Lesson 1 of 5
Customer returns
9 min
A customer return is a sales process that runs backwards. Goods come back into your warehouse, and money (or a replacement) goes back to the customer. SAP S/4HANA models it with the same building blocks as a normal sale: a sales document, a delivery, a goods movement and a billing document. Each one simply points the other way.
At Contoso Motor Co., Great Lakes Fleet Services received 50 alternators CMC-ALT-100 on invoice 90001877. Four units arrived with cracked housings. Maria, the order-to-cash key user, has to take them back and credit the customer. This lesson follows her through the standard (sometimes called "lean") returns process.
- Return orderCreated with reference to invoice 90001877; order reason "damaged in transit"; billing block set automatically
- Returns deliveryInbound delivery of the four units to plant 1710, created from the return order
- Returns goods receiptPosts the units into stock, usually a separate returns stock rather than unrestricted stock
- Release billing blockSomeone with authority confirms the credit is justified
- Credit for returnsBilling document that credits the customer account and posts to finance
The return order
In SAP GUI, Maria creates the return order with VA01, using the returns order type (RE in the standard system) and choosing Create with Reference to the original billing document. In the Fiori launchpad, the same step is done in the sales order creation app or, where your roles include it, Manage Customer Returns. Referencing the invoice matters: it copies the customer, the product and, most importantly, the price the customer actually paid, so the credit matches the original sale.
Two fields deserve attention. The order reason records why the goods came back (damaged, wrong product, customer changed mind). Many projects make it mandatory because it drives reporting and sometimes pricing or approval. The billing block is normally proposed by the returns order type, so no credit can be created until someone has checked the claim.
| Field on the return order | Contoso value | Why it matters |
|---|---|---|
| Reference document | Invoice 90001877 | Copies customer, product and the price actually charged |
| Order reason | Damaged in transit | Explains the return; feeds analysis and approval rules |
| Quantity | 4 pieces | Cannot sensibly exceed what was billed; copy control can check this |
| Billing block | Set automatically | Stops the credit until the claim is approved |
| Plant / shipping point | 1710 Detroit / 1710 | Where the goods will physically come back |
What to check on a return order.
Returns delivery and goods receipt
The return order is followed by a returns delivery (delivery type LR in the standard system), created in SAP GUI with VL01N or in the outbound delivery apps. It looks like an outbound delivery but moves goods in. There is no picking; when the units arrive, the warehouse posts the goods receipt against the returns delivery.
Where the goods land is decided by configuration, specifically the movement type attached to the schedule line. In the standard flow, movement type 651 posts the units into blocked stock returns, a separate, non-valuated stock type. Returned goods are not available for sale until someone inspects them and moves them on, for example to unrestricted stock with a transfer posting (movement type 453) or to scrap.
Refund or replacement
Not every customer wants money back. If Great Lakes Fleet Services wants four new alternators instead, Maria leaves the billing block in place and creates a free-of-charge subsequent delivery with reference to the return order. The customer gets goods, no credit is issued, and the document flow shows the return and the replacement side by side. Advanced Returns Management (ARM), covered in lesson 4, adds more structured options such as inspection results and refund codes.
What would you do?
Maria creates a return order for 4 alternators with reference to invoice 90001877. The system proposes a billing block. The customer is calling every day for the credit. What should Maria do?
- Returns flow: return order, returns delivery, returns goods receipt, release of the billing block, credit for returns.
- Create the return order with reference to the original invoice so the credit uses the price actually charged.
- The order reason explains the return; the billing block stops the credit until it is approved.
- Returned goods usually land in a non-valuated returns stock and are inspected before being moved on.
- A customer can be refunded or sent a free-of-charge replacement.
Check your understanding · not graded
Lesson check
1. Why should a return order be created with reference to the original invoice?
2. What does the billing block on a return order prevent?
3. In the standard flow, where does movement type 651 post returned goods?
4. The customer wants replacement units instead of money. What does Maria create?