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Posting Purchase Credit Memo - Entries applied to an Outbound Transfer cannot be unapplied.

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Hello,

Good day.

We are currently trying to post a Purchase Credit Memo against a Purchase Invoice. However, the items received under this invoice have already been transferred to another warehouse.

Because of this, we are encountering the following error:

Error Message: Entries applied to an Outbound Transfer cannot be unapplied.

We need to properly close the Purchase Invoice related to this Purchase Receipt. How do we proceed, given that the items have already been transferred?

Thank you!

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Dynamics 365 Business Central

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Tom_Gioielli 3,084 Super User 2026 Season 1 on at

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Moving to the Business Central forum.

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OussamaSabbouh 12,878 Super User 2026 Season 1 on at

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Hello ,

This is standard Business Central behavior: once items from a purchase receipt are applied to an outbound transfer, the receipt cannot be unapplied, so a Purchase Credit Memo cannot be applied to that invoice. To close the invoice, the supported solution is to post a Purchase Credit Memo without item application (financial correction only) if the issue is price-related. If the goods must be physically returned, you must reverse the inventory chain (transfer back, then return), which is often impractical. Do not force unapplication or delete entries—BC blocks this to protect inventory and cost traceability.

Regards,

Oussama Sabbouh

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OussamaSabbouh 12,878 Super User 2026 Season 1 on at

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Hello ,

This is standard Business Central behavior: once items from a purchase receipt are applied to an outbound transfer, the receipt cannot be unapplied, so a Purchase Credit Memo cannot be applied to that invoice. To close the invoice, the supported solution is to post a Purchase Credit Memo without item application (financial correction only) if the issue is price-related. If the goods must be physically returned, you must reverse the inventory chain (transfer back, then return), which is often impractical. Do not force unapplication or delete entries—BC blocks this to protect inventory and cost traceability.

Regards,

Oussama Sabbouh

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YUN ZHU 99,084 Super User 2026 Season 1 on at

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Hi, As of now, we can undo transfer shipments, but we cannot undo receipts.

https://learn.microsoft.com/en-us/dynamics365/release-plan/2023wave1/smb/dynamics365-business-central/undo-transfer-shipments?wt.mc_id=DX-MVP-5004336

https://experience.dynamics.com/ideas/idea/?ideaid=1cbd5ab0-b179-ef11-a4e5-6045bdb9fcc9

You can manually transfer it back and then manually select this new item ledger entry on the credit memo line.

Hope this can give you some hints.

Thanks.

ZHU

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Dhiren Nagar 2,898 Super User 2026 Season 1 on at

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Hi,

The simple solution to this problem is do not mess with system.

Follow below steps.

1 - Bring back the item to main location or create credit memo with the location where the material is transferred. To bring the item back, use transfer order and bring back the item.

2 - Create a credit memo manually, do not use Get posted document line to reverse or copy document, Why? It will try to do fixed application and it will give you error. Enter the line manually for that Item, enter location code, amount. There is also a cost amount field which you need to bring out from personalize to enter the cost manually or you can keep the system taken cost in case you do not want to change it.

3- Post the credit memo, If on the Purchase & Payable setup you have keep Exact cost reversing mandatory it will give error, so you need to turn it off, post the credit memo and turn it back on.

Regards,

Dhiren.

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Rishabh Kanaskar 6,219 Super User 2026 Season 1 on at

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Hi,

Once the items received on a Purchase Invoice have been posted to an outbound transfer, Business Central permanently locks the related item ledger entries, which means a Purchase Credit Memo can no longer be applied to that invoice or receipt. This is by design, as entries applied to an outbound transfer cannot be unapplied. To close the Purchase Invoice, the only supported option is to post the Purchase Credit Memo without item application, typically using a G/L account or a charge item, so the financial correction is made without reversing inventory.

One of the ways to fully apply the credit memo would be to reverse the transfer first, return the items to the original location, and then unapply the receipt, which is only possible if the transfer can still be undone. There is no configuration or workaround that allows applying a Purchase Credit Memo once outbound transfer entries exist.

Regards

Rishabh

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