How to return goods to the supplier: write-off from the individual entrepreneur and accounting for debt

Proper return processing: how to return goods to a supplier so that they are correctly written off from the required Sole Proprietorship and reduce our debt amount?

To process a return of goods to a supplier with correct write-off from the required Sole Proprietorship and automatic reduction of your debt amount, you need to use the corresponding mode in the Torgsoft program.

1. Creating a return document

• Go to the main menu item Document — Return of goods to supplier.

• To create a new return, click the Add button.

2. Filling in the details (Selecting the Sole Proprietorship and currency) 

In the «Return to supplier» window that opens, it is very important to fill in the document header correctly, since it determines exactly how your financial balances will change:

• Supplier: specify the supplier to whom you are returning the goods.

• Currency: be sure to specify the return currency. This is necessary for correct inventory and monetary balance tracking with the specified partner.

• Business entity: in this field, you must select from the list the business entity (private entrepreneur / Sole Proprietorship) on whose behalf you are returning the goods. This guarantees that the goods will be written off from the balance of the specific Sole Proprietorship and that the financial result will be assigned to it.

After filling in these key fields, click the Save button. The document header will be created, and you will immediately be able to see your current debt to this supplier (if the amount is displayed with a minus sign, this means that the supplier owes money to you).

3. Adding goods to the document 

Next, you need to add the goods that you are physically returning. You can do this in several ways:

• Scan the product barcode directly into the form.

• Use the Select from warehouse or Select from warehouse by product types buttons.

• Use the Select from delivery list button. In this case, a window will open with all deliveries from the given supplier, where by selecting an item and clicking "Select", you will transfer it to the return document.

To change the quantity of goods being returned, double-click the item in the document and specify the required quantity. Here you can also check the purchase prices. Click Save.

Important nuances of debt and stock accounting:

• Moment of write-off: as soon as the goods are added to the return document, they are automatically considered returned to the supplier and removed from your stock balances. The return price is fixed at the purchase price.

• Debt reduction: all processed returns directly affect your settlements. For example, in the supplier goods sales analysis, the program automatically calculates the difference between the indicators Delivery (how much goods and for what amount were received) and Returned to supplier. Your total debt is adjusted automatically according to the formula:

Delivery — Paid — Returned = Debt.

• Limitation: it is not recommended to process a return of goods to the supplier if these goods are currently in a negative quantity (below zero) in stock, especially if you work with this supplier under a consignment scheme.

• Defective goods: if you are returning not just stock leftovers but specifically defective goods, for correct accounting it is better to use the separate mode Document — Return of defective goods.