Returns to Supplier

Send faulty, wrong, or excess stock back to suppliers cleanly so you recover the money you are owed.

4 lessons 35 min 5-question assessment 70% to pass

What you’ll learn

Identify valid reasons to return to a supplier

Raise a supplier return cleanly

Track the credit or refund due

Reconcile credits against returns

Lesson 1 of 4 Reading 8 min

Valid reasons to return

You return stock to a supplier when it is faulty, damaged in transit, the wrong item, or — where the contract allows — excess that did not sell. A return reverses a purchase you should not be paying for.

Getting the reason right matters because it determines whether you are owed a refund, a replacement, or a credit note, and whether the supplier will even accept the return. A vague return often gets rejected.

If a supplier ships 100 units but 12 arrive cracked, those 12 are a clear damaged-goods return worth KES 9,600 at KES 800 each — you should not pay for stock you cannot sell. Tagging the reason as "damaged in transit" tells the supplier exactly why and supports your claim for a credit.

Key takeaways

Return faulty, damaged, wrong, or (if allowed) excess stock.
A return reverses a purchase you should not pay for.
The reason sets refund vs replacement vs credit.
Example: 12 cracked units at KES 800 = a KES 9,600 damaged return.

Lesson 2 of 4 Practice 9 min

Raising a return cleanly

A clean supplier return links back to the original purchase order, lists the exact SKUs and quantities, states the reason, and removes the goods from your stock when they physically leave. Paperwork and physical stock move together.

Doing it cleanly matters because a return that does not reduce your stock leaves a phantom — your books show units you have shipped back. A return not linked to its PO is hard for the supplier to credit.

For the 12 cracked units, you raise a return against the original PO, mark reason "damaged", and your on-hand drops by 12 as they leave the building. Now your books match reality, the supplier can match the return to their invoice, and there is a clear trail when the credit arrives.

Key takeaways

Link the return to the original PO with exact SKUs and quantities.
State the reason and remove goods from stock when they leave.
Paperwork and physical stock must move together.
Example: returning 12 units drops on-hand by 12 against the PO.

Lesson 3 of 4 Reading 9 min

Tracking the credit due

A return usually creates a credit due — money the supplier owes you, often as a credit note against future invoices rather than cash back. That credit must be recorded and tracked until settled.

Tracking matters because an untracked credit is easily forgotten, and a forgotten credit means you quietly pay full price on the next order for goods you already returned. Suppliers rarely chase you to give money back.

After returning KES 9,600 of damaged stock, you record a KES 9,600 credit due. When the next invoice for KES 50,000 arrives, you apply the credit and pay KES 40,400. Without the record, you would pay the full KES 50,000 and lose the KES 9,600 you were owed.

Key takeaways

A return usually creates a credit due, often a credit note.
The credit must be recorded and tracked until settled.
A forgotten credit means paying full price twice.
Example: a KES 9,600 credit reduces a KES 50,000 invoice to KES 40,400.

Lesson 4 of 4 Reading 9 min

Reconciling credits

Reconciling means matching each credit note the supplier issues against the return that earned it, and each applied credit against the invoice it reduced. Every return should end in a settled, matched credit.

Reconciliation matters because suppliers make mistakes too — a credit note for the wrong amount, or one never issued. Matching catches the gap before it costs you, rather than after the relationship has soured.

If you returned KES 9,600 but the supplier’s credit note reads KES 6,400, reconciliation flags the KES 3,200 shortfall so you can query it with evidence (your PO-linked return). A monthly reconciliation of returns to credits ensures none slips through and your supplier statement matches your books.

Key takeaways

Match each credit note to the return that earned it.
Match each applied credit to the invoice it reduced.
Reconciliation catches supplier errors before they cost you.
Example: a KES 9,600 return vs a KES 6,400 credit note flags a KES 3,200 gap.

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Returns to Supplier

What you’ll learn

Course content

Valid reasons to return

Raising a return cleanly

Tracking the credit due

Reconciling credits

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