Sales Return Process in Dynamics 365 Finance and Operations Part 1

In the world of retail and commerce, managing sales returns efficiently is a critical aspect of customer satisfaction and operational excellence. In this blog, let’s explore how the sales return process works in Dynamics 365 Finance and Operations (D365FO) and explore how businesses can leverage the capabilities of this robust ERP system to streamline and enhance their return management.

In this part, I will walk you through the standard process. Please keep in mind that the steps and setups may vary based on the business requirement.

Let’s consider a scenario wherein we have sold 10 quantities to the customer and amongst them 3 quantities get damaged during transit. So now the customer wants to return those items back to us.

So, lets create a Return Order, to do that go to Sales and Marketing>Sales Return>All Return Orders.

Create a New Return Order.

The RMA number is generated automatically based on the Number sequence set up.

Tip: In order to generate the RMA Number manually you can enable the Manual number sequence parameter in the RMA Number Sequence set up.

For this scenario, I have enabled the Manual Parameter.

The next step is to Enter the Customer Details, Site, Warehouse, Return Reason Code and RMA Number. Then click OK.

Now to add the line item on the Return Order line there are two ways to do it:

1. Add the line item manually with Negative Quantity Or,
2. Use the Find Sales Order function.

For now, I will go with the Find Sales Order function. To use that go to the Return Order fast tab in that under the Return Tab click on the Find Sales Order button.

The next step is to select the Sales Order Invoice for which the Return Order will be Created.  

Based on my scenario the system has automatically taken the quantity as 3.

In the above screen shot you can see that a New Return order is created with the Negative line quantity.

Return Order processing:

There are two ways to process a Sales Order Return:

1. Credit Only
2. Physical Return

1.Credit Only: In the credit-only process, the customer’s account is credited without the need for replacing or returning the item. Here, the Sales price is credited to the Customer deducting the charges.

2.Physical Return: The Physical Return process involves the Return of Item to the customer. Here during registration, a Disposition Code is assigned which determines the Sales Return process for that particular Item.

To keep this simple and easy to understand I will go ahead with Credit Only process in this part. But for this we will first need to create a Credit Only Disposition Code. For that go to Sales and Marketing>Set Up>Returns>Disposition Codes.

In that Click New and create a New Credit Only Disposition Code.

Now the next step is to Register the Return order for that on the Return order lines click Update Line then under that click on Registration.

Then select the Credit Only Disposition Code and click OK.

Then Confirm the Registration.

As I click on the Confirm Registration button a New Sales Return Order is created with the same quantity and same customer on the All-Sales Order page.

The next step is to Invoice the Sales Return Order.

After Invoicing the Sales Return Order, in the below screenshot you can see that the Return status of the order is changed to Invoiced.

This completes the Credit only sales return order process.

Maintaining customer satisfaction and operational efficiency in Sales and Marketing involves effectively managing sales returns. Dynamics 365 Finance and Operations (D365FO) simplifies this task, whether you opt for a credit-only strategy or handle physical returns. By leveraging D365FO’s powerful features, businesses can ensure precise and efficient return management, enhancing both customer relations and operational excellence. Stay tuned for the next section, where we’ll dive into the Physical Return process.

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