Sales returns
A Sales return credits a customer for items - whether or not the goods physically come back. Two situations are common:
- Physical return: the customer sends the goods back, and the return both credits the customer and puts the item back into inventory (or scraps it).
- Credit only: the customer keeps the goods, but you still issue a credit - because the cost of shipping a defective item back isn't worth it, because there's enough trust not to require it, or because the item can't be resold anyway.
Which of these applies to a given return line is decided by its Disposition - see "Disposition codes and disposition actions" below.
A return invoice doesn't have to reference a Sales invoice at all - a line can be entered manually with no link back to anything. Linking is optional, and it happens per line, not per document: use the Find sales invoice function on a line to tie it back to the exact invoice line it's returning, and different lines on the same return can reference different Sales invoices - a single return can credit items originally sold across several invoices at once.
Creating a Return invoice
Navigate to Accounts receivable > Sales returns and select New return invoice.
The Return invoice header collects:
- Customer: The customer receiving the credit.
- Location: The warehouse the return is processed at.
- Return date / Due date: The return's own date, and the date the resulting credit note is due.
- Return reason: Why the customer is returning the item - see "Return reason codes" below. This applies to the return as a whole, not per line.
- Tax group: The customer's tax profile, the same as on a Sales invoice.
- Currency: The currency the return is raised in.
Payment information collects Cash discount percent, Payment schedule, Payment method, and Payment term, the same fields available on a Sales invoice.
Adding return items
On the Return items tab, lines can be added two ways:
- Manually - select an Item, Unit, Quantity, Unit price, and so on, the same as any line entry, with no link back to any Sales invoice.
- Find sales invoice (recommended) - search for a Sales invoice, select it, and select which of its lines to return. Repeat the search for a different invoice to add lines from it too - a single return invoice can pull lines from as many different Sales invoices as it needs to.
Using Find sales invoice carries the item, unit, unit price, discount, cost, and tax group across from the original invoice line, so the return is valued exactly as the item was originally sold - you aren't retyping figures that could drift from the original sale. The dialog also caps the Quantity to return at that line's own quantity, so you can't select more than was actually sold on it.
Once a line has been added, its Quantity can still be edited freely - the cap that keeps a return from exceeding what was sold is enforced by the Find sales invoice dialog itself, not by a rule that revalidates the line afterwards.
Each return line's Line details has General, Setup, and Product tabs - Setup carries the line's Tax group and, when the line came from Find sales invoice, a reference back to its Original line. Select a Disposition for the line - see "Disposition codes and disposition actions" below.
Return reason codes
Applying a Return reason to a return helps make return patterns easier to analyze afterwards - it records why the customer wanted to return the items, separately from what happens to the goods or the money (that's what Disposition, below, is for). See Return reason codes for how to configure them.
Disposition codes and disposition actions
An important step in processing a return is assigning a Disposition to each return line. The disposition code determines:
- The financial implications - should the customer be credited for the returned items, and should any charges be added to the line?
- The disposition of the returned item - should it go back into inventory, be scrapped, or be returned to the customer?
- The logistics of the returned item - should a replacement be issued?
Two dispositions cover the common cases:
| Disposition code | Financial implications | Implications for logistics |
|---|---|---|
| Credit only | The customer is credited the sales price minus any fees or charges. Loss from scrapping the item is posted to the ledger. | The item is not physically returned. Used when there's enough trust between the parties, when the cost of shipping the item back is prohibitive, or when the item can't go back into inventory anyway. |
| Credit | The customer is credited the sales price minus any fees or charges. The inventory value is increased by the cost of the returned item. | The item is returned and added back into inventory. |
See Disposition codes for the full list of actions and how to configure a code.
The financial implications described above are the intended design, but as things stand, posting a return always produces the same reversing entries described under "Posting" below - inventory included - no matter which Disposition is selected on a line. Disposition is recorded on the line, but nothing in the posting logic reads it yet.
Posting
Select Post and confirm. Posting is irreversible - the return invoice's header and lines become read-only afterwards.
Posting a return reverses the original sale, line for line: revenue, discount, tax, cost of goods sold, and the inventory movement are all posted with entries opposite to the original Sales invoice's own - a return line's quantity is always stored as a negative value for exactly this reason.
The cost used for the inventory/COGS side of that reversal comes from the line itself: a line added via Find sales invoice carries over the exact cost the item was sold at, so it's revalued consistently with the original sale. A manually-entered line can have its cost typed in directly - but if you leave it blank, it isn't zero: it defaults to the item's current inventory cost, resolved the same way it would be anywhere else in Inventory management - from the item's Standard cost, or from whichever actual costing method (e.g. FIFO, weighted average) the item's inventory model uses.
Posting result example
Returning 3 units originally sold at a unit price of 10, an inventory cost price of 5, and a 6% line discount:
| Qty | Unit price | Inv. cost price | Line discount | Revenue (DR) | Revenue (CR) | Discount (DR) | Discount (CR) | Accounts receivable (DR) | Accounts receivable (CR) | Inventory (DR) | Inventory (CR) | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales invoice | 3 | 10 | 5 | 6% | 30 | 1.8 | 28.2 | 15 | ||||
| Return invoice | 3 | 10 | 5 | 6% | 30 | 1.8 | 28.2 | 15 |
Every column on the return's row is the mirror image of the sales invoice's own - same quantity, same unit price, same cost, same discount, opposite debit/credit side. That's what "reverses the original sale, line for line" means in practice.
After posting, the usual further actions are available: Print, Voucher transactions, Open transactions, and Accounting distributions.
Viewing Sales returns
The Sales returns list summarizes your returns with Total, Open, Posted, and Overdue counts, the same layout as the Sales invoices list. Each row shows its Return number, Customer, Return date, Original invoice, Return reason, Net amount, Tax amount, Total amount, Status, and Posted date. A posted return also appears on the originating customer's Customer transactions as a Credit note, linked back to the return's own number.