Record Sale Return & Refund
Quick Summary
Sales Return
What Is This Feature
What It Is
Sales Return
When a customer returns goods, you should not delete the original invoice, as it is part of your accounting records.
Instead, you need to create a Sales Return.
- A Sales Return is a document linked to the original invoice
- It records the goods that have been returned
- It keeps your original sale intact
- It automatically updates your stock (inventory increases)
In simple terms:
Goods come back → create a Sales Return → stock is updated
Credit Note
A Credit Note is used to handle the money value of the returned goods.
- It records how much amount is owed back to the customer
- You can:
- Refund the amount (cash/bank), or
- Adjust it in the next invoice
Please Note: To use this feature, make sure Credit Note is enabled in your settings.
When To Use This Feature
When & Who
Used by any business that accepts returns — retailers, wholesalers, e-commerce sellers. Also used to issue goodwill credits, discount coupons, or adjustments for quality complaints, without any physical return of goods.
Step-by-Step Flow
🔁 Flow — Recording a Sale Return
- Tap on the original invoice → select Make Sale Return.
- Enter return quantities → tap Next → review preview → tap Save.
- A separate sale return entry is created. The original invoice remains unchanged.
- Status of sale return: Not Refunded.
🔁 Flow — Issuing a Refund
- Tap on the sale return entry → tap Mark as Refund → enter amount → save.
- Status updates to Refunded.
🔁 Flow — Adjust Refund During Payment
When recording a payment from a client, you can adjust the refund amount from a Sales Return.
- Go to Payment Received
- Select the client
- Choose the Sales Return (Credit Note)
- Adjust the refund amount to update the receivable for that invoice
Fields Explanation
Key Fields
| Field | What It Means |
|---|---|
| Return Quantity | Number of units being returned. Cannot exceed the quantity in the original invoice. |
| Refund Amount | The monetary value returned to the client in cash or via bank transfer. |
| Credit Note Amount | The value of credit issued to the client for future use. |
| Credit Note Status | Whether the credit has been used against an invoice yet. |
| Sale Return Status | Whether the monetary value of returned goods has been refunded or not. |
| Adjustment Amount | The portion of a credit note being applied to a specific invoice. |
| Remaining Credit Balance | The unused portion of a credit note still available for future transactions. |
Statuses
| Document | Status | Meaning |
|---|---|---|
| Sale Return | Not Refunded | Return recorded; money not yet returned to client. |
| Sale Return | Refunded | Money has been returned to client. |
| Credit Note | Not Adjusted | Credit exists but has not yet been applied to an invoice. |
| Credit Note | Adjusted | Credit has been fully applied against invoice(s). |
Optional Settings
Credit Note Use Cases
A credit note can be issued in the following situations:
- Client returned goods (linked automatically to a sale return)
- Overcharged on a previous invoice
- Goodwill gesture or loyalty reward
- Quality complaint settlement
- Promotional discount applied after a sale
Underlying Concept (Accounting / Logic / Calculation)
Concepts
Why not delete the original invoice: Deleting an invoice when goods are returned misrepresents financial history. The original sale happened and must remain in the books. A sale return is a contra entry — it offsets the original without erasing it. This is a fundamental principle of double-entry bookkeeping.
Credit Note: A formal document issued by a seller to a buyer, reducing the amount the buyer owes or crediting their account. It is the reverse of an invoice. Example: Invoice raised for ₹10,000 (10 items at ₹1,000 each). Client returns 2 items. Credit note issued for ₹2,000. The client now either receives ₹2,000 back or has ₹2,000 to offset a future purchase.
Credit Note Feature Toggle: When this feature is enabled in Settings, every sale return automatically generates a linked credit note. When disabled, sale returns are recorded without generating a credit note — only simple refunds are possible.
Which invoices appear in multi-invoice adjustment: Only invoices where payment is not received or partially received are shown. Fully paid invoices do not appear because there is nothing to adjust against.
Interaction With Other Features
Interaction with other features - dependency , side effects
- Invoice:
The sales return is always linked to the original invoice against which the return is made.
- Credit Note:
A credit note is created for every sales return to record the amount to be refunded or adjusted.
- Reports:
Sales returns are reflected in reports, helping you track returns and their impact on your business.
- Client / Transaction History:
The client’s transaction history shows the sales return and updates their current balance (reduces the amount they owe).
- Inventory:
Stock is automatically updated when a sales return is created (items are added back to inventory).
- Payment Received:
While recording payments, the sales return amount can be adjusted since it affects the total receivable from the client.
Alternate Terms
Alternate Terms
| App Term | Also Known As |
|---|---|
| Sale Return | Sales Return, Return Inward, Customer Return, Goods Return |
| Credit Note | CN, Credit Memo, Store Credit, Credit Voucher |
| Refund | Reimbursement, Cashback, Money Back |
| Adjust / Adjustment | Apply, Offset, Set Off, Redeem |
| Carry Forward | Roll Over, Defer, Pending Credit |