Warranty returns to Vendors – DealerVu Help Center

Warranty returns to Vendors

Warranty returns to Vendors

Here's how to follow the process of returning defective parts to a vendor for a credit or refund:

When a customer comes to the dealership seeking warranty on a part or accessory they have purchased, you must seek approval from the vendor for its return. Each vendor usually has their own form that you must fill out and submit, along with a code for the reason for return. Sometimes you can just phone the vendor for approval but you must still have a return number. If approval is received over the phone have them fax you a confirmation.

Once you have approval, create an invoice to the vendor for the part or parts. This invoice will take the part out of inventory that you are replacing to the customer and create an account receivable to the vendor. It is a good idea to note on the invoice to the vendor, the customer’s name and the return authorization number.
You can now replace the item to the customer from your inventory if you have it in stock, or wait until the replacement comes in from the vendor. If the customer does not want the item replaced or if it can no longer be purchased you will have to give the customer a refund. You can either post the item as a return and a credit to the customer’s account or post the item as a return and refund the customer from your till. Any of these three scenarios will be accounting for the item taken out of inventory by the invoice to the vendor.
Usually, a vendor will want the merchandise returned. So you will have to package the merchandise up and include a copy of the return form, making sure that the return authorization number is on the form. Whether the package is sent prepaid or collect and what mode of transportation will depend on the agreement you have with the vendor.

There are three possible ways that the vendor will issue credit for the warranty:

The most common way is for the vendor to issue a credit back to the dealership for the product. At that point, the credit will be processed through shipping and receiving and thus crediting inventory. When the credit hits accounting the receivable invoice to the vendor will be reversed and inventory will be debited.
The vendor will ship the replacement product back to the dealership. At that point, one of two things will happen. If you have already given the customer a replacement you will simply replace your floor inventory, initial and date the packing slip and forward to accounting. You will also need to reverse the account receivable invoice to the vendor.
Lastly, the vendor may issue a cheque to the dealership. If that happens the cheque is posted as a payment on account to clear the receivable invoice.

This may seem like a lot of work and think why bother I’ll just track it manually or in a book. This is not only a much more efficient way in the fact that it leaves an excellent audit trail, but it eliminates the human error factor. Also if someone quits or leaves unexpectedly you have your audit trail and can track everything very clearly and quickly.

What can go wrong and what can I do about it?

You have taken a verbal confirmation from a vendor over the phone, received no written back up, given the customer the product and now the vendor is recanting: Basically there is not much you can do. You can try and get the vendor to change his mind. However; if the vendor will not change their mind there is not much you can do. That is why if you call it in wait for written confirmation (even fax) before taking any more action.

You have sent the product back, the vendor says they did not receive the product and will not honor the warranty until they do: At this point get the waybill and have the transportation company put a trace on it. They will have to come up with a drop off point and the name of who signed for it. If the vendor received it and signed for the package, that is your proof to them and they will have to honor the claim. At this point, the onus is on them to find the package. However, if the package was delivered to the wrong address it is up to the transportation company to find it.

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