Replacing a faulty item

Cloud user!

What is the correct procedure if we need to replace a faulty product for a customer?

The product was invoiced and delivered.

We can of course write off the extra stock but I like doing a delivery note as we then have a record of replacing this product when you look through the customer history.

Creating a delivery note without an invoice will of affect “Qty to invoice”.

Is it an acceptable solution to add that item on the old invoice, with no price and a description that it is a replacement or what would be the correct way of handling this?

Thank you in advance.

Create sn invoice with a selling price of zero?

What happens to the faulty item?

why dont you generate a credit note, pick the faulty one generate credit note (add to your inventory) then delivery the new one by new delivery note.

I think this can be done without changing the Sales Invoice.
only need to make a Delivery Note in (-) for receipt of damaged goods. Then create a new Delivery Note to send replacement goods.

This is what we have been doing, but not sure if it’s appropriate or a “clean” way to do it, accounting wise. What I mean is usually there are many ways to achieve the same end goal, but there might be a more appropriate way of doing it.

The returned item in our case, usually gets tested and is then discarded or given to staff depending on the issue. Often times there is nothing wrong with a product, but a customer might have an issue for whatever reason.

Regarding if what you are doing is correct or not or preferred you should solicit an accountant. I quoted this part because in many jurisdictions discarding is treated different from giving to staff as for the latter it may have tax implications as gifts even of so called discarded items still have a value, same for the discarded item, in both cases purchase value.

Also when e-invoicing took place you need to follow the procedures outlined to cancel them.

The solution by @Mabaega, however pragmatic, may also be problematic because the returned good should still be written-off at a defined value which is different from Sales price or even purchase cost and thus affect the value of the inventory.