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[Michael Carr]

I am looking to create financial credit memos only for items with no inventory impact. In essence i would like to give back purchase price on items without any entries in the inventory ledgers. We are either NOT having the item returned or scrapping it immediately so we don’t want to record it into inventory , at all. We are using 2013 R2.

Thought we could do it via the Sales Credit Memos (9302) entry screen in Financial Management- Receivables but to my surprise if we enter Quantity and post…….. it automatically creates receipts into inventory ledgers.

We need to enter items to account for the credit properly to our customers.

Is there any way to issue sales dollar credits for items without triggering an inventory posting?

Thanks for any answers.

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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[Michael Carr]

note: The Return Receipt on Posting in the Sales and Receivable Setup IS NOT Checked?

leaves me stumped.

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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[Ian Ray]

Here is how we do it (or at least how I have been documenting that we do it).

Create an item charge for how you want to label the credit memo. Set the Gen. Business Posting group to something appropriate, likely the same code.

In Gen. Posting Setup, create entries for different Gen. Business Posting Groups with the new Gen. Prod. Posting Group. Set at least the Sales Credit Memo Account to the appropriate G/L account.

Create a credit memo with the posting date, customer, charge item, quantity, value. In Item Charge Assignment, use Get Shipment Lines to bring in the items you are crediting for. Assign as desired.

When this is posted, it will create G/L entries for the appropriate A/R account and for whatever account you set the item charge to go to. In the case I am describing, this will be a quality-related account.

This will also create ledger entries with a dollar value and a 0 invoiced quantity.

There may be a better way of doing this. We do this so infrequently that this seemed like the most straightforward approach.

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Ian Ray
Cypress Grove
Arcata CA
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[Ian Ray]

Another method is to go straight to a G/L account. It follows the same pattern except that you don’t have to create an item charge and associated general posting setup.

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Ian Ray
Cypress Grove
Arcata CA
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[Ron Ketterling]

Can you use a GL account?

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Ron Ketterling
President
Business Automation Specialists of MN, Inc.
Minneapolis MN
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[Michael Carr]

Thank for answers.

Those are workarounds that should be unnecessary. Need the software to function as designed. will create to much confusions and errors in accounting as well as customer relations. 

Further research :

According to documentation the create receipt flag on S&R setup if unchecked will create only a credit not a return receipt. Yet checked or unchecked it always creates a cost entry and sometimes a item ledger entry and sometimes not. This is what it does
Unchecked -creates credit memo, posted return receipt to Item ledger and GL posting BACK to Inventory,
Checked creates credit memo,AND GL posting back to inventory and NO inventory posting —-why do we create a GL entry to FG Inventory and NOT a Inventory ledger posting?

Is there a fix for this?

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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[Ian Ray]

I think the answer is no, we can’t post a sales credit memo with inventory-type item lines without affecting inventory. There is no setting for that. It is similar to how there is no setting to post a sales invoice with inventory-type items that doesn’t affect inventory.

I think this all does function as intended considering the design of inventory-type items on sales documents. If we post a sales invoice with inventory-type item lines, inventory of those items is affected. We can have a sales shipment step in between the sales order and invoice to account for shipping the items prior to invoicing them, but this still affects inventory, just with an additional step. The same thing is happening with a sales credit memo and sales return order/receipt. That is, if we insert a sales return step into the process prior to posting the sales credit memo, the items can be returned to inventory prior to posting. If “return receipt on credit memo” is checked, this will automatically post a return receipt when a credit memo is posted; that’s all that setting does as far as I can tell.

The wording of “return receipt on credit memo” is a bit confusing. The setting perhaps should be titled “post return receipt document on posting credit memo” or something like that. As it is, it could sound like it changes the process more than just posting something automatically.

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Ian Ray
Cypress Grove
Arcata CA
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[Michael Carr]

Ian,

Thanks, I just can’t see that it is working with any coherent logic at all. Why post a GL posting to inventory if you aren’t posting to the Item ledger table ? you are just creating an inventory discrepancy?

And the documentation is completely out of sync with the actions of the check box.

Thanks for your info.

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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[Ian Ray]

Not creating an item ledger entry is odd.

If you do “navigate” from the posted return receipt, you don’t also see an item ledger entry and warehouse entry?

This is what I see with “return receipt on credit memo” checked.

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Ian Ray
Cypress Grove
Arcata CA
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[Michael Carr]

Ian and David

Thanks for the sharing of info.

I didn’t realized that it creates a return no matter what and thus there is no way to just give a customer money back and leave them a trail of what you are giving them credit for items that are disposed of on site or just disposed of after testing. No reason for these to impact inventory and in fact , they technically are your customers property until you issue credit so to post to inventory. So that doesn’t meet US accounting principles.

Not customer oriented handling at all, not very thoughtfully designed for sure.

I will have to investigate your work arounds to see what will work best for us.

Microsoft , if you are listening , this needs improvement —-a lot of improvement!

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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[David Wiser]

One solution I’ve seen is to add a checkbox to the sale return order/credit memo page indicating whether the item is being returned or not.  The desire is to be able to identify the item on the credit memo.  When the checkbox is unchecked, the credit returns the item to inventory like normal.  If the checkbox is checked, then the item is brought back into inventory, but this triggers a subsequent process to adjust the inventory back out.  This way the credit memo shows the item but inventory is not changed.  This works well for credit being given for “dispose on site” types of transactions.  If the intent is just to give back some sales dollars, then I prefer the Item(Charge) method against the original shipment.

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Dave Wiser
Controller
Beckwith & Kuffel
Seattle WA
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[Michael Carr]

Dave,

Thanks for your help. As feedback I see how the item charge would work the best in our situation. When we create the SRO we enter a generic RMA part so if we have a disposal on site or a trash decision we just apply it to the generic part.

Thanks for the point in the correct direction.

Ian, thanks for your help and congratulations on the Member of the month.

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Michael Carr
VP , Finance
Philadelphia Scientific LLC
Montgomeryville PA
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