Introduction - Register a compensation agreement with a vendor
You can record compensation from a vendor for damaged or otherwise unsatisfactory items that can be important both for cost recovery and for the ongoing relationship between your company and the vendor.
To process vendor-oriented tasks you usually will include the following:
Register compensation agreement with the vendor.
Ship return items, if applicable, to the vendor.
Debit the vendor either by receiving a credit for physically returned items, or with a purchase allowance if the company isn't required to physically return the items.
Create a replacement purchase order(s) if a replacement is specified by the compensation agreement.
You also might have the following internal tasks.
Receive replaced/repaired items.
Make sure that the inventory value assigned to the returned items is accurate.
Combine several return shipments to the same vendor into one credit memo document.
There are several ways a company can expect compensation when it's dissatisfied, or when one of its customers is dissatisfied with a vendor's products. The terms of the compensation agreement frequently depend on the reason for the dissatisfaction and on the company-vendor relationship.
The parties might agree, for example, that if the vendor delivered the wrong items, then the company must return the items to the vendor, receive a credit for the incorrect order, and receive a replacement shipment. If items arrive at the company damaged but can still be used, the company can request a price deduction against the original purchase order price. Or, if a customer returns a damaged item that is covered by a vendor warranty, the company can ask the vendor to repair the item.
In Business Central, you use the purchase return order to register a compensation agreement with a vendor. From this document, you can access other purchase-related documents and enter and maintain the return-related information, the method of compensation, and other important information. You can register different aspects of the compensation agreement by creating return lines of different types, such as items, item charges, and G/L accounts.
On the purchase return order line, specify the items you are returning to the vendor.
As with sales return orders, you can use the Move Negative Line function to transfer lines with a negative quantity to a purchase order or a purchase invoice.