How to return supplier inventory returns

If we maintain inventory and make purchase invoices of 10 items against supplier, then how can we treat purchases return of 4 items?

When you return items, do you get cash refund or credit?

If you get cash refund, simply record this transaction under Bank Accounts tab where you will receive money and categorize them to Inventory on hand account.

If you get credit, go to Journal Entries tab and make a journal entry that will look like this:

(Apologies if i have missed somthing)
I searched the forum but could not find any posts explaining how do we deal with items returned to supplier and receiving a refund now?
I created a Debit note but the amount goes to supplier credits, this is not the case, i received a refund to my bank account.
When i receive money from bank account i cannot allocate refund to the item?
Any help would be appreciated

The only way i could achieve this is reverse spend money, is this the only way?

As you generally return the items first and then receive the refund second, it quite ok to do the Debit Note as this records that items have been returned, then when you receive the refund - Receive Money with Account = Accounts Payable - Supplier, this will cancel out the Supplier Credits.

If the supplier didn’t do a refund, then the Supplier Credit would sit there until you purchased from them again and the Supplier Credit would become a full or partial payment towards that new invoice…

Fantastic, thank you!
Just wondering, is this a work around or the official way of entering the refund?

Would be nice if money was refunded, that on Debit note there was a dropdown for bank account as there is for invoice/supplier credits?

No its not a work around, it properly documents the movement of Inventory Items and it saves one from having to maintain separate tracking (external of the accounting system) that the refund does arrive.

The Debit Notes allows for the following:
Your inventory items quantity status is always correct.
Allows the Supplier three courses of action:

  1. Forwards a refund
  2. Sends replacement inventory
  3. Allows a credit against future invoices

Debit Notes could also be used where a Supplier has over charged you for a service (non-inventory). The Debit Note is your request for an adjustment to an invoice but that usage has declined over the years.

Debit Notes are a form of Journal, which transfers values between inventory and supplier credits therefore there is no need for bank account access, the same applies to Credit Notes, another form of Journal

Neither, Debit or Credit notes have an actual account so there is no location to place the bank transaction.

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I have been using this approach to deal with Supplier refunds and all was ok. I have just updated to V 17.10.15 and i now have two purchase invoices which say overpaid and one that is 90 days overdue! Its causing a bit of a headache as i cannot find the source of the overpayment. Whether i have been doing things incorrectly im not sure, i just followed instructions above.
@lubos has somthing changed?

Clicking on the balance due (ÂŁ45.29) of Invoice total ÂŁ156.91 see that the invoice was paid in full on 07/07/2017

It has somthing to do with how Supplier refunds have been handled.

please read the below topic for details regarding your query.

Yes I read that release but how does the above happen?

It isn’t possible to completely diagnose your problem without seeing the actual transactions. But from what you have shown, £45.29 was applied to invoice 3099645 that should have gone towards invoices 3077154 and 3037309. This may have been because you selected that invoice when posting a total payment of £204.18. This may have been by actual payment or debit note. Previously, if you overpaid one invoice, Manager applied the excess to other open invoices. Now, it leaves the excess as being applied to the designated invoice. That way, rolling payments do not occur, where you have difficult tracking just what has actually been paid. In other words, you have more control now.

The conversion was supposed to have happened automatically, so there must have been something unusual about how these three invoices were handled that slipped through the cracks. The good news is that the sums of invoices totals and balances due for those three invoices match. So the problem is contained there. Track down the payment, either a bank or cash transaction or a debit note. Properly allocate the amounts to the correct invoices, and the problem should both disappear and never recur. Let us know what you found.

Thanks @Tut, it is very strange. I have spent 3hours (so far!) trying to find the problem without luck and I have the data. Just to be clear, with this particular supplier, every time I pay a purchase invoice it is a spend money click from within the purchase invoice. So I don’t worry about automatic allocation so that payment is linked to that invoice. The problem is somehow linked to the items I returned. The process I used was creating a debit note which reduces item quantity and giving me a credit on the supplier account, then later when I actually receive payment back into bank account I create a receive money transaction select accounts payable then supplier which reduces the credit from supplier account. Everything was balanced and bank account reconciled until updating today.

I don’t understand how a purchase invoice that was paid with the exact amount is now saying overdue. Surely, if there was a problem/overpayment with a particular invoice the the feature should link the offending transaction with the the offending invoice and not to any other invoice that clearly says it was paid.

First, let’s correct terminology. A purchase invoice credits Accounts payable and the supplier’s subaccount. So a debit note debits Accounts payable. Nevertheless, I understood what you were describing.

