Closing Out Vendor Returns

When a Return to Vendor shipment is processed, Pending records are created for the shipment during invoicing.  These Pending records are used to track the items while they are at the vendor and to provide information about outstanding or open returns.

Once the return has been processed by the vendor and the eventual disposition of the items sent to the vendor is known, the system allows you to "clear" the records for the returned items from the pending file. 

Items returned to the vendor are normally resolved in one of the following ways.

      The Vendor issues you a credit for the items returned. - In this situation, the vendor issues a credit memo to you for the merchandise returned to them.  This situation is very similar to processing a return to vendor for immediate credit except that the accounts payable credit memo is created for the vendor after the shipment has been processed instead of as the items are invoiced.  This type of resolution is processed using the Pending File Management program.  This program allows you to "tag" a single line item or multiple line items for a specific vendor in the Pending file and to specify the value at which each item will be cleared from the file.  Once this is done, you may press Alt + P buttons to have the system create an AP credit memo for the tagged lines.  As the AP credit memo is created, the system updates the following data files as indicated below.

      The Vendor repairs or replaces items and returns them to you - In this situation, the vendor repairs or replaces the items which were returned and sends them back to you.  As the goods are received, the Pending records for the original return are cleared from the Pending File and the goods are returned to stock.  This type of return is processed using the "Return to Inventory" feature which is available in the Pending File Management program.  The "Return to Inventory" procedure moves the selected items and quantities from the Pending file into the inventory location specified by the operator and it creates a journal entry for the difference between the average cost of the items in the location they are being returned to and the cost which is stored in each Pending record.  Note:  The new Receiving program will also automate this procedure.  When the goods are received the receiving program will clear the Pending records for the original return from the pending file and return the goods to stock.  If the original shipment (order) had an internal RA number in the reference field (REF_NO), then this information will be passed to the RA system for further processing.  As the "Return to Inventory" transaction is processed, the system updates the following data files as indicated below.

      The Vendor replaces the items returned to them with different items - In this situation, the vendor sends back different merchandise than you returned to them (for example you return monitors and the vendor sends you back modems).  This can happen for several reasons (stock rotation agreement, vendor cannot repair or replace items because they are discontinued or unavailable, etc).  This situation can be handled by creating an AP credit memo for the items which were sent back to the vendor.  The credit memo is based on the credit given for the returned merchandise by the vendor.  The replacement items are then received directly into inventory like a normal inventory receipt.  The AP credit memo is used to clear the open records for the return from the pending file.  An accounts payable invoice is entered for the replacement merchandise and the credit memo for the return may be applied against the new invoice to reduce the open balance if desired.  The gain or loss on the RTV return is based solely on the difference between the average costs of the items sent back to the vendor at the time they were moved into the Pending file vs. the amount of the credit issued by the vendor.  The new or replacement items are posted directly into the inventory or inventory accrual account and are then matched to the new accounts payable invoice as the new invoice is manually entered into the system.  The data files on the system are updated in the same manner as when the vendor issues a credit memo after the fact, except that an additional accounts payable invoice is manually entered for the replacement items, and additional records are created in the Inventory Transaction file for the replacement items as the items are received.

      The Vendor does not issue you a credit, or return or replace the items.  In this case, the vendor has refused to take the items back or they have determined that you are not owed a credit or replacement merchandise.  This situation can be handled in one of two ways.

      If the vendor returns the items you shipped back to them, and you wish to put the items back into inventory, you can process a Return to Inventory in the RTV Management program.

      If the vendor does not return the items to you, or they do return the items and you do not wish to put them back into stock, you can write off the pending records for the shipment and charge the write off to a specific General Ledger Account.


Invoice Vendor

Return to Inventory

Write Off

Special Vendor Return Situations