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General recommendationįrom an operations perspective, if materials are being shipped, then I would use the Purchase Return Order option. Using the two different methods helps identify what was done if there are rules associated with using the Purchase Return Order versus the Credit Memo. The value entries are stamped with the “Document Type” that posted the entry.įigure 1 – Here, Document Type in the value entry shows Credit Memo or Purchase Return Order to indicate whether the transaction was initiated by Accounting or Operations One reason to use both the Credit Memo and the Purchase Return Order is to differentiate between accounting-initiated transactions and operations-initiated transactions. Normally when this is done, operations will transfer the defective material to a “Defective” location and wait for the accounting department to confirm the credit memo has been processed before discarding the goods.
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Many companies will accept the vendor’s authorization to discard the product and will use the Credit Memo to relieve inventory and record the credit memo to the vendor’s payable account. There are occasions when the vendor agrees to issue a credit memo but does not want the product back. The only way to maintain inventory integrity is to create the Purchase Return Order and create the warehouse documents so the goods ship using normal warehouse processes. The Credit Memo does not allow you to create warehouse documents from it. This will allow you to use the normal warehouse tools to ship the items back to the vendor. If you are using warehousing, you will want to use Purchase Return Orders. The information below gives some guidance on when one option makes more sense than the other.
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The answer is…there isn’t necessarily a correct answer! It really depends on your operating environment and how you want to use the system. Both allow you to use the “Get Posted Documents to Reverse”.Both allow you to set the “Applies To Item Entry,” and.Both subtract inventory from stock and create an item ledger entry,.When should you use a Purchase Return Order or Credit Memo in Microsoft Dynamics NAV? It can be confusing