cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 2

How to record damaged goods after invoicing customer?

Hello QB Community,

 

One of my sales channels is Amazon Vendor Express where they control the invoicing, inspection, shipping, etc.  I just deliver goods based on the POs that they submit to me.  I'm having trouble figuring out how to record what they call "shortages".  This happens when I ship them products and they claim the quantity invoiced does not match what they received.  This usually happens because an item was damaged during shipment.  

 

Workflow:

1. PO Received:  Amazon provides a PO with SKU, price and qty.

2. PO Approval:  I enter SKU and quantities into Amazon system for the items that will be shipped.

3. Invoice (Amazon):  Amazon autogenerates an invoice in their system,  to themselves, based on items shipped.

4. Invoice (QBO):  I manually create invoice in QBO that matches the Amazon invoice.

5. Fulfillment:  Order is delivered to Amazon facility and inspected by their team.

 

6. *Shortage:  Occasionally, Amazon will make an adjustment to the invoice stating that they did not receive the quantity specified in the shipment.  For example, I ship 100 units but they only receive 99.  I accept the shortage as a loss and receive payment for the updated quantity.

 

Question: How do I record the shortage in step 6?  I need to ensure my QBO inventory on hand reflects what was shipped yet record payment for a lesser amount.

 

Any feedback will be very much appreciated!

 

Thanks,

Ryan

Solved
Best answer 04-20-2018

Best Answers
Highlighted
Level 10

How to record damaged goods after invoicing customer?

@JungleMerch

 

It's very impressive workflow you've!

 

I will add these two more steps (in addition to five steps you already have) to handle loss on shipment transactions.

6) Create credit memo to Amazon —use the same item code as used on the original invoice
This should take care Customer account. But the actual inventory quantity on hand is overstated.
7) Create "Inventory Qty Adjustment" form (Plus sign at the top > Other > Inventory Qty Adjustment). This entry will fix new QOH in QuickBooks Inventory. You have an option to select which "Inventory adjustment account" to use for shipment loss, the default is inventory shrinkage account.

 

Hope this helps!

View solution in original post

7 Comments
Highlighted
Level 10

How to record damaged goods after invoicing customer?

@JungleMerch

 

It's very impressive workflow you've!

 

I will add these two more steps (in addition to five steps you already have) to handle loss on shipment transactions.

6) Create credit memo to Amazon —use the same item code as used on the original invoice
This should take care Customer account. But the actual inventory quantity on hand is overstated.
7) Create "Inventory Qty Adjustment" form (Plus sign at the top > Other > Inventory Qty Adjustment). This entry will fix new QOH in QuickBooks Inventory. You have an option to select which "Inventory adjustment account" to use for shipment loss, the default is inventory shrinkage account.

 

Hope this helps!

View solution in original post

Highlighted
Anonymous
Not applicable

How to record damaged goods after invoicing customer?

Hey Ryan (@JungleMerch), 

 

Thank you for sharing your Amazon workflow and I agree with @vpcontroller, it's very impressive! How did you come up with it? Did you develop it bit by bit as you went along? Is it a version of an existing workflow? 

 

There are tons of sellers who want to get started on  Amazon but don't know how to get started. As ecommerce takes an increasing volume of b2c sales overall, this information will be really helpful. Any additional basic advice you could offer? 

Highlighted
Level 2

How to record damaged goods after invoicing customer?

Hi James,

Appreciate the feedback.  Just as you guessed I developed the steps bit by bit as I went along.  Coming from a tech background it was always good to document my workflows with the expectation of scaling via automation in the future.  I think it just became a habbit and carried over to my small business.

 

I'd love to collaborate with other Amazon sellers in developing workflows and best practices.  Once the kinks are ironed out, these workflows can save a lot of time.   Here's some basic advice for Seller Central.  (Vendor Express will be retired in the next month)

 

1. Use a clearing account in QBO that mirrors the transactions of the Amazon accrual account.  I named it "Amazon.com Balance".  All transaction go into this account before transfering in/out of my bank account.

2. If you use QBO for inventory tracking then make sure you account for all Amazon reports. 

    - Transaction Report - Units Sold

    - Customer Return Report - Units Returned to Inventory

    - Reimbursement Report - Units Reimbursed to Inventory

3. Use accrual accounting instead of cash basis.  This will get your #s to match the 1099K filed by Amazon.

 

If there's an Amazon subcommunity on these forums I'd be happy to share and participate.

 

Highlighted
Level 2

How to record damaged goods after invoicing customer?

Thanks VPController!!

 

Here's my updated workflow:

1. PO Received:  Amazon provides a PO with SKU, price and qty.

2. PO Approval:  I enter SKU and quantities into Amazon system for the items that will be shipped.

3. Invoice (Amazon):  Amazon autogenerates an invoice in their system,  to themselves, based on items shipped.

4. Invoice (QBO):  I manually create invoice in QBO that matches the Amazon invoice.

5. Fulfillment:  Order is delivered to Amazon facility and inspected by their team.

6. Receive Payment: Amazon dispurses payment for order.  Apply payment to invoice in QBO.

 

*Apply steps 7-10 when Amazon claims shortage

7. Shortage (Amazon): Amazon adjusts invoice in their system to match quantity received.  

8. Shortage (QBO): Create credit memo to Amazon using the same SKU and price as original invoice

9.  Inventory Adjustment: Create "Inventory Qty Adjustment" for the difference in quantity due to Amazon shortage.

10. Receive Payment: Apply credit memo (created in step 8) to QBO inovice.

 

 

Highlighted
Level 10

How to record damaged goods after invoicing customer?

 

@JungleMerch 

Wonderful!!

Highlighted
Level 1

How to record damaged goods after invoicing customer?

Hi @JungleMerch and @vpcontroller 

 

I just reviewed the conversation above on inventory shrinkage, etc.

 

Questions please:

A. Why did you wait until Step 10 to apply credit memo (assuming you 'Applied to Invoice'?

B.  I assume the same Steps 7-10 would be applied if inventory are returned damaged?

 

Thanks

 

Highlighted
Level 1

How to record damaged goods after invoicing customer?

I agree this is one way to resolve the problem, but QuickBooks programmers need to address this problem so that so many steps are not needed.  To me the easiest way to fix this is for us to be able to issue a credit memo to the customer, but not add the product back to the inventory.  At first we felt that leaving the Qty field blank would solve the problem, since no product was returned, and therefore not added back into our inventory.  But even leaving the Qty field blank still adds a quantity of "1" back into inventory.  To me it should be simple for QuickBooks programmers to allow this to be done...issuing a Credit Memo, but leaving the Qty column blank since no quantity is being added back into inventory.

Ken Hoagland

NewLook International, Inc.

[removed]

[email address removed]

Need to get in touch?

Contact us