Sales · Daily operations · 8 min read

Returns and credit notes

Take goods back from a customer and credit the invoice, within what was delivered and billed.

Before you begin

• The order has delivered goods. Services cannot be returned to stock; credit them instead.
• Creating a return needs document.deliver. Credit notes need document.invoice; approving a note needs document.confirm where the billing approval policy requires it.
• The warehouse receives returned goods in Inventory > Returns.

Start a return

1. Open the order and go to the Returns tab.
2. For each stocked line, enter Coming back (of N). N is delivered less returned. You cannot return more than that.
3. Choose a Reason: Defective, Damaged in transit, Wrong item sent, No longer needed, Warranty claim, Arrived too late or Other. For reasons that need a note, enter Customer's claim.
4. Press Create return.

You see "Return drafted. Authorise and receive it in Inventory > Returns." The return is listed with its status. If the quantity is too high: 'Only <n> can come back - delivered less ...'. For a service: '<line>: a service does not come back to stock; credit it instead.'

Receive the goods

The warehouse user opens Inventory > Returns, authorises and receives the return. Stock goes up, or goes to scrap depending on the reason's suggested disposition. The Returned column on the order is updated. The goods come back through the return receipt, not through the credit note.

Credit the customer

From a received return

1. On the Returns tab press Create credit note.
2. A draft credit note opens, tied to the invoice lines, with Against invoice set.

From an invoice

1. Open Sales > Invoicing > Customer invoices and open a posted invoice.
2. Press Credit this invoice. A draft credit note opens with all the invoice's lines and the note "Credit of INV-...". Remove or reduce lines you do not credit.

From scratch

Under Sales > Invoicing > Credit notes press New credit note, choose the Against invoice (a posted invoice of the same customer) and the Note date.

Approve and post

1. Press Approve note. The stage moves from Draft to Approved.
2. Press Post note. The stage moves to Posted.

Where the billing approval policy requires it, a note cannot be posted without approval, and the approver is a different person from the one who drafted it. Posting reverses receivable, revenue and VAT for the credited quantity. The Credited column on the order is updated.

Worked example

You delivered and invoiced 5 units at AED 100.00 plus 5% VAT (AED 525.00). The customer returns 2.

A later credit note for more than 3 remaining units is refused: 'INV-... has only 3 of <CODE> left to credit.'

Refund or allocate

Refunds are payments on the credit note. Record the refund, or allocate the credit against the customer's open invoices. See Billing.

What happens next

The customer's balance falls by the credit note total. Sales > Reporting > Returns and credits compares returned quantities with credited quantities per order, and Sales analysis shows invoices less credit notes.

Good to know

• The credit note must be against a posted invoice, of the same customer: 'Only a posted customer invoice can be credited. This one is draft.' and 'The note must be for the same partner as the document it credits.'
• A note cannot be dated before the invoice: 'A note cannot be dated before INV-...'.
• A product not on the invoice cannot be credited: '<CODE> is not on INV-....'.
• To cancel an invoice entirely, use Reverse, which needs document.reverse. Reverse the receipts first: 'Reverse document payments first.'
• A user with only the draft right sees the return buttons but is refused when they press them. Ask an administrator for the delivery right.