ax2009_enus_tl1_07

Chapter 7: Vendor Returns

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CHAPTER 7: VENDOR RETURNS Objectives

The objectives are:

• Create a vendor return by using a Negative quantity, the Create credit note feature, and the purchase order type Returned order.

• Return an item with multiple serial and batch numbers to a vendor.

Introduction Companies frequently return items to their suppliers when, for example, the goods are the wrong size/color, the expiration date has passed or the goods are damaged during transportation or because of a wrong handling.

In Microsoft Dynamics® AX 2009, vendor item returns are handled like purchase orders, as they involve transactions in the Inventory management, General ledger, and the Accounts payable modules.

Vendor Returns discusses how to return a product to a vendor. You will be shown how to handle the returns with and without serial and batch numbers attached.

Microsoft Official Training Materials for Microsoft Dynamics ® Your use of this content is subject to your current services agreement

Trade and Logistics I in Microsoft Dynamics® AX 2009

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Create Vendor Returns Certain modules are affected for purchase orders and returns when you use the Vendor Returns feature.

FIGURE 7.1 MODULES AFFECTED IN PURCHASE ORDERS AND PURCHASE RETURNS

Companies can issue vendor returns for various reasons, such as for damaged products or perhaps the vendor shipped the incorrect product. You must issue a vendor credit note when items are returned to the vendor. There are three methods to create vendor credit notes, as shown in the following table.

Method Description Use a negative quantity A purchase order for an item with a

negative quantity.

Copy the original purchase invoice. The credit note is created from the original purchase invoice.

Returned order purchase type The purchase order type is selected as Returned order and not as a purchase order.



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Negative Quantity

The first method to create a vendor return is to specify a negative quantity on the purchase order line in a new or existing purchase order. Typing a negative quantity in the purchase order line has the same effect as if you are actually selling from your inventory to the vendor that you want to return the items to.

Companies can use the Negative Quantity method, for example, when a return is made to a vendor and no reference to a specific purchase order or Return Merchandise Authorization (RMA) number is required.

Procedure: Negative Quantity

To create a vendor return by using negative quantity, follow these steps.

1. Click Accounts payable > Purchase Order Details and create a new purchase order.

2. “Select an item number and, for example,”-5” in the Quantity field to indicate that this is an item return. Notice that the amount in the Net amount field is automatically given a minus sign.

HINT: You can indicate a specific return action by going to the Setup tab on the purchase order line and selecting a Return action in the Returned order field group. The return action is for information only and has no functionality on the vendor return.

3. When negative quantity has been entered, post the return. 4. On the Purchase order header, click Posting > Invoice. 5. In the Posting invoice form, ensure that All is selected in the

Quantity field, specify the invoice number in the Invoice field, and then click OK.

6. The invoice has now been posted and Microsoft Dynamics AX 2009 records the items as being removed from the system. To verify this, click Inventory > Transactions from the purchase order line. Notice the negative quantity, and that the Issue column is set to Sold to indicate the items leaving the inventory.

Copy Original Purchase Invoice

Another method to issue a vendor credit note is to copy a previously posted purchase invoice. The copy feature is time saving as it prevents you from having to key in the original purchase information again.

This method is primarily used when you must match a credit note to an original purchase order. The original pricing is used when you copy the original purchase order. This eliminates any variance that may occur if the purchase price has changed after the original order was invoiced.



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In addition, when you copy the purchase order, Microsoft Dynamics AX 2008 ensures that the return quantity does not exceed the original quantity received from this purchase order.

Procedure: Copy the Original Purchase Invoice

To create a vendor return by copying the original purchase order, follow these steps.

1. Click Accounts payable > Purchase Order Details and select a Purchase order that you want to create a credit note for.

2. On the Purchase order header, click Functions > Create credit note. 3. The Create credit note form contains a list of posted invoices from

the specific vendor on the Invoice tab; and for every header, the lines are shown in the lower pane.

