You have received a credit for an Inventory item which has been returned from your warehouse and need to reflect this transaction in ConnectWise Manage and your Accounting Package.
There are two parts to stock returns process:
- Reduce Stock on Hand / Warehouse Value in Manage and your Accounting Package
- Create a credit against the Supplier/Vendor
You will need to first make a couple of additional accounts and setup in ConnectWise and Xero first (if not already there)
Create an additional Xero account (recommended)
- Stock Adjustment (Credit/Returns)
This should be a "Direct Costs" or "Expense" Account Type.
- New Inventory Adjustment Type: Stock (Credit/Returns)
- New Subcategory for "Supplier Credit" -could be put under a miscellaneous category or similar
- New Product called SUPPLIER-CREDIT under Subcategory "Supplier Credit". This should have the Product Class and Product Type of Non-Inventory
- New GL Account Mappings mapped accordingly to the new Xero account created above:
*Inventory Adjustment Type: Inventory Adjustment - Stock Adjustment (Credit / Returns)
*Revenue-Product: > SubCategory > Supplier Credit - Map to the COGS account field
*Revenue-Agreement Product: > SubCategory > Supplier Credit - Map to the COGS account field
Where the Part being Credited is an Inventory Class Product:
- Create and close Inventory Adjustment entry: Stock (Credit/Returns)
*Reduce the Inventory on the basis that the stock has been returned
*Inventory Adjustment will post (the cost) to "Stock Adjustment (Credit / Returns)" account
- Create a Purchase Order for Supplier of returned goods.
*Add the Non-Inventory Product (SUPPLIER-CREDIT)
*Add positive quantity
*Add negative $ amount (excluding tax)
*Add Part Code, Description, Serials
The above will then in Xero:
- Post a Credit against the Supplier for the returned goods
- Reduce the "Stock Adjustment (Credit / Returns)" Account (by the Credit Above)
You will then need to ensure that the Stock Adjustment (Credit / Returns) account is cleared at the end of the process, as you are returning Stock, and reducing the Asset Value (ie. the end result should be that this account is always $0)
If Freight or an Additional Restocking fee has been charged, process the Supplier Credit Product item on the Purchase Order for the full value of item (ie Cost Value posting via Inventory Adjustment). Then add additional products onto the Purchase Order for the Freight Expense.
Non-inventory class item return (RMA)
Where the Part being Credited is a Non-Inventory Class Product, you can return the "Product Sold" item rather than the Supplier-Credit item as this will then reduce COGS directly.You do not need to process the additional Adjustment step as the item will not be in your stock warehouse.