X3 provides many options when processing customer returns. The tricky part of it is knowing which process applies to which situation.
Situation 1: Customer Return for Replacement or Credit
Creating a Credit Memo from a Customer Return. These are generally processed when the original shipment was processed through X3 and the customer would like to return some or all of the shipment. These returns can either be for replacement or for credit.
The customer return transaction can be linked to the original X3 shipment and entered prior to receiving the return so that when the return is actually received, the quantity returned can then be entered. The customer return transaction when matched with the original X3 shipment will increase the quantity on hand and make the following journal upon creation of the return:
The following is the journal entry created if this is a return for credit.
Inventory (Cost)
Cost of Sales (Cost)
When the credit memo is created, the stock transaction flag on the header is then automatically set to YES and cannot be changed. Posting this credit memo will make the following entry:
AR (Price)
Gross Sales (Price)
Sales Clearing (Price)
AR Clearing (Price)
If the original shipment is being returned for replacement of the same quantity of the same product returned and there is no reason to adjust the original invoice, then confirm the Generate Credit Memo field on each line is set to NO. A return for replacement generates the following entry.
Inventory (Cost)
Cost of Sales (Cost)
The Generate Credit Memo field on each return line defaults to NO. This can be changed manually.
The Update Stock field on each return line initially defaults to NO and changes to YES once a value is entered in the Return Quantity field.
Situation 2: Credit Notes
A credit note is a credit memo linked to an invoice rather than a return. These are generally processed when there is a price adjustment needed on the original invoice. A credit note will produce the following entry if the stock transaction flag is set to yes:
Gross Sales (Price)
AR (Price)
No stock transaction or cost of sales/inventory journal is actually generated. Not sure why we can change the flag on the header of the credit memo if it does not actually generate anything.
Situation 3: Credit Memos Not Linked to a Return or Invoice
These are generally processed if the original order/shipment/invoice did not take place in X3. For example, the original transaction may have taken place in the legacy system.
Creating these type of credit memos will produce the following entry.
Gross Sales (Price)
AR (Price)
A related stock transaction can recorded if the Stock Transaction field on the header of the credit memo is set to YES. The transaction will use the system cost of the product’s valuation method at site of the credit memo. The credit memo line allows for the entry of a location and status. If the Stock Transaction flag is set to NO, no cost entry or inventory transaction results. When it is set to YES, the resulting stock transaction will produce this entry the next time the stock journal is run.
Inventory (Cost)
CGS (Cost)
Other Notes:
1. If the customer return is processed before the invoice is generated a net invoice can be generated instead of a credit memo. You must set field on the customer return line Deduct from Invoice to YES.
2. The shipment quantity can be modified after validation and before the invoice is generated resulting in no credit memo and a net invoice.
3. All this assumes that the Anglo-Saxon Stock Accounting parameter (ACCDTSTK) is set to YES, which out of the box defaults to NO.
Need Help With Sage X3?
Just leave your name below and a Sage 100 expert from RKL eSolutions will follow up and assist.
