When customers return an item you may charge them a restocking fee. This article provides a guide on how to account for them.
How to account for restocking fees
- Create a new account code related to restocking fees via Accounting > Chart of Accounts.
- Set up a new service (non-stock tracked) product called Restocking Fee. Set the Sell code to be the account code created in the previous step.
- Create a sales credit for your customer.
- Add the Restocking Fee product to the order.
- Insert a negative price value against this line on the credit (ie -10.00 to specify a negative value of £10)
This has reduced the money due back to the customer from £200 to £190.
Refund the customer via your chosen payment method, and complete the credit by clicking the green Credit button.
Here are the resulting accounting transactions (in our example the £10 restocking fee is taxable, hence £8.33 against miscellaneous income, and £1.67 for sales tax):
