RMA Returns (Physical Returns)

Handle customer returns where physical goods are returned to your warehouse.

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When to Use RMA Flow

Use the RMA (Return Merchandise Authorization) flow when:

• Customer is physically returning goods
• You need to receive items back into inventory
• Defective or damaged products are being returned
• Wrong items were shipped

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Flow Diagram

PHYSICAL RETURN FLOW
─────────────────────────────────────────────────────────────────

Customer wants to return goods
         │
         ▼
┌──────────────────────┐
│ RETURN AUTHORIZATION │  ← Approve the return request
│ (RMA)                │
│ GL: None             │
│ Inv: None            │
└──────────┬───────────┘
           │
           │ Customer ships goods back
           │
           ▼
┌──────────────────────┐
│ ITEM RECEIPT         │  ← Goods physically returned
│ (from RMA)           │
│ GL: None (typically) │
│ Inv: Increases       │
└──────────┬───────────┘
           │
           │ Continue to Credit Memo
           ▼

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Stage 1: Return Authorization (RMA)

What Happens

Action	Result
Create RMA	Authorize customer return
Specify items/qty	Define what can be returned
Link to original SO	Track against original sale
Set status	Pending Receipt

Creating an RMA

RMA CREATION
─────────────────────────────────────────────────────────────────

From Sales Order #SO-001 or standalone:

RMA #RMA-001
├── Customer: ABC Company
├── Original SO: SO-001 (optional link)
├── Line 1: Widget-A (Qty: 5)  ← Can return up to 5
├── Line 2: Widget-B (Qty: 3)  ← Can return up to 3
└── Status: Pending Receipt

GL Impact

None - RMA is just an authorization, no financial impact.

Inventory Impact

None - Goods haven't been received yet.

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Stage 2: Item Receipt (Return)

What Happens

Action	Result
Create receipt from RMA	Record goods arriving back
Inspect items	Verify condition of returns
Assign location	Put items back in inventory
Save receipt	Inventory increases

Creating Item Receipt from RMA

ITEM RECEIPT FROM RMA
─────────────────────────────────────────────────────────────────

RMA #RMA-001 (authorized 5 + 3 units)
├── Line 1: Widget-A (Authorized: 5)  ──▶  Receive: 5 ✓
└── Line 2: Widget-B (Authorized: 3)  ──▶  Receive: 2 (partial)

Result: Item Receipt #IR-001 created
        RMA Status: Partially Received

Next: Can receive remaining Widget-B later
      Then create Credit Memo for received items

GL Impact

Typically None (standard configuration).

Exception: If "Reverse COGS at Receipt" is enabled:

Account	Debit	Credit	Why?
Inventory Asset	$60		Goods back on shelf (Asset ↑)
COGS		$60	Reverse cost of sale (Expense ↓)

ITEM RECEIPT GL EXPLAINED (if COGS reversal enabled)
─────────────────────────────────────────────────────────────────

What happened: Customer returned goods to warehouse

Inventory (Asset)          $60  Dr
  └── Goods back on shelf = Asset INCREASES

COGS (Expense)                   $60  Cr
  └── Reverse the cost we recognized when we sold = Expense DECREASES

Think: "Undoing the inventory part of the sale"

Inventory Impact

INVENTORY AFTER RETURN RECEIPT
─────────────────────────────────────────────────────────────────

Before Return:
┌─────────────────────────────────────────┐
│ Item: Widget-A                          │
│ On Hand:      75                        │
│ Available:    75                        │
└─────────────────────────────────────────┘

After Return (5 units received back):
┌─────────────────────────────────────────┐
│ On Hand:      80  (increased by 5)      │
│ Available:    80                        │
└─────────────────────────────────────────┘

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Partial Returns

You can receive items in multiple batches:

PARTIAL RETURN SCENARIO
─────────────────────────────────────────────────────────────────

RMA #RMA-001: 10 units authorized
    │
    ├── IR #001: 4 units received
    │   └── RMA Status: Partially Received
    │
    ├── IR #002: 4 units received
    │   └── RMA Status: Partially Received
    │
    └── IR #003: 2 units received (final)
        └── RMA Status: Fully Received

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Inspection and Disposition

After receiving returned items, you may need to:

Disposition	Action	Inventory Impact
Return to stock	Normal receipt	Available for sale
Quarantine	Receive to separate location	Held for review
Scrap	Receive then write-off	Eventually removed
Refurbish	Receive to work order	Process before resale

RETURN INSPECTION FLOW
─────────────────────────────────────────────────────────────────

Item Receipt from RMA
         │
         ├── Good condition ──▶ Receive to sellable location
         │
         ├── Minor damage ──▶ Receive to refurbish location
         │                    └── Process for resale
         │
         └── Major damage ──▶ Receive to scrap location
                              └── Write-off inventory

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RMA Statuses

Status	Meaning
Pending Approval	Needs manager approval
Pending Receipt	Approved, waiting for goods
Partially Received	Some items received
Pending Credit	Fully received, awaiting credit memo
Fully Credited	Credit memo issued
Closed	Completed or cancelled

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Quick Reference

Step	GL Impact	Inventory Impact
Create RMA	None	None
Receive from RMA	None*	On Hand increases
Credit Memo	Reverses revenue	None (already received)

*Unless COGS reversal is configured

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Next Steps

After receiving the return:

• Credit Memo - Issue credit for returned items
• Customer Refund - Process refund if needed