The questions being asked are:
a) how much revenue have I lost due to parts returned on
RMA and
b)without analyzing and totaling each individual job,
how much additional factory costs are incurred to "make it right" with
the customer.
Revenue lost is the value returned. If you sold it for $100 and it is
returned, you credit $100 to the customer, revenue lost is $100.
If you Credit, repair and re-bill, are you offsetting the returns and
allowances or just adding to sales for the new billing?
When you charge the restocking, cancellation or R/R/R fee, are you using
the R&A account as the income account or are you taking the income
somewhere else?
As to the cost of the RMA, the cost would be the costs involved in
repairing or replacing the item.
- If you scrap the item, you may have some salvage which may
offset the R&A but the COST has already been accounted for so there is
no satisfaction there.
- If you return the item to stock, the inventory increase is
offset by the Cost of Sales.
- If you do a R/R/R, then the cost would be the job cost or the
inventory cost depending on whether it was a replacement from production
or inventory which would then go to your cost of sales.
That is a quick, off-the-top-of-my-head analysis, but probably pretty
accurate.
Charlie Smith
Smith Business Services / 2W Technologies LLC
www.vistaconsultant.com <http://www.vistaconsultant.com/> /
www.2WTech.com
From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of stanchmura
Sent: Wednesday, September 03, 2008 2:15 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Returns and Allowances
After almost 10 years of Vantage, our financial people have changed and
are asking a few questions about Returns and Allowances (RMAs) that were
not previously addressed. (We are currently running Version 6.1)
The dollar value reported to the G/L for RMAs received is the value of
the product sold. This was initially mistakenly interpreted as lost
revenue. Typically for RMAs we receive where the merchandise is unusable
to the customer for whatever reason, we will:
a) credit the original sale; remake/replace/repair the merchandise and
rebill at the same price. (or sometimes at additional cost to the
customer - depending on who "accepts the blame" for the unusability;
i.e. customer ordered wrong or we designed/built it wrong)
b) credit the customer and return to stock (customer changed their mind
- sometimes subject to re-stocking fee)
c) credit the customer and scrap because the part is specific to the
customer. (usually subject to cancellation charge)
The questions being asked are:
a) how much revenue have I lost due to parts returned on RMA and
b)without analyzing and totaling each individual job, how much
additional factory costs are incurred to "make it right" with the
customer.
I'm hoping someone out there has a method for capturing and separating
those numbers? I thought that it would be good if the reason codes
associated with RMAs could be pointed to specific G/L accounts, but it
looks like that can only be done with DMR reason codes.
Any thoughts or suggestions on the topic would be greatly appreciated!
Thanks!
Stan
[Non-text portions of this message have been removed]
a) how much revenue have I lost due to parts returned on
RMA and
b)without analyzing and totaling each individual job,
how much additional factory costs are incurred to "make it right" with
the customer.
Revenue lost is the value returned. If you sold it for $100 and it is
returned, you credit $100 to the customer, revenue lost is $100.
If you Credit, repair and re-bill, are you offsetting the returns and
allowances or just adding to sales for the new billing?
When you charge the restocking, cancellation or R/R/R fee, are you using
the R&A account as the income account or are you taking the income
somewhere else?
As to the cost of the RMA, the cost would be the costs involved in
repairing or replacing the item.
- If you scrap the item, you may have some salvage which may
offset the R&A but the COST has already been accounted for so there is
no satisfaction there.
- If you return the item to stock, the inventory increase is
offset by the Cost of Sales.
- If you do a R/R/R, then the cost would be the job cost or the
inventory cost depending on whether it was a replacement from production
or inventory which would then go to your cost of sales.
That is a quick, off-the-top-of-my-head analysis, but probably pretty
accurate.
Charlie Smith
Smith Business Services / 2W Technologies LLC
www.vistaconsultant.com <http://www.vistaconsultant.com/> /
www.2WTech.com
From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of stanchmura
Sent: Wednesday, September 03, 2008 2:15 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Returns and Allowances
After almost 10 years of Vantage, our financial people have changed and
are asking a few questions about Returns and Allowances (RMAs) that were
not previously addressed. (We are currently running Version 6.1)
The dollar value reported to the G/L for RMAs received is the value of
the product sold. This was initially mistakenly interpreted as lost
revenue. Typically for RMAs we receive where the merchandise is unusable
to the customer for whatever reason, we will:
a) credit the original sale; remake/replace/repair the merchandise and
rebill at the same price. (or sometimes at additional cost to the
customer - depending on who "accepts the blame" for the unusability;
i.e. customer ordered wrong or we designed/built it wrong)
b) credit the customer and return to stock (customer changed their mind
- sometimes subject to re-stocking fee)
c) credit the customer and scrap because the part is specific to the
customer. (usually subject to cancellation charge)
The questions being asked are:
a) how much revenue have I lost due to parts returned on RMA and
b)without analyzing and totaling each individual job, how much
additional factory costs are incurred to "make it right" with the
customer.
I'm hoping someone out there has a method for capturing and separating
those numbers? I thought that it would be good if the reason codes
associated with RMAs could be pointed to specific G/L accounts, but it
looks like that can only be done with DMR reason codes.
Any thoughts or suggestions on the topic would be greatly appreciated!
Thanks!
Stan
[Non-text portions of this message have been removed]