Reversal of Purchase Invoice When Items are Sold to Customer

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Posted on by Ahmad Subhani

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Hi Everyone,

Is there any method from which we can reverse the Purchase Document even though items are already sold to the Customer.

Currently I think so we can reverse it but first needs to reverse the Sales Document.

Any method to only reverse without reversing Sales.

Thanks In Advance

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Dynamics 365 Business Central

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Ben Baxter 7,042 Super User 2026 Season 1 on at

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Can you describe your question in more detail? