Write a returns policy before you need one
Most losses on returns come from returns nobody decided on: a rep who takes back anything to keep a customer happy, expired stock credited at full price, goods brought back months later and credited at today’s price. A written policy says what comes back, for how long and in what state.
Share it with customers when their account is opened, and with reps before their first route. A policy only the office knows about will be overruled at the shelf.
- How many days after the invoice a return is accepted
- Which conditions you accept: good, damaged, near expiry
- Whether the customer must name the original invoice
- Who may approve a return, and up to what value
- When the customer gets a refund and when store credit
TipTell new customers the return window when you open their account, so the first dispute is not the first time they hear it.
Tie every return to its invoice
A return against the original invoice credits exactly what the customer was charged: the same price, the same discount. Without the invoice, someone has to guess the price, and the guess is usually today’s list price, which may be higher than what was paid.
If the customer had a discount when they bought, crediting at the list price hands back margin you never received. On a single return the amount looks small; across a year of returns it is real money.
TipAsk for the invoice number at the shelf; it takes a minute and saves an argument.
Approve before anything comes back
Approving before receipt stops the van and the warehouse from becoming a dumping ground. The approver checks the return against the policy: inside the window, items the customer actually bought from you, and quantities no larger than were invoiced.
Approve or reject quickly, and record why a return was rejected, so the rep can explain it to the customer. For small returns taken on the route you may let trusted reps approve on the spot, and leave larger ones for the office.
- The rep or the office raises the return against the invoice
- The approver checks the window, the items and the quantities
- The return is approved, or rejected with a reason
- Goods come back only once the return is approved
Receive good and bad stock apart
When goods come back, count them and note each line’s condition. Good stock can go back on the shelf and be sold again. Damaged or expired goods must be kept apart, or they will be picked for the next order and come back a second time.
Goods that cannot be sold at all should be scrapped and recorded as a loss, not counted as sellable stock that nobody will ever buy.
TipKeep damaged returns in a marked area of the warehouse, never on the receiving dock where good stock waits.
Refund or store credit
Once the goods are in, the customer gets either money back or credit to spend with you. Store credit keeps the cash in the business and the customer buying; it suits regular customers who will order again soon. A refund suits a customer who has paid and will not order for a while, or a case where your policy promises one.
Either way, a credit note against the original invoice is the record that reduces what the customer owes. If the invoice has not been paid yet, there is nothing to refund: the credit note simply lowers the balance.
TipOffer store credit first to customers who order every week; it is spent on their next order.
Watch returns as a cost
Track returns each month by customer, by rep, by item and by reason. A customer who returns a lot may be over-ordering; a rep with many returns may be over-selling or carrying the wrong stock; an item often returned expired is being bought or loaded too deep.
Returns cost twice: the margin on the credit, and the handling and write-off of goods that cannot be sold again. Put both in one number and watch it month by month.
Checklist: Before you take the next return
- Write a returns policy with a time window
- Ask for the original invoice on every return
- Credit at the invoiced price, not today’s
- Approve before goods come back
- Note each line’s condition on receipt
- Keep damaged and expired goods apart
- Choose refund or store credit by policy
- Review returns by customer, rep and item monthly