Any company that sells products will, at some point, get returns from customers. It’s important that these are accounted for correctly, and that they are not lost.
According to Policy
Firstly, you need to have a solid returns policy in place that complies with the law. When accepting a return, you should start by making sure that the merchandise return is still within your acceptable returns period. Once this is confirmed, you must correctly enter the return into your system.
The Sales Return Entry
It is important that you have the original customer receipt. If you do not, there is no assurance that what you are refunding to your customer is what that client paid! Because of customer relations, some retailers will accept returns without receipts, but will only issue a store credit on those items. That way, the item can be re-shelved and sold for the amount refunded (less risk of loss this way). With the original receipt, it is simpler to enter the return for the same amounts that were originally charged – make sure that sales taxes and base cost are entered correctly!
Asking the Customer Why the Item Is Being Returned
Many retailers ask their customers why each item is being returned and will have a form for the client to fill out. This is so that the retailer has backup evidence on the return. This can be used for audit (accounting) purposes. And it can be used for proof to the supplier if something is defective. Many goods cannot be detected as defective until the end-user tries them out. Or sometimes something breaks as soon as it is used, such as a shoe that loses its outer sole in the first wearing. The defective goods will need to be returned to the vendor.
Vendor Return Issues
Hopefully, there will be no issues with the majority of your returns – it’ll all be straightforward, and you’ll get a credit (or check) for the same amount as what you paid. To be sure of this, your inventory costing and tracking system must be set up properly, to begin with. When you do send an item back to a vendor, you must have a system for tracking the expected credit. Once the credit is received from your supplier, you must match the actual credit received with the expected amount. If these differ, you will need to contact your vendor to let them know of the discrepancy. Always have a back-up! This should be your original purchase receipt and any information that you’ve received from your customer.
You should always be clear on your suppliers’ refund policies, as well. Some wholesalers will not take returns under certain conditions or after a specific amount of time. Familiarize yourself with these. As well, many wholesalers are willing to bend the rules a little for their better clients. This often means people who are easier to deal with, pay on time, and have few returns. Try to be one of those clients!
Reselling Returned Merchandise
In many (hopefully most) returns you will be able to resell the merchandise. To do this, the item needs to be in new condition, and if it was packaged, the packaging should be undamaged. If the packaging is damaged, it needs to be still usable and re-sealable (at worst, with a little tape). Some retailers will offer a small discount on items with damaged packaging. This is your choice.
You should now have a good idea of the major issues involved in customer returns. This will help you to set your policies and procedures, thus minimizing your losses on returned merchandise.