Understanding RMA

An RMA is an authorization from the supplier to the customer for returning outbound inventory for credit, replacement or repair. When you create an RMA for outbound inventory, you can:

• Create a purchase order to receive the inventory from the customer and a sales order to ship the replacement.

• Create a purchase order to receive the inventory from the customer and a credit order to return the amount charged for inventory.

Business Example

Worldwide Pharmaceuticals sells medicinal and surgical goods to International Hospitals on consignment. A surgical knife received at International hospitals, was found to be damaged during shipment. Since International Hospitals has not yet paid for the knife, there is no financial return. To update the inventory correctly and to track the returned goods, a purchase order is created to receive the goods at Worldwide Pharmaceuticals from International Hospitals. Also, a sales order is created to ship a replacement surgical knife from Worldwide Pharmaceuticals to International Hospitals.

If the payment for the knife is already complete, a purchase order is created to receive the surgical knife and a credit order is created to return the amount charged for the surgical knife.