Credit Notes & Inventory Quantity

Good Day @lubos


I got really confused how the inventory quantity shows wrt to credit notes in Manager. we do not usually receive debit notes from our customers and so i did not have a chance to check how the credit notes tab adjust the inventory quantity.

today i received an item quantity of 79 numbers as a debit note from one of my customers. i entered the same as a credit note in Manager.


now when i check the inventory items, the Qty to deliver and Qty owned are updated.

also, the item total shows under Qty to invoice in the Customers tab.


now my question is, when an item is received back by entering a credit note, shouldn’t the items be shown under Qty to receive rather than under Qty to deliver ?

also, the Credit note can only be copied to a New Delivery Note which should be in my opinion New Goods Receipt.


i am also a little confused about the Qty on hand and Qty owned but i think i have made things clear to you with everything above.

PS: a feature request would be to add another reference field for credit and debit notes where the user can enter the internal company document reference number and also the received document reference number. these would help when issuing statements.

This situation is easy to misunderstand. The key is to know that both credit notes and delivery notes apply only to customers. Debit notes and goods receipts apply only to suppliers.

So quantities from a credit note contribute to the Qty to deliver column as negative numbers. And credit notes can only be copied to delivery notes, because copying to a goods receipt would leave you without a customer, shifting you into the Accounts payable domain. For the same reason, Qty to receive applies only to goods coming from suppliers, and goods receipts cannot be used to record returns from customers.

So the way to record the returned goods when they arrive is with a delivery note, but with quantities entered as negative numbers. Think of the transaction as a reversal of the delivery note on which you recorded the original delivery to the customer.

As for why the quantity shows up under Qty to invoice in the Customers tab before the return of goods is recorded, that is because of the temporary imbalance between Qty to deliver and Qty owned . If the customer were to keep the goods after you issued the credit note, you would need to issue another sales invoice to undo the effects of the credit note. When you enter the negative delivery note, that Qty to invoice will disappear.

As a final note, all the preceding discussion assumes the goods are actually intended to be returned to you. If you are only adjusting the price, such as when goods were damaged in transit, you should enter zero quantities in the the credit note, as explained in the relevant Guide.

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thanks @Tut for explaining that in detail. I do understand how the tabs and various accounts in Manager are linked.
my question was can we make it a proper and correct accounting process rather than finding workarounds.

I did not say what I described was a workaround. That is the way the program is designed, rooted in the structure of the Accounts receivable, Accounts payable and Inventory on hand control accounts with their customer, supplier, and inventory item subsidiary ledgers. Delivery notes and goods receipts both interact with only two of those accounts, not all three. So you are limited to using the delivery note or goods receipt form that includes the customer or supplier.

Negative entries are not incorrect accounting processes. They happen all the time, although they are often camouflaged by the group we assign the accounts to where they are posted. They even happen within a single transaction. Think of a sales invoice where you extend a bonus discount, not on an individual line item, but as a separate entry (as a negative number).

If you receive goods back from customer, it should be entered as negative delivery note. This is not a workaround. It’s how it is intended to work.

The reason why Qty to deliver is negative rather than making Qty to receive positive is to not mix up supplier and customer qty balances. It would make understanding what’s going on with inventory more complicated.

Also, some businesses deliver goods to customers before invoicing them. This would again make Qty to deliver negative and it would be wrong to show it as Qty to receive because you are not expected to receive anything. You will eventually invoice for these goods delivered and Qty to deliver will be zero.

Yes, I could add more tabs, more columns etc. but this would just make the system a lot more complex overall without necessarily communicating more information or without making anything easier.

I still think something can be improved though. For example, Goods receipts tab could be renamed to Supplier deliveries and Delivery notes could be renamed to Customer deliveries or something in that regard to indicate one tab is to capture movement of goods between you and suppliers and the other is to capture movement between you and customers.