Basic Sales and Purchase ProcessesLesson 12

Processing Customer Returns for Credit with Receipts

Back to D100: Inventory Order Management Basics

Lesson 12: Processing Customer Returns for Credit with Receipts

Part 2: Basic Sales and Purchase Processes

Acumatica ERP supports the most common types of customer returns of items that your company has sold. These types include returns in which you receive the item or items to inventory and issue a credit memo to adjust the customer's balance in the system. This lesson explains how to process customer returns of items with returned items being received to inventory and a credit memo being prepared for the customer.

Returns for Credit with Receipts: General Information

Acumatica ERP provides support for the most common types of return processes, which gives you the flexibility to manage various types of customer returns according to the return policies of your company. Returns for credit with receipt of items are one type of returns. These returns are processed in the system as return orders of the RC order type. With this type, a customer returns an item, which you need to receive to inventory. You then process a credit memo to adjust the customer's balance in the system.

Learning Objectives

In this lesson, you will do the following:

  • Create a return order that is linked to the sales order in which the returned items were sold
  • Create an incoming shipment (receipt) of the returned item or items, and confirm the shipment
  • Create a credit memo for the original sales order
  • Process the credit memo and the related inventory and AR documents

Applicable Scenario

You create a return order for credit (that is, an order with the RC predefined order type) to perform a customer return for credit with the returned item or items received to inventory and the AR documents issued to adjust the customer balance in the system.

Processing of Returned Items for Credit

The standard process of return for credit typically includes the entry of a return order, the addition of items to be returned, the processing of the receipt of the returned items to inventory, and the preparation of the related AR document to a customer. In general, the Sales Orders (SO301000) form is the starting point for the creation of a customer return. You create a new return order and add the item or items that are being returned by the customer. You can add a line and select the item to be returned without linking it to a sales document, or add a line with a reference to the original sales invoice for which the return is performed. To add an item with a link to the original sales invoice, on the Sales Orders form, you click Add Invoice on the table toolbar of the Details tab and select the line of the needed invoice in the Add Invoice Details dialog box (which opens). If an item to be returned has a specific lot or serial number, you should select this particular item from the list of invoice lines. The receipt of the items returned to inventory is processed in the system as an incoming shipment document with the Receipt operation type. Aer you have prepared and confirmed the document reflecting the receipt of items to inventory, you need to update the customer's balance in the amount of the returned items by preparing and releasing a credit memo (which is a sales invoice of the Credit Memo type). The credit memo is a financial document in the system that contains links to the applicable shipments and sales orders. You can review the prepared credit memo on the Invoices (SO303000) form; then you can release it. When the credit memo is released, you can view it on the Invoices and Memos (AR301000) form as an AR credit memo. An AR credit memo does not contain the links to the applicable shipments and sales orders. Also, the AR credit memo can be applied to the customer balance. To finish the return process, you need to process the AR credit memo to completion. You can apply the credit memo to the original invoice, or process a customer refund if the original invoice was already paid. For details on credit memo application, see AR Invoice Correction: General Information. For details on the processing of a customer refund, see Refunds: To Create a Refund and Apply a Credit Memo to It.

Workflow of a Return for Credit with a Receipt

The processing of a return order for credit involves the actions and generated documents shown in the following diagram. Returns for Credit with Receipts: Process Activity

The following activity demonstrates how to prepare and process to completion a customer return for a particular sales order with the returned item or items being received to inventory and a credit memo to the customer being created.

Story

Suppose that you are Grace Norman, a sales manager in the SweetLife Fruits & Jams company. On January 30, 2025, the FourStar Coffee & Sweets Shop customer requests authorization for the return of the oranges ordered on January 29, 2025, because the customer was not satisfied with the quality of the shipped fruits. You authorize the return with shipping of the returned items to SweetLife’s main warehouse. Acting as the sales manager, you need to process this return.

