Reverse a purchase invoice without touching the receipt

The vendor's invoice has been posted wrongly: wrong amount, wrong period or wrong vendor. The goods have been received and are to stay received. The question is how to reverse only the invoice. Here is what Microsoft Learn says about Correct, Cancel and credit memos, and what you should check before you begin. It is a guide for the bookkeeper. You also get a checklist for the bookkeeper.

Correct and Cancel on purchase invoices

On a posted purchase invoice you can choose Correct or Cancel if it has not been paid. The system creates and posts a corrective purchase credit memo that reverses the invoice. With Correct, a new purchase invoice with the same information is created at the same time for correction.

Microsoft also writes that if the cancellation applies to a partial invoicing, the original purchase order line is updated. The fields Qty. to Invoice and Quantity Invoiced are reset to the values before the partial posting. The receipt is then still posted, and the order line can be invoiced again. This is the closest we have found to reversing only the invoice.

When Correct and Cancel do not work

Learn mentions three limits. The function does not work if the invoice has been paid. It does not support partial returns or cancellations. And you cannot correct or cancel a purchase invoice that was posted with receipts from more than one purchase order. The same applies to invoices based on combined receipts.

In those cases you have to create a purchase credit memo yourselves, possibly through a purchase return order.

Credit memo and item charges

You can create the credit memo from the posted invoice with Create Corrective Credit Memo, or copy the invoice into an empty credit memo with Copy Document. When you post the credit memo, item charges assigned to the posted document are also reversed, so that the item's value entries are as they were before the assignment.

If it is a price reduction and not a return, you can post a purchase discount as an item charge on the credit memo and assign it to the posted receipt. The items then stay in stock, and the value in inventory is adjusted.

Traceability and cost

To keep inventory value right, returned items must be valued at the original cost. Learn calls this exact cost reversing. The Get Posted Document Lines to Reverse action on a return order does this automatically. The Copy Document action requires that the field Exact Cost Reversing Mandatory is switched on in Purchases & Payables Setup.

Checklist

Has the invoice been paid? Then you need a credit memo and a receivable from the vendor.
Was it posted with several receipts or several orders? Then Correct and Cancel are not possible.
Should the items stay in stock? Then choose Cancel on the invoice and invoice the receipt again, or use an item charge.
Reconcile the vendor ledger entries, and write the reason on the credit memo.

When to contact the vendor

If the invoice was posted wrongly because the vendor sent a wrong invoice, the vendor should issue a credit memo. Then post the vendor's credit memo instead of making your own. If the error is your own, for example wrong account or period, Cancel or Correct is usually the simplest route if the conditions are met. Always write the reason, and check afterwards that the vendor balance matches the vendor's statement.

The idea on our list

The idea Vendor Invoice Reversal is about a guided reversal of a purchase invoice without touching the receipt. At Addverk we collect ideas for small apps that could close gaps like this. They are ideas we are considering, not something you can download or buy today. The list of 30 ideas is on the Coming up page, and you can see which of them look like what you are missing yourselves.