4. Highlight the invoice number from which you want to create a credit note.

5. Select the Mark check box for the item that you want to return, and then update the Quantity field.

6. Click OK and your credit note is created in the Purchase order form with the line that you selected. Notice that the quantity is a negative number which indicates a credit note.

NOTE: You can only copy one invoice for each credit note by using this feature on the header. If you create a credit note by using the feature on the purchase line level, you can select multiple invoices.

HINT: Select the Select All check box on the invoice header and all the purchase order lines will be copied to the credit note. If you do not want to select all the purchase lines, select the Mark check box on the appropriate purchase lines. Ensure that you have the correct header selected before you select the individual lines.

Procedure: Post the Copy of the Original Purchase Order

To post a copy of the original purchase order, follow these steps.

1. When the credit note has been created, you can indicate a return action on the Setup tab for each purchase order line. This is optional.

2. To post the return, click Posting > Invoice. 3. Specify the invoice number on the Posting invoice form and then

click OK. The credit note is now invoiced. 4. To verify the transactions, select the line for which you want to see

the transactions, and then click Inventory > Transactions. Notice that Sold is specified in the Issue field and that the quantity is negative. This means that the item is removed from inventory.



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Returned Order Purchase Type

The third and final way to issue a vendor credit note is to create a purchase order by using the order type Returned order.

NOTE: This is the only method in the Accounts payable module where you must enter an RMA number and a Return action.

The RMA number is a reference used for tracking purposes and is typically issued by the vendor when you return goods to them. This number acts as a pre-approval number with which to return goods.

Scenario

At Contoso Entertainment Systems, the Purchasing manager wants all Purchasing agents to have an RMA number associated with a return before any physical stock is moved. To support this requirement, all Purchasing agents must use the purchase order type Returned order when they create a return.

As an added benefit, the Returned order type checks that the quantity is negative, which minimizes data entry errors.

Procedure: Create a Returned Order Purchase Type

The following procedure shows how to create a vendor credit note by using the order type Returned order.

1. Open Accounts payable > Purchase Order Details and create a new purchase order.

2. In the Create purchase order form, select the vendor for which you want to return items.

3. In the same form, select Returned item in the Purchase order drop-down menu under the General field group. Notice that the RMA number field appears under the Purchase order field. You must fill in the RMA number at this point. Typically you have already been in contact with the vendor and have received this number.

4. Click OK to create the Purchase order header. 5. Create a new purchase line and select the items to return and enter

the quantity with a negative sign. 6. On the Setup tab on the purchase order line, select a Return action.

If a return action is not selected, an error appears when you try to post the invoice.

HINT: To create a new return action, right-click in the Return action field and select Go to the Main Table Form. In the Return action form, press CRTL+N to create a new return action and specify the name and description.



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7. Now the order is ready to be invoice updated by clicking Posting > Invoice, and specifying the invoice number, and then clicking OK.

8. The credit note has been fully invoiced. To view the posted transactions, click Inventory > Transactions. Notice that the quantity is negative, indicating that the items are removed from inventory because of the posted return

Create Vendor Returns for Serialized Items When returning a serialized item to the vendor, you must specify the item's serial and batch number on the credit note line. This ensures that the correct serial/batch number will be removed from inventory and also indicates to the vendor which serial/batch numbers are returned.

When you create vendor returns for serialized items, there are the same three options as for non-serialized items:

• Negative quantity • Copy the original purchase invoice • Returned order purchase type

Scenario - Vendor Return for a Serialized Item

Contoso Entertainment Systems ordered and received five lamp transformers from vendor 1103 - Fog Projectors.

After inspection, four of the lamp transformers were found to be defective and must therefore be returned to the vendor. These transformers are serialized so identification of which one is returned is important. By using the order type Returned order, the Purchasing agent can generate the negative purchase order appropriately.

Procedure: Create a Returned Order Heading

To create a Returned item order heading, follow these steps.

