We’ve been working our way through some of the standard NetSuite processes in our SuiteFoundation series, and transactions play a major role in those processes. Part of understanding how transactions in NetSuite work is understanding how returns work. In our next blog, we’ll explore the return process in more detail, but for now, let’s take an in-depth look at the return authorization form in NetSuite.
Return Authorization Form Overview
Definition
The return authorization form is the first step to returning items in NetSuite. Also known as a return materials authorization form (or RMA form), the return authorization form simply demonstrates an expected return. An RMA form shares some similarities with sales orders. For example, like sales orders, an RMA record doesn’t post to the General Ledger. And even as sales orders act as a sort of confirmation that a sale will eventually take place, return authorization forms act as a confirmation that a return will take place. No money actually changes hands—yet.
Content of the Form
Return authorization forms need three key pieces of information. First, they need to specify the items that are being returned. They also need to specify the amounts of those items. This functionality is important because it allows customers who may have ordered multiples of certain items to do partial or complete returns of their order. And finally, the return authorization form needs to include the prices of all the items being returned.
Creating a Return Authorization Form
You have two options when it comes to creating an RMA form. First, you could create the form from an existing sales transaction. In other words, you can create a return authorization form directly from either a sales order, cash sale, or invoice. To do this, navigate to your company’s list of sales orders, cash sales, or invoices, and select the record from which you want to create a return authorization form. The record (whether it’s a sales order, cash sale, or invoice) will have an Authorize Return button. Clicking this button will take you directly to the Return Authorization page. The return authorization form will contain all the information on the original transaction record. You will simply need to make any necessary adjustments, such as changing the number of items being returned for a partial return.
The second way you can create an RMA form is from scratch. SuiteAnswers calls this a “Standalone Return Authorization.” To create a standalone RMA form, navigate to Transactions > Customers > Issue Return Authorizations. Unlike the previous method, which uses information in the previous transaction to autofill the RMA form, this method requires you to enter all the relevant information yourself.
Types of Forms
Before we jump into the nuts and bolts of return authorization forms, it’s important to understand that there are two types of return authorization forms: (1) Standard Return Authorization – Cash and (2) Standard Return Authorization – Credit. Having two separate types of the same form allows you to differentiate between returns that will result directly in a refund and returns that will result in a credit memo. We’ll look at each of these situations in more detail.
Refund Result
First, let’s look at return authorization forms that result directly in a refund to the customer.
Setup
If you want the return to result in a refund instead of a credit, you would manually select the form type Standard Return Authorization – Cash on the return authorization form. Doing this allows you to authorize a direct refund to customers after they have returned their items. However, if you want to be able to refund customers before they return their items, then you would need to enable the feature Refund in Advance of Return button, which is located in the Order Management tab of your Accounting Preferences.
Credit Result
Now let’s take a look at return authorization forms that result in a customer credit before the refund is issued.
Setup
As with cash refunds, you can also manually determine if a return will result in customer credit. Simply select the form type Standard Return Authorization – Credit when you fill out the return authorization form. As with direct refunds, you must enable the Refund in Advance of Return feature if you want to authorize a credit before customers have returned their items.
If the Advanced Receiving feature (located under the Transactions tab of Enable Features) is turned on, then you will no longer have a choice about whether the return authorization form will result in a cash return or a customer credit. When Advanced Receiving is turned on, all RMA forms must be processed as customer credits before a refund can be issued.
The Customer Credit Memo
The credit memo is an integral part of doing a credit return. According to the Help Center, a credit memo is basically a transaction “that decreases the amount a customer owes you.” Credit memos allow you to complete a return before the customer has even paid their bill or (in the event that the customer has already paid their bill) apply a credit to any of that customer’s existing or future invoices with your company.
Customer credit memos can be created independently from a return authorization form, but they perform slightly differently from credit memos that are generated as a result of a return authorization form. Perhaps the most significant difference is that credit memos connected to a return authorization form will not affect your inventory, while independent credit memos do affect inventory.
Conclusion
In our next blog, we will delve even more into the topic of customer returns. If this post helped you understand NetSuite better, join the SuiteRep newsletter below to receive future posts directly in your inbox once a week!