Purchase returns and supplier credits
Send goods back to a supplier, record the credit they give you against the bill, and take a refund for any credit left over.
What it is
A purchase return sends goods back to a supplier — damaged, wrong, or more than you need. It works in two steps:
- The return: the goods leave your stock.
- The credit: the supplier's credit for those goods. It comes off the bill first; anything above what you still owe becomes money the supplier holds for you, which you can use on later bills or have refunded.
Purchasing › Returns has three tabs: Returns, Supplier credits and Refunds.
Who it is for
- Warehouse staff who send goods back.
- Buyers who agree credits with suppliers.
- Accountants who match supplier credit notes and refunds.
Before you start#
- The goods must have come in on a goods receipt and still be in stock.
- Lots and serial numbers, if the items are tracked, must be the ones that receipt brought in.
- The person needs the right to add purchase returns; refunds need the supplier refund right.
Step by step#
- Open Purchasing › Goods received and choose Return goods in the receipt's row menu (or New return on Purchasing › Returns and pick the receipt).
- Enter the quantity of each line going back, with its lots or serial numbers.
- Tick credit it now if the supplier has already agreed the credit.
- Save. The goods leave stock; the return shows as Waiting for credit if not credited yet.
- When the supplier confirms the credit, choose Credit on the return.
- If credit is left over after the bill, record the supplier's refund on the Refunds tab when the money arrives.
What the credit does#
- The credit's value is the returned share of the receipt lines (price plus tax).
- It reduces the goods bill first. If the bill was already paid, or the credit is larger than what is owed, the rest becomes the supplier's balance in your favour.
- That balance can pay later bills (Pay from the supplier's balance) or be refunded to you into Undeposited Funds or a cash or bank account.
- Uncredit undoes the credit exactly, as long as nothing has been refunded from it.
- A return can be deleted only once it is uncredited; the goods then come back into stock.
How it posts to the books#
- Return saved: the stock leaves at the current average cost — Dr Purchase Returns / Cr Inventory.
- Credit: Dr Accounts Payable (the part applied to the bill) and Dr Supplier Balance (the refundable part) / Cr Purchase Returns. What is left in Purchase Returns is the difference between the price and the stock's cost.
- Refund: Dr the account the money went into / Cr Supplier Balance.
Limits and what is not there yet#
- Only goods still in stock can be returned. Goods already sold cannot be sent back through a purchase return.
- A purchase return starts from a goods receipt. For a price reduction with no goods back, correct the bill's price instead.
Questions#
The supplier agreed a credit but hasn't sent it yet. What do I do?
Save the return without the credit. It shows under Waiting for credit until you choose Credit.
What happens if I return goods after paying the bill?
The credit cannot reduce a paid bill, so it becomes money the supplier holds for you. Use it on the next bill or record their refund.
Why is the stock value different from the credit amount?
The goods leave stock at today's average cost, while the credit is at the price you paid. The difference stays in Purchase Returns.
Can I see a supplier's credits in one place?
Yes, on the Supplier credits tab, and on the supplier's own page under Statement and Documents.