How to handle returns to vendors

In order to create a Vendor credit, open up the Enter Bills screen and click the radio button at the top that says "Credit." Then, using the Items tab in the body of the Bill Credit, put in the exact things that you paid for/returned. If you didn't use Items, then put it to the same account on the Expense tab. You can even tie them to a Customer:Job if that was part of the history too.

When it comes time to pay the next set of Vendor Bills, you can use this credit to reduce your payment by selecting this Vendor in the Pay Bills screen and using the "Set Credit" tab at the bottom

This is how we handle the credit memos. However we do not enter these until we get a credit memo from the vendor. I need a way to record that we sent the items back to the vendor and THEN once we get the credit memo from them we can enter a credit to the vendor account.

I'm also interested in reading the responses - we run into that, as well, and are trying to find the best way to handle it.

We tend to do an item receipt referencing an RGA for the number, then in the body, choose the items being returned. We can't enter a qty since it won't allow a negative item receipt, so we skip a line or two then in the body write a summary of the qty of each number being returned and any additional notes. Unfortunately, it doesn't remove the items from inventory until the credit comes through....but we also run into the problem that you can't have a credit "pending". (When we receive the credit, I do a credit and delete the item receipt - or another option would be to check the bill received box and reference the credit number in the body to provide a link for previous notes that you want to keep.)

Also, wish QB would show the credit memos as part of the remittance advice of the check and show up when you pull up a specific check!! :) I think there is definitely room for improvement in the credit area of the program!

Maybe we'll both learn something new with your question - you're certainly not alone with your curiousity!

Here is a method I've worked out for returning product to a vendor:

1. Create a duplicate Purchase order template and rename it "Vendor Product Return"

Edit the template:

Change the title to "Vendor Product Return"

Relabel the PO number field to "Return Authorization Number"

Relabel the Terms field to "Return for:" (Later you will create credit terms of Credit, Refund, Replacement )

Change appearance as desired.

2. Returning the product:

Start by opening a PO form. In the upper right corner, change the template to "Vendor Product Return".

Complete the form, print and enclose as packing list; send another copy as a debit memo to the vendor.

Note that this does not affect inventory. (You still own it, anyway.)

3. Receiving credit/replacement:

a. If the vendor issues a credit, record the credit memo and list the items. This will clear them from your inventory. CLOSE the Vendor Product Return PO without receiving any items.

b. If the vendor sends you a replacement, receive the VPR PO as any other PO, creating a bill. Create a vendor credit memo for the returned items.

This will balance the inventory, and the CM can be applied to offset the bill.

c. If the vendor sends a refund, create a vendor credit memo for the items in the amount of the refund.

This will remove the items from inventory.

DO NOT enter the check as a payment. Wait until you are ready to deposit it to your bank.

When creating a bank deposit, after including any other checks being deposited, include the refund check on an additional line.

In "Received From", select the vendor name, for "From Account" choose "Accounts Payable", include reference info in the "Memo" field and enter the check information.

Complete the deposit.

Then go to "Pay Bills".

The check should appear as an amount payable.

When you select it, the credit memo should be available to 'pay' it.

This will clear them both.