Getting Started
This is the question most people actually have: "which option do I pick for the credit memo in front of me?" Work through it by situation, or by the two questions at the end if your situation isn't listed.
Common business situations
| Your situation | Option to use |
|---|---|
| The customer is physically shipping the item back to you, or handing it back in-store, and you'll restock it once received | Return to Stock |
| You made a pricing error, applied a discount after the fact, or are issuing a goodwill gesture, and no goods are involved | Credit Only - No Stock Change |
| You issued a duplicate invoice, or invoiced the wrong customer or amount, and need to reverse it with no goods moving | Credit Only - No Stock Change |
| The goods arrived damaged or faulty and the customer is keeping them, discarding them, or you've told them not to bother returning something not worth the freight | Credit + Write Off Stock |
| The goods were lost or destroyed in transit and will never reach you | Credit + Write Off Stock |
| A customer complains about a service issue unrelated to any specific item (a late delivery, for example) and you're issuing a credit with no item impact at all | Credit Only - No Stock Change |
Still not sure? Ask two questions
- Are the physical goods coming back to your warehouse or store, to be resold?
- Yes: use Return to Stock. Stop here.
- No: go to question 2.
- Do you want your inventory reports to be able to tell this credit apart from an ordinary "credit only" transaction, for example to track how much stock is being written off as damaged versus credited for other reasons?
- Yes: use Credit + Write Off Stock.
- No, or you don't track that distinction: use Credit Only - No Stock Change.
Both non-default options leave your on-hand inventory exactly where it already was; question 2 only decides how the transaction is tagged for later reporting (see Reporting). Getting it "wrong" between those two never affects a customer's balance, the G/L, or your stock count.
One credit memo, mixed situations
A single credit memo is not locked to one option. If a customer is returning three units of one item but you're separately writing off two units of a different item as damaged on the same document, set each line independently (Setting Inventory Handling): Return to Stock on the first, Credit + Write Off Stock on the second. There's no need to split these across separate credit memos unless your business process calls for it anyway.