As I was suspecting, your problem occurred because of the debit note. You haven’t explained everything in quite enough detail to be sure, but it sounds like your debit note might not have specified the purchase invoice it applied to, only the supplier. Is that correct? If so, you’ve created an unallocated amount of money that Manager will try to apply to open invoices. When you enter the refund receipt, if you specified an invoice, that one could end up being overdue because you’ve forced Manager to reverse a payment you already made on it.

Look at all the transactions involved again. Do they all specify invoices? If not, edit them so they do. If that doesn’t fix them, remove all invoice references from all of them to see how Manager auto allocates. Having still not seen all the transactions, it’s tough to visualize exactly what happened, but I think the trouble stems from a mix of transactions where part specified invoices and part did not. I think it will work either way, but requires consistency. Sorry, but I don’t have time to model this right now.

Yes that’s correct, thats the procedure I was recommended (previous post in this topic)

No invoice specified, I just selected accounts payable and supplier. (I have checked this but will check again later to confirm)

I know, is difficult to understand without seeing the transactions, I can see them and it’s still difficult! I will try to show screenshots of the edit screens of the debit notes and the receipts.

Thanks for your help.

                         *** PROBLEM SOLVED *** 

(after more hours!) :joy:

I changed the Debit Note date to the refund receipt date and all was back in line.

Note, i had not over paid any invoice.

When you create a Debit Note, then create purchace invoices inbetween the date you enter the refund receipt, manager applies the debit to that invoice even if you click spend money from that purchase invoice and pay it in full.

It may be as designed but Manager needs to handle this better.

@lubos, I never receive the money for a returned item on the same day you returned it.
I need to enter a debit note to show that the item was returned and is not now in stock.

A few things i have noticed on my journey.

  1. When viewing the Debit note list, the Debit Note description is not visible for each Debit Note. it would be nice to see the description.

  2. In my panic this morning of having to create invoices for waiting customers, i wanted to roll-back to the previous version (saved)(as i have in the past) adding the backup i made before updating (problem starting). I uninstalled Manager then re-installed the previous version and it wouldnt allow me to import my backup it came up with this screen and did not allow me to continue.

Is there no way of rolling back now incase of any major issues with new features?

I think, not if you apply the Debit Note to the “specific” Purchase Invoice which it relates to, then the Debit Note shouldn’t (?) be available as a part payment towards any subsequent Purchase Invoice (not tested).

NOTE: If you have a Purchase Invoice for 100 and fully pay that amount, then any Debit Note applied to that Purchase Invoice will cause it to be shown as “overpaid” until the Receive Money is posted against that same Purchase Invoice.

Possibly you needed to delete (copy elsewhere) the current (updated) business data file as well, as that file probably holds a flag indicating which version it relates to. If its not available then the re-installed previous Manger wont know that it exists.

Payment is usually taken the day I receive the items and create the purchase invoice.

My error could be then that I failed to select the purchase invoice when entering the Debit Note and refund Receipt - allowing manager to auto-select.

I backup to a folder on my computer and on to a USB whenever I make a backup. May try deleting the folder on computer (save USB!) and try your suggestion.

Your backup folder on the computer is not an issue, its the business file located under Preferences - 0 App Data 1, that is where Manager is looking.

Well, this is the issue.

If you enter debit note and don’t select which invoice debit note applies to, Manager will allocate the credit to the oldest invoice that is due.

You might argue this is wrong and that the amount should sit unallocated however then you’d see forum posts asking how can Manager allow situation where money is owed to supplier and supplier being owed money at the same time.

In other words, what Manager is doing is making sure that accounts payable balance equals to total of unpaid invoices. This is what everybody would expect.

If you enter debit note for invoice that you have already paid and the credit from debit note will be refunded, just allocate the debit note to purchase invoice (purchase invoice will become overpaid). When you receive refund, categorize it against the overpaid invoice which will debit your bank/cash account and credit your overpaid purchase invoice. If the refund received is the same as overpaid amount, the invoice balance will become zero and invoice will no longer be overpaid.

I wish I had done this from the start then I wouldn’t have had a blind panic and tried finding an error I hadn’t created.

I still don’t think this is the correct way. Overpayments (I think) are to help you find errors, it places them near the top. Refund isn’t an error.

If there could be 3 options when creating a debit note,

  1. Selecting invoice you hadn’t paid yet.
  2. Leaving invoice field blank and let Manager select open invoices.
  3. Have a Refund tick box and have a supplier credit/Refund account.

Then receive money, select supplier credit/Refund account then supplier.

No false overpayment needed.