How Returns and Credit Notes Work in Order Manager and Staff Bill

A wholesale sales return should not be recorded by deleting or editing the original invoice. The original bill describes what was sold on that date. The return is a later business event that needs its own document, its own value and a clear connection to the original sale.

My Local Shops handles this through a credit note in Order Manager and Staff Bill. The user opens the original invoice, selects the exact quantities returned, reviews the value, and confirms whether the credit reduces unpaid outstanding or requires money to be refunded.

For inventory-linked goods, the returned quantity goes back into the same billing location at the landed cost saved on the invoice line. For a GST sale, the credit note reverses the corresponding taxable value and tax components without asking the user to price the goods again.

Return, credit note and refund are different

These words describe connected but separate parts of the workflow.

Term	Meaning in My Local Shops
Return	Physical goods received back from the customer
Credit note	The financial and tax document created against the original invoice
Due reduction	Credit-note value applied against that invoice's open outstanding
Refund	Money paid back when the credit-note value is more than the invoice's remaining due
Stock restoration	Inventory-linked returned quantity added back to the original billing location

A return does not always require a cash refund. If the buyer still owes money on the invoice, the credit normally reduces that outstanding first.

Why the original invoice remains unchanged

Suppose a retailer bought 100 shirts and returned 10 after three days. Changing the invoice quantity from 100 to 90 would hide what actually happened:

• 100 pieces were sold on the invoice date;
• 10 pieces came back later;
• the original GST and payment history already referred to the 100-piece bill; and
• the return may belong to a different reporting date.

The correct history is therefore:

1. retain the original invoice;
2. create a linked credit note for 10 pieces;
3. update the invoice's cumulative returned quantity;
4. adjust money and outstanding; and
5. restore eligible inventory.

This produces an audit trail that an owner, buyer or accountant can follow.

Where to start a return

Open the original invoice in Order Manager or Staff Bill. If at least one line still has a returnable quantity, the invoice actions include Return, described as a credit note for customer-returned goods.

The return screen identifies:

• the original invoice number;
• the party name;
• every invoice line;
• quantity originally sold;
• quantity already returned;
• quantity still returnable; and
• original unit selling price.

The return is started from an invoice rather than from a generic product search. This ensures that the app knows the exact sale price, tax, party, location and previous returns.

Select only the quantities actually returned

Enter a return quantity beside each relevant invoice line. Leave all other lines blank.

Example:

Invoice line	Sold	Previously returned	Returnable now	Enter now
Red / M	20	0	20	3
Red / L	15	2	13	1
Blue / M	10	10	0	Disabled

The new credit note contains four pieces: three Red / M and one Red / L.

Blue / M cannot be returned again because its entire sold quantity was already covered by earlier credit notes. Its input is disabled when returnable quantity reaches zero.

At least one positive quantity is required. A user also cannot enter more than the remaining returnable quantity for any line.

Repeated partial returns are supported

A customer may return part of an order today and another part next week. The original invoice keeps a cumulative qtyReturned for every line.

If 20 pieces were sold:

• first credit note returns 4;
• the invoice then shows 4 returned and 16 returnable;
• second credit note returns 6; and
• the invoice then shows 10 returned and 10 returnable.

Each return gets its own credit-note number and date. The app does not combine later physical events into an old credit note or allow the cumulative return to exceed the original sale.

Rates and tax come from the original bill

The return screen says that rates and tax match the original invoice. This is an important protection.

For every selected quantity, the credit-note line copies the original line's:

• product and SKU identity;
• item code and HSN when present;
• unit price;
• GST rate;
• taxable amount proportion;
• CGST, SGST or IGST proportion;
• line total; and
• landed cost used for inventory and profit reversal.

The user does not enter a new selling price for a return. Otherwise, the seller could accidentally return one price while reversing another.

Proportional example

An invoice line sold 10 pieces with:

• taxable value: ₹2,000;
• GST: ₹100;
• total: ₹2,100; and
• price before GST: ₹200 each.

If two pieces are returned, the return ratio is 2 ÷ 10 = 20%.

Credit-note component	Value
Taxable value	₹400
GST	₹20
Value before independent round-off	₹420

The original price and tax proportions are preserved instead of recalculating the line from today's product settings.

GST and non-GST returns

The credit note follows the original invoice's tax mode.

Original GST invoice

If the invoice used CGST and SGST, the credit note shows proportional CGST and SGST. If the invoice used IGST, the credit note shows proportional IGST.

