Returns paperwork is the part of the process everybody improvises, usually over the phone, and then cannot reconstruct at month end. Three documents fix it, and none of them takes long.
Two separate events
A return is two things happening, and they are frequently confused:
- Goods physically coming back. A stock and possession question.
- Money going back, or an invoice being reduced. An accounts question.
They can happen days apart. Recording them as one event is what causes stock and accounts to disagree.
When goods come back to you
Record what arrived, in what condition, on what date. A goods received note does this, whether the goods came from a supplier or back from a customer.
Received from Acme Ltd
Reference Against invoice INV-0087
Item Condition Qty
Floor tile, grey Unopened boxes 8
Floor tile, grey Opened, chipped 1The condition column matters. “Nine returned” and “eight resaleable, one damaged” lead to different credits, and the difference is only recoverable if somebody wrote it down on the day.
What is a goods received note covers the fields.
When goods go back to a supplier
The same document, pointed the other way. Send a delivery note with the goods so the supplier’s warehouse knows what they are receiving and against which invoice.
Goods arriving at a supplier with no paperwork are goods that sit on a loading bay uncredited for a month. How to write a delivery note covers what the driver needs to hand over.
When the money moves
If the customer has not paid yet, you are reducing what they owe. That is a credit note against the original invoice.
If they have already paid, you are refunding. The credit note still comes first, because it is what tells both sets of accounts that the invoice has been reduced; the refund is the payment that follows.
Credit note or refund covers why these are two events rather than one.
Reference the original, always
Every return document should name the invoice it relates to.
Credit note CRN-0009
Against invoice INV-0087 dated 2 August 2026Without it, a credit note is an unattached reduction and somebody has to guess what it belongs to. Credit notes, explained covers the numbering.
Partial returns
Credit the lines that came back, not the whole invoice. Restocking charges, if you apply them, go on as their own line so the customer can see what was deducted and why.
Description Amount
Floor tile, grey, 8 boxes returned (48,000)
Restocking charge, 10% 4,800
Credit (43,200)Hiding a charge inside a reduced credit figure produces exactly one phone call per customer.
Write the policy down
What can be returned, within how long, in what condition, and who pays the carriage. Two or three lines in your terms, on the quote and the invoice.
A policy decided in advance is a policy you can apply evenly. One decided during the phone call is a policy you will contradict next month.
Returns from a customer, step by step
The sequence, once, so it can be followed under pressure:
- Customer says goods are coming back. Agree what and how many, in writing.
- Goods arrive. Log them on a goods received note, with condition.
- Check against the original invoice and the delivery note.
- Raise a credit note for what is being credited.
- Refund, or hold the credit against the next invoice. The customer chooses.
- File all of it against the original invoice number.
Six steps, none of them long. What takes time is doing them out of order.
Restocking, carriage and who pays
Three charges that need deciding in advance because they are impossible to introduce afterwards without an argument.
- Restocking. A percentage, stated in the terms, applied consistently.
- Carriage out. Usually refunded on faulty goods, usually not on a change of mind.
- Carriage back. Usually the customer’s, unless the goods were wrong.
Write the three lines once. The alternative is deciding each case on its merits, which sounds fair and produces a different answer every time.
Goods that never arrive back
A credit raised on the promise of a return, where the goods then do not come back, is a hole in both your stock and your accounts.
Credit on receipt, not on agreement. If the customer needs the credit sooner, that is a commercial decision, and it should be a deliberate one rather than a filing habit.
Reconcile stock and accounts monthly
The two records drift for exactly one reason: a return recorded in one and not the other. A short monthly comparison catches it while somebody still remembers the transaction.
Short and damaged deliveries covers the supplier side of the same reconciliation.
Set it up once
Open the credit note maker and the goods received note maker, fill in your own details, and save both as blanks. The next return then costs minutes rather than a reconstruction.