Entering Debit Memo Purchase Orders

Debit memos are used in situations similar to return to vendor orders, but in this case the items in inventory will be kept, or otherwise disposed of, and the only adjustment needed in the system is the registering of credit owed by the vendor.

Configuration

No specific configuration required.

Process

The steps below outline the process for debit memo POs:

  1. Navigate to Purchasing > Order Entry.
  2. Enter the Vendor from whom the credit is owed. Make sure that the facility is where the inventory current resides. For example, if the material has failed QC and has been quarantined in a non-production facility, be sure to specify that non-production facility on the PO. Ensure that the term codes are correct on the order.
  3. Add a line to the purchase order. Enter a description of the return rather than entering a part number to return. Also, enter the charge to account which will not be an inventory account in this case because the part is going to be adjusted out of stock.
  4. Specify the quantity being returned as a negative number and enter the price that the Vendor is allowing for the returned material. This may be the same as the price that was originally paid for the material, or may be less, if the vendor deducts a percentage of the price originally paid for a restocking fee. The system requires that this be a positive number. Verify the extension and the total amount for the line are negative, which indicates that the vendor will be issuing a credit. Click "Save" and "Exit" to save the line and again for the header.
  5. Receive the Purchase Order according to the steps listed in Receiving Purchase Orders.
  6. Navigate to Purchasing > Invoice. Enter a "dummy" invoice for the return to vendor. If you have actually received the check from the vendor, select the "Print check now" flag to process the payment. If the payment has not been received, the payment can be processed later through manual checks or a check run. Click "Apply" to complete the transaction.
  7. Navigate to Accounting > Manual Checks. To process the vendor's payment, move it to the right side of the manual check form and select the "Apply" button. Often times a vendor will not send a payment and the credit will be applied to future orders. This is handled through the check run and manual check forms by deducting the credit from the total amount due to the vendor.

Note: Users can also create Debit Memos by selecting the Purchase Order that the Debit Memo applies to and then copying the original PO as the basis for the new Debit Memo. This links the Debit Memo with the original PO allows users to match the two on check runs and when creating manual checks. POs can be copied via the “Copy Order” button on various PO reports and via the “Copy PO” button when modifying a PO.