1. Click Accounts payable > Purchase Order Details and create a new purchase order.

2. In the Create purchase order form, select the type Returned order in the Purchase order field.

3. Enter an RMA number and then click OK.

Procedure: Create a Returned Order Line for a Serialized Item

To create a Returned item order line for a serialized item, follow these steps.

1. Create a new purchase order and purchase order line for an item that is serialized. Ensure that you type a negative quantity.



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NOTE: If you only return one item or one batch where only one serial or batch number is required for the purchase order line, you can select these numbers directly from the line, from either the Serial number field or the Batch number field.

2. Click Inventory > Reservation to specify the serial numbers. 3. The Reservation form shows the serial numbers available in the

warehouse of the purchase line.

NOTE: If the field Serial number is not available in the Reservation form, click Inventory dimensions display and select the Serial number check box, and then click OK.

4. Select the serial numbers that you want to return to the vendor by

entering the quantity requested in the Reservation column for the appropriate serial numbers. Notice that you can only select as many serial numbers as specified in the Quantity field of the purchase order line.

5. Close the Reservation form. 6. Select a Return action on the Setup tab under the Returned order

field group and invoice update the credit note. 7. When the purchase return has been posted, verify that it removed the

correct serial/batch numbers from inventory. To do this, click Inventory > Transactions on the Purchase order line. The Serial number field displays which serial numbers were selected and the Issue field displays the status as Sold.

Scenario: Vendor Return with Items from Two Batches

Contoso Entertainment Systems has made an agreement with vendor 1103 - Fog Projectors, to return ten Lamp transformers because the items are defective.

The defective transformers were received on two purchase orders, and from two batches. For tracking and statistical accuracy, the Purchasing agent will use the create credit note method for this return.

Procedure: Create a Vendor Return from Two Batches

To return items to a vendor from two purchase orders and two batches, by using the create credit note functionality, follow these steps.

1. Create a new purchase order for the vendor that you will return the items to.

2. To copy an original purchase order, click Functions > Create credit note on the Purchase order header.

NOTE: You can also access the Create credit note functionality from the purchase order lines.



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3. In the Create credit note form, highlight the purchase order that you

want to return from. 4. In the line for this purchase order select the Mark check box and

update the quantity. 5. Highlight the second purchase order that you want to return items

from. 6. On the line for the second purchase order, select the Mark check box

and update the quantity in the Quantity field. 7. Click OK and the information from the original purchase order is

copied into the new purchase order.

NOTE: When the information from the original purchase order has been copied to the new order, you can still edit the quantity of the purchase order in case you want to return a different quantity.

Procedure: Reserve Batch Numbers to be Returned

The batch numbers can be selected on each purchase order line in the Batch number field, but the recommendation is that you reserve the batch numbers for the item return instead. To do this, follow these steps.

1. Highlight the first purchase order line and then click Inventory > Reservation. The Reservation form shows the batch numbers available for the warehouse of the purchase line.

2. Items have already been deducted from a batch and from the available inventory. However, changes can be made to this, if for example the items must come from another batch or from two batches.

3. Specify changes to the batch numbers. 4. Delete the quantity specified in the Reservation column by

highlighting the number and clicking Delete. 5. Select the batch numbers to return to the vendor by entering the

quantity requested in the Reservation column for the appropriate batch numbers.

6. The purchase order number associated to each batch is shown at the bottom of the screen when a line it is highlighted on the Overview tab.

7. Close the Reservation form. 8. From the Purchase order form repeat steps 1 through 7 for other

purchase order lines. 9. Now the purchase order is ready to invoice update and as soon as the

posting is complete. Verify that the system removed the correct batch numbers from the inventory. To do this click Inventory > Transactions.



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Inventory Pick

Instead of reserving the serial and batch numbers, you can also do a pick by going to Inventory > Pick from the purchase order line.

The benefit of making a reservation is that the items that you want to return are reserved at the warehouse and the same items are not available for other people to reserve or pick. Notice that if the item has Picking requirements selected in the inventory model group, picking must also be performed in a credit note.



