Purchase Return and Debit Note

Use this workflow when goods are sent back to a supplier, a supplier issues a credit, or a supplier refunds money to your bank account.

The correct path depends on how the original purchase was recorded and whether the supplier credit will reduce another invoice or be paid back in cash.

Before you start

Confirm the following:

The original Purchase Receipt or Purchase Invoice is submitted.
The goods are still available in the recorded warehouse.
Batch and serial details are available for controlled items.
You have the supplier's credit note, return authority, or other supporting evidence.
The original tax treatment and the correct Purchase Taxes and Charges Template are known.
A Company Bank Account is configured if the supplier will pay a cash refund.
The stock and accounting posting periods are open.
You have permission to submit Purchase Receipts, Purchase Invoices, and Payment Entries.

Do not backdate a Debit Note into a filed GST or BAS period without approval from your finance adviser.

Choose the correct path

Situation	Stock document	Accounting document
Goods were received through a separate Purchase Receipt	Create a Purchase Return from the original Purchase Receipt	Create a Debit Note from the submitted return Purchase Receipt
The original Purchase Invoice had Update Stock selected and there is no separate Purchase Receipt	No separate Purchase Return	Create Return / Debit Note from the original Purchase Invoice and keep Update Stock selected when the goods leave inventory
The credit is for a price, service, freight, or another non-stock adjustment	No stock document	Create Return / Debit Note from the original Purchase Invoice and leave Update Stock clear

Important: Never move the same stock in both a Purchase Return and a Debit Note. If the Purchase Return has already removed the goods, leave Update Stock clear on the Debit Note.

1. Return stock from a Purchase Receipt

Use this path when the original receipt and supplier invoice were recorded separately.

Open the submitted Purchase Receipt.
Select Create, then Purchase Return.
Confirm Is Return is selected.
Confirm Return Against Purchase Receipt contains the original receipt.
Remove item rows that are not being returned.
Review the negative Accepted Quantity or Rejected Quantity on each returned row.
Confirm the correct Accepted Warehouse or Rejected Warehouse.
Check the Rate, Amount, batch details, and serial details.
Save and submit the Purchase Return.

Create a Purchase Return from the submitted Purchase Receipt

The mapped return uses negative quantities and amounts. The negative quantity must match the goods that will physically leave the warehouse.

Mapped Purchase Return with Is Return selected and negative quantity

If the goods are in a rejected warehouse, use Return Qty from Rejected Warehouse only for the units that will leave that warehouse.

Submitting the Purchase Return records the inventory movement. It does not dispatch the goods or notify the supplier. Complete your normal packing, courier, and supplier communication steps separately.

Check the stock movement

After submission:

Select View, then Stock Ledger.
Confirm the returned quantity is negative against the correct item and warehouse.
Review Stock Balance and confirm on-hand stock reduced by the returned quantity.
Confirm any required batch or serial numbers were removed from the correct warehouse.

2. Create the Debit Note

The Debit Note reverses the supplier liability and the related purchase value or expense.

From a separate Purchase Return

Open the submitted return Purchase Receipt.
Select Create, then Debit Note.
Confirm Is Return (Debit Note) is selected.
Confirm the item rows link to the return Purchase Receipt.
Confirm the quantities and Grand Total are negative.
Confirm Update Billed Amount in Purchase Receipt is selected.
Leave Update Stock clear because the Purchase Return has already moved the stock.
Enter the supplier's credit note reference in Supplier Invoice No and its date in Supplier Invoice Date, when available.
Confirm the original tax treatment and Purchase Taxes and Charges Template.
Attach the supplier credit note or return evidence if required by your organisation.
Save and submit the Debit Note.

Directly from a Purchase Invoice

Use this path when the original Purchase Invoice moved the stock, or when the credit does not involve stock.

Open the submitted Purchase Invoice.
Select Create, then Return / Debit Note.
Confirm Is Return (Debit Note) is selected.
Confirm Return Against Purchase Invoice contains the original invoice.
Remove rows that are not being credited.
Review the negative quantities and amounts.
Select Update Stock only when this Debit Note is the document that will remove the returned goods.
Leave Update Stock clear for a price, service, freight, or other non-stock credit.
Review Update Outstanding for Self:
- Leave it clear when the Debit Note should reduce the original Purchase Invoice directly.
- Select it when the Debit Note should retain a separate credit balance for later allocation or refund.
Enter the supplier's credit note reference and date when available.
Confirm taxes and the Grand Total.
Save and submit the Debit Note.

Create a Return or Debit Note from the submitted Purchase Invoice

The mapped draft shows the return link, the outstanding treatment, negative quantity, and whether stock will be updated.

Mapped Debit Note with negative quantity and Update Stock clear

If a Debit Note created from a Purchase Invoice exceeds that invoice's outstanding balance, NexWave may keep a separate Debit Note balance even when the original invoice is linked.

3. Decide how to settle the supplier credit

A submitted Debit Note can remain as a credit for current or future invoices, or it can be settled by a cash refund.

Apply the credit to an invoice

Use Payment Reconciliation when the supplier credit should reduce an unpaid or future Purchase Invoice.

