Customer Returns
Customer returns are managed by two distinct processes:
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Customer return management – tracking information about items that customers return to you.
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Customer credits and refunds – crediting the customer with a credit memo, or refunding the customer after they have returned an item.
Customer Returns Workflow
The following workflow shows each step of the customer returns process.
Items do not need to be in the inventory, and non-inventory items can also be returned and issued with credit memos.
This workflow shows steps without the Allow Refunds in Advance of Returns preference enabled. For more information on returns preferences, see Preferences for Customer Returns.
Customer Return Management
When a customer returns an item, it is tracked in a return authorization.
Each return authorization records data regarding the Customer Returns Process, such as item numbers and prices, as well as procedural information such as the status of each return. This process can include issuing and approving the return authorization, receiving items back into inventory, issuing a credit or refund to the customer, and closing out lines on an authorization.
The return authorization is used by each department to process the return. The receiving department matches return authorizations to items as they receive shipments. The authorization shows the accounting department, the credit or refund amount due to each customer, and whether the credit or refund has been processed. Management can use return authorizations for Reporting on Customer Returns Impact on the company.
As the return authorization form is updated at each point in the process, accurate and efficient returns data is maintained for all departments. This is necessary because your sales, inventory, and accounting functions are integrated. For example:
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When a return is initiated from the original sale, the process is simplified, time is saved and keying errors decrease because you do not re-enter information. The information from the sale is copied to the return, such as the sale price and quantity sold.
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When the warehouse receives an item against an authorization, totals for stock levels and inventory values are simultaneously updated without entering additional forms.
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Depending on your set preferences, a credit memo is not issued by accounting until the item is received in the warehouse, which safeguards against losses due to crediting unreceived returns.
With an integrated system, all employees use one set of data to manage, process and track returns with current, accurate information in real time.
Customer Credits and Refunds
After you receive a returned item from a customer, you can either credit or refund the customer with the amount that they paid for the item.
Customer credit is provided in the form of a credit memo that the customer can apply to open or future invoices. The value of the credit memo is deducted from the invoice. See Customer Credit Memos for more information.
A customer refund records the payment you make to a customer when they return an item. This payment is generally in the form of currency or a printed check. See Customer Refunds for more information.