Damaged Items

The following information will be helpful when you deal with damaged products. Damages to your products can come from a number of ways: they may come from rough treatment or accidents in your warehouse or they can be damaged in transit to the customer. In particular, we are talking about products that you are selling and which have been entered into the Product Information Database.

Note that the following is not applicable to Level I programs which do not have inventory features.

When deciding what route to take with damaged products, there are two questions that you should ask yourself.

1) Is this a product which has already been sold? In other words, has this item been invoiced using the "S" code.

2) Is this a product that has not been sold? In other words, it has not been included on an invoice with a Sales Code of "S" code.

Sales codes are entered in the "S" column in the Item Area. The "S" sales code , above, means regular sale. A "D" sales code is used to indicated damaged items.

The "D" sales code is used when an item has been previously invoiced with the "S" code. (For more information on "S" and other codes, see Sales Codes.) To see how this works, let's use an example. Let's say that you've received an order for 10 copies of the book The Adventures of Huckleberry Finn from a customer that gets a 40% discount. You create an invoice for the ten books. The books are listed using the "S" code and are discounted at 40%. You ship the books off and send the customer the invoice. But when the books arrive, the customer reports back to you that three of the books are damaged. They also tell you that the seven books they received will suffice for their purposes and you don't have to send them any more.

In a situation like this, you should create a second invoice to the customer. On this invoice you would use the "D" code and list the three damaged books at a 40% discount. When you use the "D" code, it will show up as a credit (negative amount) on invoice. Thus, the second invoice gives the customer credit for the three damaged books. If you were to run a billing statement for the customer, the first invoice listed on the statement would show a debit cost for all ten books, but the second invoice shows a credit for the three books. The balance shown on the statement is the cost for seven books.

Whenever you use the "D" code, it should always be associated with a previous "S" code. In the example above, the "D" code on the second invoice was used for books that were originally invoiced with an "S" code.

It helpful to understand how the "D" code works from an inventory standpoint. When you use the "S" code, the items will be removed from inventory. In the example above, the ten books on first invoice will be removed from inventory. When you use the "D" code, however, no inventory adjustment is made, and, thus, the three books listed on the second invoice have no effect on the inventory level. The customer, of course, is credited for the three books, but no inventory change is necessary because the three books have already been removed from inventory when they were originally invoiced with the "S" code.

Let's follow up on the above example. Let's say the customer wants you to send them three replacement copies. The way to do this is to issue a second invoice. On this second invoice three books are invoiced using the "D" code. That takes care of the damaged books and gives the customer a credit. Additionally, on the same invoice, the three replacement books are invoiced using the "S" code.

The total due will be zero (0) since the three damaged books (a negative amount) are offset by the three replacement books (a positive amount). AnyOrder will correctly reduce your inventory by 13 books: ten which are included on the first invoice with an "S" code and three replaced books invoiced on the second invoice with an "S" code. Remember the "D" code makes no adjustment to the inventory.

Returned items are goods and merchandise that are returned to you. If the returned items are in good shape and can be placed back in your inventory, use the "R" code."

However, if the returned items are damaged and you are unable to place them back in your inventory, use the "D" code. Generally, the "D" code is used when products are damaged in shipping and you want to credit the customer. But it also can be used to indicate returned products which are no longer saleable.

The "R" and "D" codes are treated differently when you run an inventory. The "R" code places items back in inventory. On the other hand, as mentioned above, no adjustment is made to the inventory when the "D" code is used.

When you use the "D" code, AnyOrder will place the following notation on the bottom of the printed invoice: "Damaged or Non-saleable Return." From the customer's standpoint, there is no difference between "R" and "D." In both cases, the customer is credited for the returned items, but from your standpoint there is an important difference in how your inventory is adjusted.

In the case of consigned products, the "D" code works the same way except the distributor is doing the selling. (For more information, see Consignment Distributors) Let's say your consignment distributor sells ships several products to one of their customers. The customer reports back to the distributor that some of the products are damaged. The distributor issues the customer a credit for those damaged products, and the distributor reports that information to you: the number of products damaged and the discount.

When you receive that information from the distributor, you would issue an invoice with the number of damaged products at the reported discount. The important thing here is that the products have already been reported sold by the distributor. In other words, you have the products recorded with an "S" code from a previous report (or from that report). Anything invoiced as a "D" code must have been also invoiced as an "S" code.

If your distributor reports damaged products (but are not associated with a sale), then you'll want to use the technique described in the next section.

Let's say your warehouse is flooded and you lose 500 copies of The Adventures of Huckleberry Finn. In this case, the books have not been invoiced (as in the examples above) and the "D" code is not used. However, the damaged books must be removed from your inventory.

To do so, select PRODUCT TOOLS >> PRODUCT INFORMATION & CATALOG NUMBERS. Find The Adventures of Huckleberry Finn. In the "Inventory Added" field, type in -500 (that's minus 500). There's no need to enter a total cost when you are dealing with shrinkage. Click on "Enter Additional Inventory." The inventory level will be reduced by 500.

Consigned items are handled in a similar manner. The important thing to remember is that the "C" code (for consignment) is not the same as the "S" code. Let's say you send 1,000 books to a distributor, and you've invoiced them using the "C" code for consignment. Later, they report back that 10 of the books were damaged in transit.

These books have not been sold yet. No "S" code transaction has been recorded in AnyOrder. Rather, the books are being moved from your inventory to the distributor's inventory. Since there is no sale involved, there is no associated credit and no use of the "D" code.

In this case, the books were originally invoiced with the "C" code: 1,000 books sent on consignment. But the distributor now has 10 less books in their inventory. To make the appropriate adjustment, you would issue a second invoice showing 10 books with the "T" code. This removes 10 books from the distributor's inventory.

But you must take one additional step. You also must remove those 10 books from your overall inventory. Do that by selecting PRODUCT TOOLS >> PRODUCT INFORMATION & CATALOG NUMBERS. Find the appropriate book, and in the "Inventory Added" field, type in -10 (that's minus 10). Click on "Enter Additional Inventory."

Here's another possibility. Let's say you sent 1,000 books to the distributor last year. This year they run over a box of your books with their fork lift. They report that 50 books were damaged. These warehouse damaged books must be treated the same way 10 books damaged in transit above.

Make out an invoice, and use the "T" code to remove the 50 books from the distributor's inventory. Then remove the books from your inventory by selecting PRODUCT TOOLS >> PRODUCT INFORMATION & CATALOG NUMBERS and entering -50 in the "Inventory Added" field.