Dynamics 365 Business Central: Posting a Sales Refund and applying to a Credit Memo

Introduction

I come from a Dynamics GP background and I’ve always found the process for refunding in Dynamics GP to be rather long winded and not very intuitive. The main issue is there’s no specific option for creating a refund, so I was very interested to test out the option in Dynamics 365 Business Central.

In this article I’ll first explain a potential scenario when a refund would need raising and applying to a credit note, then briefly explain how I’d do this in Dynamics GP, before finally going through the refund process in Dynamics 365 Business Central.

The Scenario

The scenario is as follows:

A customer buys some goods so we issue an invoice. The customer sends us payment which we apply to the invoice however they subsequently send the goods back so a credit note is issued. Finally some time later the customer requests their money back as they aren’t planning on doing business with us anymore.

Therefore, prior to issuing the refund, the account would have an Invoice applied to a Payment and a unapplied Credit Memo as per below

To complete the process we now need to issue the customer with a refund and apply this to the credit memo.

Dynamics GP

In Dynamics GP its not possible to post a “Refund” type cash receipt and apply it to the credit memo. One solution would be to void the credit memo and post a “Return with cash” similar to below:

Alternatively you could post a debit type document, apply this to the credit memo and then create the customer in payables and post a payment, however both cases aren’t ideal. (you can also use “Refund Cheques”, but again this involves having the customer setup in payables which again isn’t ideal)

Dynamics 365 Business Central

In Dynamics 365 Business Central you can post a “Refund” and apply it to the “Credit Memo” using the “Cash Receipts Journal”. Below are the steps to achieve this:

First go to the “Cash Receipt Journal” page:

Enter the refund as per below:

Next apply this to the credit memo we are refunding:

And then post the Cash Receipt Journal.

If we now review the account we can see the refund has been successfully applied to the Credit Memo.

Conclusion

I do like this functionality in Dynamics 365 Business Central. Its intuitive and doesn’t require lots of different steps. Although I’m a firm fan of Dynamics GP I do find this an improvement when compared to the current functionality available in Dynamics GP.

Thanks for reading.

One thought on “Dynamics 365 Business Central: Posting a Sales Refund and applying to a Credit Memo

  1. Peter Taylor 5th Mar 2020 / 4:55 pm

    Cool isn’t it….loads of stuff like that in NAV and BC, happy testing 🙂

    Liked by 1 person

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