Open Payment Reconciliation.
Select the Company.
Set Party Type to Supplier.
Select the supplier in Party.
Confirm the Receivable / Payable Account.
Select Get Unreconciled Entries.
Under Payments, select the Debit Note.
Under Invoices, select the Purchase Invoice or invoices to receive the credit.
Select Allocate.
Review the Allocation values.
Select Reconcile.

The Debit Note can also reduce a payment run. It appears as a negative payment amount and reduces the positive total owed to the supplier. A payment run cannot contain only Debit Notes or end with a zero or negative total.

Do not create a refund Payment Entry when the credit is being retained for invoices.

Record a cash refund

Use this path when the supplier pays the Debit Note back into your bank account.

Open the submitted Debit Note.
Select Create, then Payment.
Confirm Payment Type is Receive.
Confirm Party Type is Supplier and Party is the correct supplier.
Select the Company Bank Account receiving the refund.
Confirm Account Paid From is the supplier payable account.
Confirm Account Paid To is the company bank account.
Confirm Paid Amount and Received Amount are positive.
Under Payment References, confirm the Debit Note has a negative Outstanding and negative Allocated amount.
Enter the Cheque/Reference No and Cheque/Reference Date from the supplier remittance.
Save and submit the Payment Entry.

The Payment Entry debits the bank account and credits supplier payables. It consumes the separate Debit Note balance.

Match the refund in bank reconciliation

The supplier refund appears on the bank statement as a deposit.

Open Advance Bank Reconciliation Tool.
Load the unreconciled bank transactions for the receiving bank account.
Select the refund deposit.
Select Actions, then Match Against Voucher.
Select Payment Entry.
Choose the submitted supplier refund Payment Entry.
Review and complete the match.

Do not create another voucher from the bank transaction. Do not match the deposit directly to the Debit Note after a Payment Entry has been created.

4. Review the result

Complete the checks that apply to your return:

Stock Ledger shows a negative quantity against the correct item and warehouse.
Stock Balance reduced by the returned quantity.
Batch and serial records match the units physically returned.
The Debit Note appears as a negative purchase in Purchase Register.
Accounts Payable shows the supplier's net balance reduced.
The Debit Note's Outstanding Amount is correct for an unallocated credit, invoice allocation, or cash refund.
The accounting ledger reverses the relevant payable, purchase, expense, stock-related, and input tax values.
The New Zealand GST or Australia BAS report reduces input tax in the Debit Note posting period.
A cash refund Payment Entry debits the bank account and credits supplier payables.
The bank deposit is reconciled to the refund Payment Entry.

For landed-costed stock, a supplier credit may not reverse freight or landed costs charged by another supplier. Review the stock valuation separately.

Capitalised assets require an asset-accounting review before using the routine stock return path.

5. Correct or undo an error

Reverse downstream records before cancelling the source document.

Problem	Correction
The bank match is wrong but the Payment Entry is correct	In matched bank transactions, use Unreconcile, then Unreconcile Only. Match the transaction correctly.
The cash is correct but the invoice allocation is wrong	Open the affected Purchase Invoice or Payment Entry, select Actions, then UnReconcile. Remove the incorrect allocation and reconcile it again.
The refund amount, bank account, or date is wrong	Unreconcile the bank transaction, cancel the Payment Entry, amend or recreate it, then match the deposit again.
The Debit Note is wrong but the stock return is correct	Remove its allocations or cancel its refund Payment Entry, then cancel and amend the Debit Note. Keep the correct Purchase Return.
The stock return is wrong	Cancel the downstream Payment Entry and Debit Note first. Cancel and amend the return Purchase Receipt only after confirming the goods' physical location.

Inventory movements made after the return can block cancellation. Correct those later movements before cancelling the Purchase Return.

Troubleshooting

Problem	What to check
The Purchase Return option is unavailable	Confirm the Purchase Receipt is submitted and that you have permission to create Purchase Receipts.
NexWave rejects the return quantity	Confirm the quantity does not exceed the original received quantity less earlier returns.
The wrong warehouse is used	Check Accepted Warehouse, Rejected Warehouse, and Return Qty from Rejected Warehouse before submission.
A batch or serial return cannot be submitted	Confirm the exact batch or serial numbers are still available in the selected warehouse.
Stock was reduced twice	Check whether Update Stock was selected on a Debit Note after a separate Purchase Return had already moved the goods. Reverse the downstream documents in order and correct the Debit Note.
The Debit Note did not reduce an invoice	Review Update Outstanding for Self and use Payment Reconciliation when the Debit Note has its own outstanding balance.
The supplier credit is missing from a payment run	Confirm the Debit Note is submitted, outstanding, for the same supplier and payable account, and that the run still has a positive payment total.
The supplier refund Payment Entry shows Pay	Change Payment Type to Receive. A supplier refund increases the bank account.
The bank refund cannot be matched	Confirm the bank transaction is a deposit and select the submitted refund Payment Entry in Match Against Voucher.
The Debit Note changed GST or BAS in the wrong period	Review the Posting Date and obtain finance approval before changing a filed period.
A foreign currency refund has a difference	Review the exchange rates and any Difference Amount or exchange gain or loss before submission.