Customer Returns
Learn how to process goods returned by customers and keep your stock and customer balances accurate.
Written by Grainne Reidy
Updated at October 1st, 2026
Introduction
When a customer returns goods, you need to add them back to your stock and credit the customer's account. Posting a Sales Item Credit Note achieves both outcomes simultaneously.
You can process the return as soon as the goods arrive, as you don't need to wait for any paperwork. The process you follow depends on the status of the order or goods:
- Order not fully delivered: Cancel the undelivered balance, then invoice or take back the delivered goods. See Open Sales Orders.
- Delivered and invoiced: Raise and post a Sales Item Credit Note. See Delivered Goods.
- Goods are damaged or can't be resold: Credit the customer in full, in part or not at all, then remove unsellable goods from stock. See Damaged or Unsellable Returns.
See:
Open Sales Orders
If the customer's order hasn't been fully delivered and they no longer want the remaining goods, cancel the undelivered balance. See Amending Transactions for information on cancelling.
What happens next depends on whether the delivered goods have been invoiced:
- Delivered but not yet invoiced: If the customer is keeping the goods, invoice only the delivered quantity. If they are returning them, take the goods back into stock. See Adjust Quantity on Hand. You don't need a Credit Note because nothing has been invoiced.
- Delivered and already invoiced: Follow the steps in Delivered Goods.
See:
Delivered Goods
When a customer returns goods that have already been delivered and invoiced, raise and post a Sales Item Credit Note for the returned quantity. Raising a Credit Note adds the returned goods back to Quantity on Hand and reduces the customer's balance at the same time.
See:
Damaged or Unsellable Returns
If you are taking responsibility for the damage, you can give full credit. If the customer caused the damage, you may decide to give a reduced credit or no credit at all.
Full credit for damaged goods
Raising a Sales Item Credit Note adds the returned goods back into stock, whether or not they can be resold.
- Raise and post the Sales Item Credit Note as normal, so the customer receives the correct credit.
- Make a stock adjustment to remove the unsellable quantity from Quantity on Hand. See Adjust Quantity on Hand.
This keeps your stock figure accurate and records the loss separately from the customer's credit.
Reduced credit for damaged goods
- Raise a Sales Item Credit Note for the returned quantity.
- Reduce the price on each line to the amount you've agreed to credit.
- Post the Credit Note.
- If the goods can't be resold, make a stock adjustment to remove them from Quantity on Hand. See Adjust Quantity on Hand.
Example:
A customer returns 4 units that were invoiced at €25 each (€100). The goods are damaged, and you agree to credit 50% of the value. Raise a Credit Note for 4 units at €12.50 each (€50). If the units can't be resold, make a stock adjustment to remove all 4 from Quantity on Hand.
No credit for damaged goods
If you aren't giving the customer any credit, don't raise a Credit Note. The customer's balance stays the same.
- Goods returned to you but can't be resold: You don't need to record anything, because they were never added back to stock.
- Goods returned to you and can be resold: Make a stock adjustment to add them back to Quantity on Hand.
Returning Goods to your Supplier
If you are returning damaged goods to your own supplier rather than writing them off, skip the stock adjustment. Follow the steps in Supplier Returns instead.