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Purchase return for imported raw material

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Posted on by Niki

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Hi Experts,

I purchase raw materials from the foreign vendors. When the items are damaged, I do not send the items back to the vendors & i do my payments earlier. I can sell those damaged items to lower price than my purchased cost. In those cases i inform damage item sold value to my vendor, then he reduce the difference ( Purchase cost- Selling value) in the next purchase order Amount. if i can not sell those items, my vendor send the new items in free of charge.

How can i handle this situation in Dynamic 365 Business Central.

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Dynamics 365 Business Central

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techreviews.digital 376 on at

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Dear Niki,

Greetings!!!

Scenario 1: Selling of damaged items.

In this scenario, we are assuming payment line is already recorded, but not applied to any posted sales invoice.

Adjustment 1:

Recalculate and update the unit cost of the item in the purchase order, and post the purchase invoice with the adjusted value.

Adjustment 2:

Application of Payment Line against Posted Purchase Invoice.

Scenario 2: New Items will Received (Free of Charge).

In this scenario, just reverse the receipt of the items, and proceed once the new items will be received. Assume you didn't receive any item yet.

I hope it will resolve all of your concerns.

Best Regards,

Sheikh Muhammad Jawad

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Jainam M. Kothari 15,631 Super User 2025 Season 2 on at

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Hello,

You can manage damaged foreign-purchased items by recording them upon receipt, selling them at a reduced price through a sales order, and tracking the loss using dimensions or item categories.

When the vendor compensates by reducing the difference in the next purchase, you can apply a line discount or a negative line item in the new purchase order.

If the vendor sends replacement items free of charge, you can create a zero-cost purchase order and tag it with a reason code like "Replacement" for proper tracking and reporting.

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techreviews.digital 376 on at

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Dear Niki,

Greetings!!!

Scenario 3: Selling of damaged items & new Items will be received (Free of Charge)..

In this scenario, we are assuming payment line is already recorded, but not applied to any posted sales invoice.

Adjustment 1:

Recalculate and update the unit cost of the item in the purchase order, and post the purchase invoice with the adjusted value.

Adjustment 2:

Application of Payment Line against Posted Purchase Invoice.

Adjustment 3: If not able to sold those items: Creating and Posting the Purchase Return Order or Purchase Credit Memo.

Adjustment 4: If not able to sold those items: Creating and Posting of new Purchase Order, once the new shipment will be received.

Adjustment 5: If not able to sold those items: Application of Posted Purchase Credit Memo, and Payment Line against Posted Purchase Invoice for new items.

I hope it will resolve all of your concerns.

Best Regards,

Sheikh Muhammad Jawad

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RockwithNav 8,600 Super User 2025 Season 2 on at

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Never tried but you can do this - In Dynamics 365 Business Central, you can manage damaged goods by creating Purchase Credit Memos to get credit from vendors for the damaged amount (the cost you paid minus what you can sell it for).Set up a separate location in your system to track damaged items using Item Reclassification Journals. If a damaged item is sold, the credit memo covers the loss. If the item can’t be sold at all, you can remove it from inventory using a negative Item Journal, and get a free replacement by creating a zero-cost Purchase Order.

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YUN ZHU 95,329 Super User 2025 Season 2 on at

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Hi, hope the following helps as well.

Dynamics 365 Business Central: Reverse Postings (Undo, Correct, Cancel, Reverse Transaction…)

https://yzhums.com/3267/

Thanks.

ZHU

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Andrés Arias 4,188 Super User 2025 Season 2 on at

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Hello,

I hope the following information can help you.

https://learn.microsoft.com/en-us/dynamics365/business-central/purchasing-how-process-purchase-returns-cancellations

https://www.youtube.com/watch?v=gnbNWdXi_4Q

I hope I can help.

Regards,

Andres

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Mansi Soni 8,907 Super User 2025 Season 2 on at

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Hello @Niki,

Since you keep the items and the vendor adjusts the cost later, a practical approach is to simply sell the damaged goods at a lower price and record the sale as usual. Then, when placing your next purchase order, you can reduce the total amount by adding a negative line (like a G/L account or item charge) for the difference between the purchase cost and what you managed to recover by selling the damaged items. If you're unable to sell them and the vendor sends replacements for free, just add those items to a new PO with a zero unit cost. This keeps your inventory and financial records clean while reflecting the actual arrangement you have with your vendor.

Hope this answer will help you!

Regards,
Mansi Soni

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Gerardo Rentería Ga... 25,157 Most Valuable Professional on at

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Hi

You could use a purchase credit note, and use item charge to adjust the cost.

4.3.13 Purchase Process/ PURCHASE CREDIT MEMO WITH ITEMS CHARGE - Dynamics Business Central NAV

Best

Gr

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Niki 427 on at

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Hello @Mansi Soni,

Thank you so much for your reply. Could you please explain more about adding negative lines. If it is a G/L account which account should i add into the purchase order.

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