Configuration Overview

In the U100 dataset, for the purposes of this activity, the following tasks have been performed:

  • On the Enable/Disable Features (CS100000) form, the following features have been enabled:
  • Inventory and Order Management, which provides the standard functionality of inventory and order management
  • Inventory, which gives you the ability to maintain stock items by using forms related to the inventory functionality and to create and process sales and purchase documents that include stock items
  • On the Order Types (SO201000) form, the RC order type has been configured and activated.
  • On the Customers (AR303000) form, the COFFEESHOP (FourStar Coffee & Sweets Shop) customer has been defined.
  • On the Stock Items (IN202500) form, the ORANGES and LEMONS stock items have been created.
  • On the Invoices (SO303000) form, an invoice for the COFFEESHOP customer has been created that has the ORANGES and LEMONS stock items and is dated 1/29/2025.
  • The following sales document, for which you will process a return, have been created:
  • On the Sales Orders (SO301000) form, a sales order for the COFFEESHOP customer dated 1/29/2025
  • On the Shipments (SO302000) form, a shipment for the COFFEESHOP customer dated 1/29/2025

Process Overview

To process a return for credit with a receipt, you will create a return order of the RC type on the Sales Orders (SO301000) form, and add to it the line or lines of the sales invoice that has been prepared for the sales order for which you need to process a return. Then you will receive the returned items to inventory on the Shipments (SO302000) form by creating a shipment with the Receipt operation and confirming it. Aer the items have been received to inventory, you will create a credit memo to decrease the customer's debt in the system by the amount of the returned items. Finally, aer reviewing the details of the prepared credit memo on the Invoices (SO303000) form, you will release it.

System Preparation

Before you start preparing and processing the customer return, you should do the following:

  1. In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to 1/30/2025. If a different date is displayed, click the Business Date menu button and select 1/30/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.
  2. On the Company and Branch Selection menu, in the top pane of the Acumatica ERP screen, make sure the SweetLife Head Office and Wholesale Center branch is selected.

Step 1: Creating a Return Order To create a return order, do the following:

  1. On the Sales Orders (SO301000) form, add a new record.
  2. In the Summary area, specify the following settings:
  • Order Type: RC
  • Customer: COFFEESHOP
  • Date: 1/30/2025
  • Requested On: 1/30/2025
  • Description: Return of unconditional fruits
  1. On the form toolbar, click Save.

Step 2: Adding the Item to Be Returned To add the invoice line with the SO type to the return order, do the following:

  1. While you are still viewing the return order on the Sales Orders (SO301000) form, on the table toolbar of the Details tab, click Add Invoice.
  2. In the Add Invoice Details dialog box, which opens, do the following: a. In the AR Doc. Type box, select Invoice. b. In the AR Doc. Nbr. box, select the reference number of the invoice to COFFEESHOP dated 1/29/2025. The invoice lines appear in the table of the dialog box. c. In the table, select the unlabeled check box in the ORANGES line. d. Click Add & Close, which closes the dialog box and adds the line to the Details tab of the return order.
  3. Review the details of the added line, and make sure that the related invoice reference number is specified in the Invoice Nbr. column.
  4. On the form toolbar, click Save.

Step 3: Receiving the Returned Items To process the receipt of items to inventory, do the following:

  1. While you are still viewing the return order on the Sales Orders (SO301000) form, on the form toolbar, click Create Receipt to create a receipt of the returned items.
  2. In the Specify Shipment Parameters dialog box, which opens, make sure that 1/30/2025 is selected as the Shipment Date and WHOLESALE is selected as the Warehouse ID.
  3. Click OK. The system closes the dialog box and opens the prepared shipment with the Receipt operation on the Shipments (SO302000) form.
  4. On the form toolbar, click Confirm Shipment.

Step 4: Processing a Credit Memo To prepare a credit memo to the customer to adjust the customer's balance, do the following:

  1. While you are still viewing the shipment on the Shipments (SO302000) form, on the form toolbar, click Prepare Invoice. Wait for the system to complete the operation. The system creates a credit memo to the customer and opens it on the Invoices (SO303000) form.
  2. In the Summary area, make sure that the Date is set to 1/30/2025.
  3. On the form toolbar, click Release to release the credit memo, which is assigned the Open status, as shown in the following screenshot. Figure: Credit memo prepared for the return order
    You have completely processed the customer return.