The generated credit-note detail and PDF identify it as a GST credit note and retain the link to the source invoice.

Original non-GST bill

If the invoice did not charge GST, the credit note remains non-GST. GST-only values are not invented merely because the product currently has an HSN or GST rate in inventory.

This historical approach matters because product settings may change after the sale. The return must follow the bill being reversed, not the catalogue at return time.

A credit note has its own round-off

The original invoice may have been rounded to the nearest rupee. A credit note is a separate financial document and calculates its own returned subtotal and tax before applying its own nearest-rupee round-off.

It does not simply take a percentage of the original invoice's round-off. With several partial returns, proportional slices of one old rounding adjustment can create confusing fractions. Independent credit-note rounding keeps each new document's payable or refundable value clear.

The review sheet displays round-off when it is non-zero.

Outstanding is reduced before refund is requested

After the selected lines are calculated, the app compares the credit-note total with the invoice's current balance due.

The rule is:

1. reduce the open due as far as possible; then
2. refund only the remaining credit-note value.

Scenario 1: fully unpaid invoice

• Invoice total: ₹10,000
• Amount paid: ₹0
• Balance due: ₹10,000
• Credit note: ₹2,000

Result:

• outstanding reduces by ₹2,000;
• new balance due becomes ₹8,000; and
• no refund is required.

Scenario 2: partially paid invoice

• Invoice total: ₹10,000
• Amount paid: ₹7,000
• Balance due: ₹3,000
• Credit note: ₹2,000

Result:

• outstanding reduces by ₹2,000;
• new balance due becomes ₹1,000; and
• no refund is required.

Scenario 3: credit note is larger than the due

• Invoice balance due: ₹500
• Credit note: ₹2,000

Result:

• outstanding reduces by ₹500;
• balance due becomes ₹0; and
• ₹1,500 must be recorded as a refund.

Scenario 4: invoice was already fully paid

• Invoice balance due: ₹0
• Credit note: ₹2,000

Result:

• no outstanding remains to reduce; and
• the full ₹2,000 becomes the refund requirement.

This prevents the system from showing both an unnecessary customer refund and an unpaid balance on the same returned sale.

Review before confirming

Tap Review credit note after entering return quantities. The review sheet lists:

• each returned item and quantity;
• value of each returned line;
• subtotal;
• CGST and SGST or IGST when applicable;
• round-off when applicable;
• credit-note total;
• amount that will reduce outstanding; and
• amount that must be refunded next.

If no refund is required, the return can be confirmed from this review. If a refund is required, the app continues to the refund step.

Review the physical pieces and quantities before confirmation. A credit note changes stock, financial history and tax records together.

Record the refund mode when money goes back

When the credit-note value exceeds open due, the app opens Refund payment. Choose how the money is being returned, such as cash, bank transfer or another supported payment mode, then confirm the refund.

The system records this as a refund payment linked to:

• the seller;
• party;
• original invoice;
• credit note; and
• payment mode.

A refund is distinct from a normal payment receipt. Receipts represent money coming into the business; refunds represent money going back after a return.

Inventory-linked goods return to the original location

For a normal product line, saving the credit note adds the returned quantity back to the location from which the invoice was issued.

If the invoice sold from Shop A, the return restores Shop A stock. It does not guess that the goods should go to Shop B merely because the user is currently standing there.

The transaction updates:

• total product stock;
• stock at the invoice location;
• in-stock and low-stock state;
• location membership and availability fields;
• grouped product-listing availability;
• dashboard units and stock value; and
• location units and stock value.

It also creates a stock movement tied to the invoice and credit note, so the increase is identifiable as a sales return rather than a purchase receipt.

Returned stock uses the original landed cost

When an invoice is created, every inventory line snapshots its unit landed cost. The return uses that saved cost to restore stock value.

Example:

• invoice line sold 10 pieces;
• landed cost saved on the invoice: ₹180 each;
• customer returns two pieces.

The system restores:

• two units to inventory; and
• ₹360 to stock value.

It does not use today's average cost or today's selling price for the restoration. That keeps the stock-value and cost reversal tied to the goods that were originally sold.

The return updates current stock and value but does not increase lifetime purchase quantities or lifetime purchase cost. A customer return is not a new supplier purchase.

Custom invoice items do not create inventory

An invoice can contain an Item not in inventory custom line. Returning that line reverses its financial value, but there is no products document to restock.