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Lab 7.1 - Working with Vendor Returns Contoso Entertainment Systems - Company CEU

Scenario

Contoso Entertainment Systems regularly orders lamps for LCD Video Projector Model 02, item number 1508, from vendor 1103 Fog Projectors.

Fog Projectors has promised a credit note for any lamp scrapped at receipt. Contoso Entertainment Systems has received a box at their general warehouse that has 10 broken lamps (item 1508) from purchase order number 000004.

Challenge Yourself!

Your task is to return these lamps to the vendor by using the same information found on purchase order number 000004.

Need a Little Help?

1. Create a purchase order header for vendor 1103, Fog Projectors. 2. Create the credit note by copying the original purchase order. On the

purchase order header click Functions > Create credit note. 3. In the Create credit note form find purchase order 000004 and

change the quantity on the line for item 1508. 4. Remember to select the Mark check box.

Step by Step

1. Open Accounts payable > Purchase Order Details. 2. Press CTRL+N to create a new purchase order. 3. Select Vendor account 1103. 4. Click Yes to transfer information from vendor. 5. Click OK. 6. Click Functions > Create credit note. 7. Click Purchase order 000004, and select the Select all check box. 8. In the lines section clear the Mark check box for the lines where the

item number is not 1508. 9. In the Quantity field type¨10¨. 10. Click OK. 11. Close all the forms.



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Lab 7.2 - Complete a Vendor Return Using Returned Order Type

Contoso Entertainment Systems - Company CEU

Scenario

The purchasing agent at Contoso Entertainment Systems has contacted vendor 1103, Fog Projectors for a Returned Merchandize Authorization (RMA) number for batch 000003 of item number 1706, to approve the return. This item did not pass the quality control.

The return must have batch number identification to be accepted by the vendor. Fog Projectors provides the purchasing agent with the RMA number AS2512 and you will use your generic invoice number of INV123.

The purchasing agent views the transactions to ensure that they were completed correctly.

Challenge Yourself!

1. Create a Purchase order with the order type Returned order with the specifications written in the scenario.

2. Make a reservation of batch number 00003. 3. Post the invoice and verify the transactions.

Need a Little Help?

1. Create a new purchase order and change the order type to Returned order after you select the vendor.

2. Remember to specify the RMA number, AS2512. 3. Use Inventory > Reservation to view and select batch numbers. 4. If the Batch number field is not displayed in the Reservations

form, click Inventory > Dimensions display and select the Batch number check box.

5. Click Inventory > Transactions to view the transactions.

Step by Step

1. Open Accounts payable > Purchase Order Details. 2. Press CTRL+N to create a new purchase order. 3. Select Vendor account 1103. 4. Click Yes to transfer vendor information. 5. In the General field group, click the Order type arrow, and then

select Returned order.



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6. In the RMA number field, type AS2512. 7. Click OK. 8. Click the Item number arrow, and then select 1706. 9. TAB to the Quantity field, and type -1. 10. Click Inventory > Reservation. 11. Click Inventory > Dimensions display. 12. Select the Batch number check box. 13. Click OK. 14. Select batch number No 000003. 15. TAB to the Reservation field, and type 1. 16. Close the Reservation form. 17. Click Posting > Invoice. 18. In the Quantity field, confirm that All is selected. 19. In the Invoice number field, type “INV123”. 20. Click OK. 21. Select the purchase order in the Purchase order form. 22. Click Inventory > Transactions. 23. Close all the forms.



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Summary Returning an item to a vendor is handled like selling from inventory to the vendor to whom the items must be returned.

The three ways to create a vendor return are:

• Negative Quantity: a return action that is made when no specific reference to the original purchase order of RMA number is required.

• Create credit note: a copy of the original purchase order information.

• Returned order purchase order type: the only vendor return that requires an RMA number and a Return action.

When you return serialized items to a vendor the same three credit note options are available as for non-serialized options. The Create Vendor Returns for Serialized Items lesson demonstrated how to create a vendor return with both one and multiple serialized items by using the purchase order type Returned order.



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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter:

1.

2.

3.
