How do you process faulty items returns?

[3rdrock]

Hi,

Up until now, if we send out an order and when it's received by the customer it turns out to be faulty, we don't trouble the customer to actually return it to us and just refunding the order.

Since it rarely happens we didn't notice the accounts going out of balance due to the below:

We use TradeGecko as the inventory management system. Returns are recorded in TG, and if it's an actual return it will create a return on their system which in turn create a credit note on the accounting platform (Xero). But, because there's not really a return, we only created a refund and then a credit note isn't created.

We can manually create a return as if it was indeed returned and then manually adjust the stock but surely that isn't a sustainable scalable solution?

What do you do?