The app therefore does not invent inventory for a custom item. Only invoice lines linked to real product IDs restore product stock.

This is another reason to bill stocked goods through the product picker or barcode scanner rather than using custom lines for convenience.

Sales and profit statistics are reversed for product lines

For each inventory-linked return, the credit-note transaction subtracts the returned quantity, revenue, cost of goods sold and profit from that product's current monthly period statistics.

This prevents the returned quantity from continuing to look like a completed net sale at product level. Stock value is restored using the saved landed cost.

The original invoice remains intact as historical evidence. The credit note supplies the reversing record rather than rewriting the old bill.

Two devices cannot return the same quantity twice

The screen initially calculates returnable quantities from the loaded invoice, but the final save does not trust that old view blindly.

The service reads the latest invoice again inside a Firestore transaction. It recalculates every selected line from the fresh qtyReturned value before writing anything.

Example:

1. ten pieces are returnable;
2. Owner A and Staff B both open the invoice;
3. Owner A returns six pieces and saves;
4. Staff B still has an old screen showing ten returnable;
5. Staff B tries to return another six.

The latest invoice now allows only four. Staff B's transaction cannot save the second six-piece return. This prevents both excess stock restoration and lost updates to cumulative returned quantity.

The same transaction reads and updates the affected products, grouped listings, invoice balances, credit note, refund record and statistics. Firestore retries when a document changes during the operation.

Owner and staff use the same protected return logic

Order Manager creates the credit note directly under the signed-in owner's seller ID.

Staff Bill receives the bound owner ID from the staff session and creates the credit note under that owner—not under the staff member's personal authentication UID. The staff user can act only within the linked business permissions enforced by the app and Firestore rules.

Both apps provide the same essential return workflow:

• select quantities from the source invoice;
• preserve original rates and taxes;
• review due reduction and refund;
• restore eligible stock; and
• generate credit-note details and PDF.

Owner-sensitive information such as the owner's broader cost, profit and reports remains outside the Staff Bill role.

Where created credit notes appear

The original invoice shows its linked credit notes and updated returned quantities. A user can open a credit-note detail page to see:

• credit-note number;
• source invoice number;
• party and location;
• returned lines;
• taxable and tax values;
• outstanding reduction;
• refund amount; and
• credit-note total.

Order Manager also provides a seller-wide Credit notes list that can be browsed by month. This helps the owner find returns without opening every source invoice individually.

The credit-note PDF can be shared or retained with the original invoice for records.

Practical return checklist

• Open the correct original invoice.
• Physically verify the goods received back.
• Match the exact colour-size invoice lines.
• Check previously returned and currently returnable quantities.
• Enter only the new return quantities.
• Confirm the original price and tax values shown in review.
• Check how much will reduce outstanding.
• Record the refund mode if money must go back.
• Confirm that returned inventory belongs at the original billing location.
• Keep the credit note with the source invoice for owner and accountant review.

Frequently asked questions

Can I return more than the quantity sold?

No. The app limits total returns across all credit notes to the original sold quantity for each invoice line.

Can a customer return only some colours or sizes?

Yes. Enter quantities only beside the exact SKU lines returned.

Can I change the original selling price during return?

No. The credit note uses the original invoice line's unit price and proportional tax values.

Does every return require cash payment back?

No. Credit first reduces that invoice's open outstanding. Only the remaining value requires a refund.

Does a return restore stock?

Yes, for inventory-linked lines. The quantity returns to the original invoice location at its snapshotted landed cost.

Does a custom item create stock after return?

No. A custom line has no linked inventory product, so only its financial value is reversed.

What happens after a partial return?

The invoice records the cumulative quantity returned and shows the smaller quantity still returnable. Another credit note can be created later for the remainder.

Can staff create a return?

Yes, Staff Bill supports the same credit-note workflow for its linked owner and permitted business context without exposing private owner reports.

Is a GST return based on today's GST settings?

No. It follows the tax mode and proportional line values saved on the original invoice.

Can two people return the same stock at once?

They may open the same invoice, but the final transaction rereads the latest returnable quantities and prevents the combined return from exceeding the original sale.

Preserve the sale and record the reversal clearly

A trustworthy return workflow does not erase history. My Local Shops keeps the original invoice, creates a linked credit note, restores eligible stock, reduces outstanding first, records any refund and protects the final write against simultaneous devices.

The owner can therefore answer four important questions later: what was sold, what came back, how money was adjusted, and where the returned stock went.