Customer Returns vs Supplier Returns in SAP S/4HANA

Customer returns and supplier returns are connected when defective goods travel back through the supply chain, but they are not one process.

Customer return: goods come back from the customer

The company receives goods that it previously sold. The process can include a returns sales order, inbound receipt, inspection and customer credit. Accounting may reverse revenue, output tax and COGS while restoring inventory at the appropriate value.

Supplier return: goods go back to the supplier

The company sends purchased goods back. The process can reference the purchase order and create a return delivery or returns purchase order. Accounting normally reduces inventory and supplier liability or creates a supplier receivable through a credit memo.

The linked scenario

A customer returns a defective product and the company decides to send it back to the original supplier. SAP needs two legal relationships:

• customer to selling company;
• buying company to supplier.

The customer credit cannot replace the supplier claim. Each document has its own quantity, value, tax and approval trail.

Controls that matter

Track serial or batch information when relevant, preserve the return reason, prevent duplicate credits, and reconcile stock in inspection or blocked locations. Confirm that the supplier claim reflects the quantity actually accepted for return.

The key reconciliation

Connect the physical unit across both flows while keeping the accounting counterparties separate. Review customer credit, supplier credit, inventory movement and any remaining loss or repair cost.