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PDF Editor FAQ

What are purchase returns?

A purchase return transaction is when the buyer of merchandise, inventory, fixed assets, or other items sends these goods back to the seller. Excessive purchase returns can interfere with the profitability of a business, so they should be closely monitored. There are a number of reasons for purchase returns, such as:The buyer initially acquired an excessive quantity, and wants to return the remainderThe buyer acquired the wrong goodsThe seller sent the wrong goodsThe goods have proven to be inadequate in some wayThe seller can legitimately charge a restocking fee to the buyer in exchange for agreeing to take back goods (unless the seller originally shipped the wrong goods to the buyer). The amount of a restocking fee is generally in the vicinity of 15% of the price the buyer paid for the goods being returned. This fee is typically not charged if a company offers free returns within a certain number of days of the purchase date.A purchase return is usually authorized under a return merchandise authorization (RMA) that is issued to the buyer by the seller. When the buyer packages the goods for return to the seller, it marks the RMA number on the outside of the package, which the seller's receiving department matches against its list of authorized and outstanding RMA numbers before accepting the receipt.The seller has several options for compensating the buyer for any returned goods, which include:A credit against future purchasesA credit memo that the buyer can apply against its next payment to the sellerAn outright cash payment to the buyerWhen the buyer records a purchase return, it can be either as a credit to its inventory account (if there are few such transactions) or to a purchase returns account (if management wants to segregate this information for further analysis). The offsetting debit is to the accounts payable account.Source: Purchase returns

What is return authorization in NetSuite?

RMA or Return Merchandise Authorization creates a transaction to indicate a customer is returning something they bought - either on line, or where doesn’t really matter - could even be I’m a factory that sells through retailers.The point is, before I allow customers to return items, I ask that they call and get an authorization - that way I may ask that they physically return the product, or as is the case in food, simply discard the outdated food and I’ll credit the account. I can also send them a return mail label with barcodes so my receiving dock knows what the heck is in this box when it shows up.The RMA lets my team know the disposition of the product - if we’re expecting it to be returned to our recieving dock via truck, mail or whatever. If we’re expecting to have in back in inventory by a certain date and can then promise to sell it to someone else. And we deduct from sales and increase our accounts payable in the amount of the refund.It’s sort of like a PO (Purchase Order), only in reverse.

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