Processing Returns to Suppliers FAQ

Set up at least one Returns type purchase class in Purchase Class Maintenance.

Return purchase orders will be entered for products being returned.

Create a new location named Supplier Returns in Location Maintenance.

This is the location that returned products will be transferred to if there is a long lag time between returning the products and entering the accounts payable debit memo.

Create a bin for every supplier in Bin Maintenance for the Supplier Returns location.

This is an easy way to view what products are in the process of being returned for each supplier if there is a long lag time between returning the products and entering the accounts payable debit memo.

Create a not available supplier return bin in Bin Maintenance for every location.

Use this method if there is not a long lag time between returning products and entering the accounts payable debit memo.

Create a product/location record in Product Location Maintenance for products being returned in the Supplier Returns location (if not already set up).

These may have already been set up. These are only needed if there is a long lag time between returning the products and entering the accounts payable debit memo.

Set up several new general ledger accounts in Account Maintenance.

Set up the following accounts:

• Inventory Returns (asset) - This will be used to segregate inventory that is in the process of being returned.

• Supplier Returns Variance (expense) - This will be used to record the accounts payable debit memo amount of the actual deduction, offset by the accounting cost of the returns stock adjustment.

Set up a new stock adjustment code in Inventory Adjustment Code Maintenance.

The new code, SuppReturn (for example), should have the Expense Adjustment mask referenced to the Supplier Returns Variance account (set up in the previous step).

You need to get an RMA number from the supplier before returning products, you return the products, and you wait until they send a credit memo before entering an accounts payable debit memo. There may be return shipping charges, or disputed items being returned, so you’d rather get supplier confirmation of the credit memo amount they are issuing before entering an accounts payable debit memo. In this scenario, there is lag time between returning the products and entering a financial transaction.

1. Get an RMA number from the supplier, enter a return purchase order using this RMA number in the Requisition # field in Purchase Order Maintenance, and fax it or send it to the supplier. Use another printed copy of the return purchase order as the packing slip for the actual physical return.

2. Enter a transfer order to move the product from a normal warehouse to the Supplier Returns warehouse. Receive it into the supplier bin in the warehouse. When all transactions are posted, it will show up in the Inventory Returns general ledger account.

3. When the credit memo is received, compare it to the return purchase order, enter the credit memo number in the Supplier’s Confirming Order # field in Purchase Order Maintenance, then void the purchase order.

4. Using the return purchase order as a source reference, make stock adjustments using the supplier return adjustment code to the relevant returned products in the Supplier Returns location.

5. Using the credit memo number as the reference number, enter an accounts payable debit memo for the credit memo amount (in the same accounting period as the stock adjustments).

6. The net variance, if any, will be captured in the Supplier Returns Variance account.

You need to get an RMA number from the supplier before returning products, and you wait until they acknowledge your return purchase order before entering an accounts payable debit memo. The return is relatively straightforward, and there is no need to wait for their credit memo. They generally acknowledge within a couple of days, so there is no significant lag time between returning the products and entering a financial transaction.

1. Get an RMA number from the supplier, enter a return purchase order using this RMA number in the Requisition # field in Purchase Order Maintenance, and fax it or send it to the supplier. Use another printed copy of the return purchase order as the packing slip for the actual physical return.

2. Stock transfer these products to be returned to a not available supplier return bin.

3. When acknowledgment is received, compare it to the return purchase order, enter the credit memo number in the Supplier’s Confirming Order # field, then void the purchase order.

4. Using the return purchase order as a source reference, make stock adjustments using the supplier return adjustment code to the relevant returned products in the not available supplier return bin.

5. Using the RMA number as the reference number, enter an accounts payable debit memo for the return purchase order amount (in the same accounting period as the stock adjustments).

6. The net variance, if any, will be captured in the Supplier Returns Variance account.