Returns: Credit Note, Exchange, Location

Credit Notes, Exchanges and Where Returned Goods Go

Steps 4 to 6 of Returns and Exchanges: an overbilling where nothing comes back, an exchange, and where returned goods should go. Steps 4 and 5 are situations of their own, not things to do after the plain return of Steps 2 and 3; Step 6 applies to any return. If you have not yet chosen the document, start with Start here: which document?

Two of today’s three situations at GadgetSphere’s GS-KV-01 are here: a corporate customer billed for 26 handsets who received only 24, and a walk-in who wants to exchange a pair of wireless earbuds (RM 249) for the model up (RM 399), paying the difference.

The rule that runs through this page: if the goods physically come back, the document is a Sales Return or a Sales Refund Note, never a credit note. A credit note takes the money off the customer’s account and the stock never comes back. And the location a returned item goes to is set on the return’s Main Details before FINAL (Step 2), so choose it with Step 6 in mind.

Step 4: Nothing coming back — raise a Credit Note
Step 5: An exchange is two transactions, not one
Step 6: Put the goods somewhere sensible

Step 4: Nothing coming back — raise a Credit Note

Sales > Sales Credit Note (Internal) > Create > Search Document

The outcome: the corporate customer’s over-billing corrected, stock untouched.

They were billed for 26 handsets and received 24. The two handsets never existed — there is nothing to take back into stock, and using a return here would invent two phones out of nowhere.

Create the credit note, use Search Document to pull the original invoice, and adjust to the two units: RM 7,600 net, RM 456 SST, RM 8,056.

Dr  Sales — smartphones                  RM 7,600.00
Dr  SST output tax                       RM   456.00
    Cr  Debtor — trade retail                     RM 8,056.00

No inventory transaction, no cost-of-sales entry. Then either Contra it against their open invoices, or settle it out on the Settlement tab if you are actually sending money back.

The same document handles a retrospective discount you agreed after billing, a marketplace commission you are absorbing, and a service reversal.

Step 5: An exchange is two transactions, not one

There is no exchange document. An exchange is a return followed by a sale, and thinking of it that way keeps both your stock and your revenue honest.

At the counter, both halves fit on one cash bill. Add the returned earbuds as a return line and the replacement pair as a normal sale line. The return line brings the RM 249 pair back into stock and posts to the sales return account; the sale line takes the RM 399 pair out. The bill’s total is the RM 150 difference plus tax, and the customer pays that. POS recognises a bill with one of each as an exchange, so a straight like-for-like swap at RM 0 is accepted too. What it refuses is a bill where the return is worth more than the sale — if the customer is trading down and you owe them money, either switch on allow a return larger than the sale in the POS settings or raise the return separately.

Away from the counter, raise the two documents separately: a Sales Return for what came back, then a new Sales Invoice for the replacement. Contra the return’s credit against the new invoice so the customer’s account nets out to the difference.

Like-for-like warranty swaps are not exchanges. If the customer is getting an identical replacement unit under warranty, no money changes hands and the sale was never reversed. The clean record is a Swap Serial Number on the original invoice or cash bill, which exchanges the sold serial for another available one and corrects both stock records — no return, no credit, no new sale.

Step 6: Put the goods somewhere sensible

BigLedger has put the returned laptop back at GS-KV-01 as ordinary sellable stock. That is very often wrong: a faulty unit should not be the next one someone sells.

The product does not decide this for you. What you can do is choose the return’s location to match what is really going to happen — a quarantine or RMA location for anything faulty, the sales floor location only for genuinely resellable goods. That single field is the difference between a controlled returns process and a faulty laptop going back out of the door next week.

What success looks like for this part

The credit note for the two handsets is RM 8,056 (RM 7,600 net and RM 456 SST), shows no inventory transaction, and is either contra’d against the customer’s open invoices or settled out on the Settlement tab. At the counter, the earbud exchange is one cash bill whose total is the RM 150 difference plus tax, with the returned pair back in stock; away from the counter, it is a Sales Return and a new Sales Invoice, with the return’s credit contra’d against the invoice. A faulty returned unit sits at a quarantine or RMA location, not at the sales floor location.

Common mistakes in this part

Two of the guide’s common mistakes belong to this part: a credit note for returned goods, and returning to the sales floor location by default. Both are in Common mistakes on the first page, with the rest of the guide’s mistakes.