Returns, Credits & Refunds

Handle customer returns, price adjustments, credits, and refunds.

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In This Section

Page	Description
RMA Returns	Physical return flow: RMA → Item Receipt
Credit Memo	All Credit Memo scenarios
Customer Refund	Apply credits and refunds

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Credit Memo Scenarios Overview

Credit Memo is a versatile transaction that can be created in multiple scenarios:

Scenario	Source	Physical Return?	When to Use
From RMA	Return Authorization	Yes	Customer returns goods
From Invoice	Existing Invoice	No	Price adjustment, billing error
Standalone	None	Optional	Promotional credit, goodwill

CREDIT MEMO - ALL ENTRY POINTS
─────────────────────────────────────────────────────────────────

                    ┌─────────────────────────────────────┐
                    │         CREDIT MEMO                 │
                    │     (Reverses Revenue)              │
                    └────────────────┬────────────────────┘
                                     │
          ┌──────────────────────────┼──────────────────────────┐
          │                          │                          │
          ▼                          ▼                          ▼
┌─────────────────────┐  ┌─────────────────────┐  ┌─────────────────────┐
│  FROM RMA           │  │  FROM INVOICE       │  │  STANDALONE         │
│  (Return Flow)      │  │  (Adjustment)       │  │  (Manual)           │
│                     │  │                     │  │                     │
│  - Goods returned   │  │  - Price correction │  │  - Promo credit     │
│  - Inventory ↑      │  │  - No inventory     │  │  - Goodwill         │
│  - Full RMA process │  │  - Quick fix        │  │  - Write-off        │
└─────────────────────┘  └─────────────────────┘  └─────────────────────┘

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Complete Return Flow

CUSTOMER RETURN FLOW (COMPLETE)
─────────────────────────────────────────────────────────────────

Customer wants to return goods
         │
         ▼
┌──────────────────────┐
│ RETURN AUTHORIZATION │  ← Approve the return request
│ (RMA)                │
│ GL: None             │
│ Inv: None            │
└──────────┬───────────┘
           │
           ▼
┌──────────────────────┐
│ ITEM RECEIPT         │  ← Goods physically returned
│ (from RMA)           │
│ GL: None (typically) │
│ Inv: Increases       │
└──────────┬───────────┘
           │
           ▼
┌──────────────────────┐
│ CREDIT MEMO          │  ← Reverse the revenue
│                      │
│ GL: Reverses Invoice │
│ Inv: Already received│
└──────────┬───────────┘
           │
    ┌──────┴──────┐
    │             │
    ▼             ▼
┌─────────┐  ┌──────────────┐
│ APPLY   │  │ CUSTOMER     │
│ to Open │  │ REFUND       │
│ Invoice │  │              │
└─────────┘  └──────────────┘

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Quick Reference

Return Types

Scenario	Path	Result
Customer returns goods	RMA → Receipt → Credit Memo	Inventory up, Revenue down
Price adjustment (no return)	Credit Memo only	Revenue down, no inventory
Full refund	Credit Memo → Customer Refund	Cash returned
Partial credit	Credit Memo → Apply to Invoice	Reduces balance

GL Summary

Transaction	GL Impact
Return Authorization	None
Item Receipt (return)	None*
Credit Memo	Reverses revenue, reduces A/R
Customer Refund	Clears A/R, reduces cash

*Unless configured to reverse COGS at receipt

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Decision Guide

WHICH PATH SHOULD I USE?
─────────────────────────────────────────────────────────────────

Is the customer returning physical goods?
│
├── YES ──▶ Use RMA Flow
│           RMA → Item Receipt → Credit Memo
│           │
│           └── Inventory increases, then Apply or Refund
│
└── NO ──▶ Is this related to a specific invoice?
           │
           ├── YES ──▶ Credit Memo from Invoice
           │           │
           │           ├── Price correction
           │           ├── Billing error
           │           └── Agreed discount
           │
           └── NO ──▶ Standalone Credit Memo
                       │
                       ├── Promotional credit
                       ├── Goodwill gesture
                       └── General write-off

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Next Steps

• RMA Returns - Physical return process
• Credit Memo - All Credit Memo scenarios
• Customer Refund - Apply credits and refunds