and update the customer account balance.

  1. Search for an open the sales return/credit.
  2. Click the Credit button.

How to mark a return/credit as refunded

Note that marking a return/credit as refunded in Brightpearl will not move any money.

  1. Search for and open the sales return/credit.
  2. Scroll to the bottom of the page and click Do refund .
  3. Select the bank account the money is going to be refunded from.
  4. Enter a reference and the amount that will be refunded to the customer.
  5. Click Allocate payment to finish.

allocate payment

 
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