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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Sales Credit Memo and ...
Small and medium business | Business Central, N...
Answered

Sales Credit Memo and Sales Return Orders

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Posted on by RR-07061806-0 611
Good day,
 
Recently started using BC and my question is what is the difference between a Sales Credit Memo and a Sales Return Order. 
 
Thanks a lot.
 
Regards
Rosemary
Categories:
Dynamics 365 Business Central
I have the same question (0)
  • Verified answer
    Suresh Kulla Profile Picture
    Suresh Kulla 50,243 Super User 2025 Season 2 on at
    You will use Sales Return order if you want to receive the goods back from the customer and then issue the credit, but if the inventory is not involved but you want to credit the customer then you can use directly Sales Credit Memo.
     
     
  • Verified answer
    Teddy Herryanto (That NAV Guy) Profile Picture
    Teddy Herryanto (Th... 14,284 Super User 2025 Season 2 on at
    Return Order is related to inventory (and warehousing module).
    If you only want to credit the money, you can use Credit Memo.
  • Verified answer
    PRao Profile Picture
    PRao 394 on at
    Hi Rosemary,
     
    Hope explanation below helps you clarify the difference between a Sales Return Order and a Sales Credit Memo in Business Central:. 

    🔁 Sales Return Order

     

    • Purpose: Initiates the return process when a customer sends goods back.

    • Used for: Managing the logistics of receiving returned items.

    • Workflow:

      1. Customer notifies you they want to return goods.

      2. You create a Sales Return Order.

      3. You can receive the items back into inventory (if applicable).

      4. Then, from the return order, you can post a Credit Memo.

    • Inventory Impact: Yes, items can be received back into stock.
    • Best for: When you expect the goods to be physically returned.

    💳 Sales Credit Memo

    • Purpose: Used to issue a refund or credit to the customer.

    • Used for: Financial adjustment (crediting the customer).

    • Workflow:

      • Created manually or from a Sales Return Order.

      • Can be posted directly (e.g., if no items are returned but you want to credit the customer).

    •  Inventory Impact: Not directly — unless it’s posted via a Return Order with item receipt.
    •  Best for: Issuing credit without expecting a return, or finalizing the financial part of a return.

    ✅ When to Use Each

     
    Scenario Use Sales Return Order Use Sales Credit Memo
    Customer returning goods ✔️ Yes Only after receiving
    Credit given without goods return ❌ No ✔️ Yes
    You need to track return logistics ✔️ Yes ❌ No
    Quick credit adjustment ❌ No ✔️ Yes


    Thank you !
    PRao
     
  • Verified answer
    RockwithNav Profile Picture
    RockwithNav 8,600 Super User 2025 Season 2 on at
    I was having the same question in my early days.
    The way we do Shipment and Invoice, exact same concept is for Return and Credit Memo. :)
     
  • Suggested answer
    Sohail Ahmed Profile Picture
    Sohail Ahmed 11,136 Super User 2025 Season 2 on at
    A Sales Credit Memo is mainly for correcting or refunding an already posted sales invoice — you use it when you need to adjust billing.
     
    A Sales Return Order is for handling the physical return of goods from the customer, often linked to warehouse processes and inventory updates before posting the credit.
     
    ✅ Mark this as the verified answer if helpful.
     
     

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