Return Fully Paid Inventory Sale



1 comment

  • Rebecca Ralls

    If you're using customer statements, this process needs some additional steps.

    In order for the credit and refund to show up in the customer statement, they need to be recorded in billings and/or cash receipts.  Payables will not show up in a customer statement. Doing only a payable will get all the accounting correct, but does not keep the complete picture on the AR side where it can be communicated easily to the customer via the statement.

    It is more clicks, but I find it is clearer record keeping to create a credit memo for the entire amount of the refunded item regardless of payment status. The credit memo will reverse the revenue from the original sale.

    Then, if money is being returned electronially, create a negative cash receipt.

    If a refund has to be done via a physical check, create a positive "refund billing" for the amount of the refund. It should have a single billing line for the amount of the refund and the revenue GL Account should be a customer refund GL account (or other clearing account). Then either a payable or a cash disbursement can be created on the AP side and the expense or debit GL Account should be the same customer refund GL account.  This effectively moves the money from the AR cycle to the AP cycle so a physical check can be cut. 

    If you've created a negtive cash receipt, you can manually createa negative Billing Cash Receipt to apply the negative cash receipt to the credit memo.  If you've created a "refund billing, you can apply the credit memo to the refund billing. 

    This process keeps the complete story of the customer's activity in the AR side of the cycle where it will show up in the customer's statement.

    *Important note - creating a negative receipt requires deactivating the 2 validation rules that require the balance to be greater than 0 and to not be negative.


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