Returning Merchandise

For the credit department, returned merchandise can cause serious delays in payment. Processing returns are complex, typically involving multiple departments with numerous opportunities for problems and delays. In order to better manage problems associated with returns, credit professionals must first understand the process, which typically includes these steps:

1. The customer contacts sales or customer support to request a return authorization.
2. The request is reviewed. If the return authorization is approved, a Return Merchandise Authorization ("RMA") is issued.
3. The customer returns the goods.
4. The receiving department accepts the goods.
5. Someone, typically in the warehouse inspects the goods. If appropriate, the merchandise is returned to stock.
6. Inventory control updates the company's records to reflect the return of merchandise.
7. The accounting department or customer support determines at what price the goods were actually sold, and at what price the credit will be issued.
8. The credit is issued and sent to the customer.
9. Accounting adjusts the sales commission.
10. The customer decides whether or not to accept the amount credited as full credit for the return.
11. If not, the process becomes far more complex.
    

What is interesting is that no single department is responsible for the entire process - meaning the process has no champion. Since no one is responsible for ensuring the process moves quickly, no single person or department can be held accountable if and when problems and delays occur. These delays inconvenience the customer, and equally important delays in issuing RMA credits can delay payments.

What seems obvious is that RMAs need a champion. Someone in the company that can shepherd the RMA through the approval process, can report and resolve bottlenecks, and can make sure the RMA is issued promptly and for the correct amount.

Source: Michael Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore.