Customer Returns: Returns Order, Goods Receipt (651) and Credit Memo

Business scenario

Demo Retail Pvt. Ltd. returns 10 EA of FG-2000 from a delivered order, reporting transit damage. Customer service creates a returns order, the goods arrive at the returns area, quality decides what can be resold, and the customer is credited.

All companies, numbers and documents are fictional demo data.

Step-by-step flow

1. 01

   Customer reports damaged goods open in twin

   Demo Retail reports 10 EA damaged in transit and asks to return them.

   Returns are always handled against a reference document, so the original price and quantity are known and cannot be disputed later.

2. 02

   Returns order is created open in twin

   Returns order 60000111 (type RE) is created with reference to invoice 90000789.

   Creating it with reference to the invoice copies the original price, so the customer is credited exactly what they were charged.

3. 03

   Returns delivery brings the goods back open in twin

   Returns delivery 84000222 (type LR) is created and the goods travel back to the plant.

   It gives the warehouse something to receive against and keeps the document flow complete from invoice to credit memo.

4. 04

   Goods arrive at the returns area open in twin

   The goods are back, but nobody has inspected them yet. Decide where they should land.

   This is the heart of returns processing: goods whose condition is unknown should not be valuated or sellable yet.

5. 05

   653 — returned straight to sellable stock open in twin

   Movement 653 puts the 10 EA directly into unrestricted stock and posts the value back to inventory.

   It is the right choice when the goods are known to be resellable — for example a wrong-item delivery where nothing was ever opened. It is valuated, so it posts Dr Inventory / Cr Cost of goods sold immediately and skips the inspection step entirely.

6. 06

   Goods receipt into blocked returns (651) open in twin

   Blocked stock returns: 0 → 10 EA. No accounting document is created.

   Because the stock type is not valuated, SAP creates a material document but no accounting document. The goods are back in the building without being back on the balance sheet.

7. 07

   Inspection decides what can be resold open in twin

   All 10 EA turn out to be undamaged — the packaging took the hit, not the product.

   This decision determines the next movement type, and therefore whether the value goes back into inventory or straight to an expense.

8. 08

   Transfer into own stock (453) open in twin

   Blocked returns 10 → 0. Unrestricted: 150 → 160 EA, and the value returns to inventory.

   This is the valuated step of the returns process. The quantity becomes sellable again and the value lands back in inventory.

9. 09

   Credit memo refunds the customer open in twin

   With the return approved, credit memo 90000901 credits ₹20,000 to Demo Retail.

   The billing block is the approval control: it stops anyone crediting a customer before the goods are back and inspected.

10. 10

    Return complete open in twin

    Returns order → returns delivery → 651 → inspection → 453 → credit memo. Two movements, one credit.

    Splitting them is what lets the warehouse take goods back immediately while finance waits for the inspection result before moving any value.

SAP documents

Stock impact

Accounting impact

Movement type

• 651GR returns delivery to blocked stock returns (non-valuated)Reversal: 652
• 653GR returns delivery to unrestricted use (valuated)Reversal: 654
• 655GR returns delivery to quality inspectionReversal: 656
• 657GR returns delivery to blocked stockReversal: 658
• 453Transfer posting returns stock to own stock (valuated)Reversal: 454
• 551Goods issue for scrapping — used when the return cannot be resold

Takes goods back from a customer in a controlled way: physically receive them without valuing them, decide what they are worth after inspection, and credit the customer against the original invoice.

Transactions & Fiori apps

Configuration

• Returns order type and billing block

  Configuration dependent

  Order type RE typically carries an automatic billing block, released after approval. Whether the block is set by default is configurable.

• Movement type in the returns delivery item category

  Configuration dependent

  Decides whether the goods receipt lands in blocked returns (651), unrestricted (653), quality (655) or blocked (657).

• Valuation of blocked stock returns

  Configuration dependent

  Typically non-valuated, which is why 651 posts no accounting document. This is a configuration decision, not a universal rule.

• Credit memo account determination

  Configuration dependent

  Whether the credit reduces the original revenue account or a separate sales-returns account depends on the condition account key and VKOA.

• Advanced Returns Management

  Configuration dependent

  An optional, richer returns solution with inspection codes, follow-up activities and refund determination. Behaviour differs substantially from the basic flow shown here.

Prerequisites

• Original invoice or delivery available as a reference document
• Returns order type (RE) and returns delivery type (LR) configured for the sales area
• Order reasons maintained so returns can be reported on
• Blocked stock returns handled in the plant's stock determination
• Billing block on the returns order type for approval control

Master data

Customer / business partner

Returns are posted against the sold-to party; the sales area data drives the credit memo pricing.

Material master

Valuation supplies the value posted by the 453 transfer; the plant data holds the stock types.

Order reasons

Reporting on why goods come back — the basis of any quality improvement programme.

Organizational structure

• Company code 1000
• Sales organization 1000, distribution channel 10, division 00
• Receiving plant 1000, storage location 0001

Tables

Integration

• MMInventory management holds the returned goods as blocked stock returns and handles the 453 transfer.
• QMCan create an inspection lot for the return, with the usage decision driving the follow-up movement.
• FIThe 453 transfer and the credit memo post the value and the customer credit.
• COThe credit reduces revenue in profitability analysis, so returns show up in the margin per customer.

Common errors

• “No accounting document was created for the 651 goods receipt”

  Likely causes: This is normal — blocked stock returns is typically non-valuated

  Where to look: Material document in MB03 · Stock type valuation configuration

• “Credit memo cannot be created from the returns order”

  Likely causes: Billing block still active on the order or item; Returns order not billing relevant; Copy control missing from order type RE to billing type RE

  Where to look: Returns order billing block · Item category billing relevance · Copy control configuration

• “Returned goods are in the warehouse but sales cannot sell them”

  Likely causes: Stock is still in blocked stock returns — no 453 transfer was posted

  Where to look: MMBE stock overview · Returns stock report

• “Inventory value looks too low after a wave of returns”

  Likely causes: Goods received with 651 but never transferred with 453; Non-valuated returns stock excluded from inventory value by design

  Where to look: Blocked returns quantities per material · MB5B stock and value report

Troubleshooting

Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.

1. CHECK 1

   Return cannot be created

   • Is there a valid reference invoice or delivery?
   • Is order type RE released for this sales area?
   • Is an order reason mandatory and missing?

2. CHECK 2

   Goods receipt problems

   • Does the returns delivery item category carry a movement type?
   • Is the posting period open?
   • Is the receiving storage location set on the delivery?

3. CHECK 3

   Stock not sellable

   • Is the quantity still sitting in blocked stock returns?
   • Was a 453 transfer posted after inspection?

4. CHECK 4

   Credit memo problems

   • Is the billing block released?
   • Is copy control maintained from RE order to RE billing type?
   • Does pricing still find the original conditions?

Interview questions

• Why does movement type 651 usually not create an accounting document?

  Because it receives goods into blocked stock returns, which is typically a non-valuated stock type. The goods are physically back but not yet part of inventory value. The value only returns when movement 453 transfers them into valuated own stock, or if the return is received directly with 653.

• What is the difference between 651 and 653?

  Both are goods receipts for a returns delivery. 651 posts into non-valuated blocked stock returns, so the goods are not sellable and no value is posted — the right choice when the condition is unknown. 653 posts straight into valuated unrestricted-use stock, immediately sellable, and posts Dr Inventory / Cr cost of goods sold. The movement type comes from the returns delivery item category.

• Why does a returns order carry a billing block by default?

  As an approval control. It stops anyone crediting the customer before the goods are physically back and inspected. Once the return is approved, the block is released and the credit memo can be billed from the returns order.

• Is a credit memo for a return billed from the returns order or the returns delivery?

  From the returns order — it is order-related billing. The returns delivery handles the physical receipt of the goods, but it carries no price, so the credit comes from the order, which copied its pricing from the original invoice.

• The customer returned goods that cannot be resold. What changes?

  The goods are still received with 651 into blocked returns, and the customer is still credited. Instead of a 453 transfer into own stock, the goods are scrapped — typically a goods issue with movement 551 charging a scrapping expense — so the value never returns to inventory.

Quiz

Related processes

• 102 · 122102 GR Reversal
• 601Order to Cash
• FlowCredit Memo

References

• SAP SE — SAP Help Portal: Returns Processing in Sales and Distribution (source)
• SAP SE — SAP Help Portal: Customer Returns (source)
• SAP SE — SAP Help Portal: Goods Movements for Returns (source)

Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.

Version history