We currently process product returns through OE - Invoice Returns, then we physically send all the returns to our Quality Assurance warehouse. After they review the product they tell us whether to keep the credit in Returns & Allowances and honor the full credit, give partial credit, or no credit, or move the credit to Sales and honor the full credit, give partial credit less restocking fee, or no credit. Sometimes we know at the beginning of the process that it is a Sales return, but still don't know whether the credit will be honored until after QA looks reviews the products and gives us the OK. The main reason we process the return as soon as it is received is so the products are “returned” to our “QA” warehouse in Business Works and we don’t lose track of products coming in the back door and this process works well enough with all the transactions balancing and the entries correctly hitting the General Ledger.
However, the problem is, depending on the complexity of testing required and the QA Lab’s work load, the original credit memo created when processing the return could have been setting there for months, across quarters, years, etc. and now needs to be moved (Sales Adjustment vs. Sales), removed, or reverse part of the credit and/or move it. In addition, while the credit is sitting there we can’t send Customer Statements because we don’t know whether the credit is valid yet. Also, our AR balances are never quite “real” with a transient number of RMA’s always “in process,” “determined, but not taken,” or “waiting for adjustment.”
Has anyone worked out a process that manages something like this without have a bunch of unearned credits sitting in AR and having to constantly manage the credit memos with in/out moves?
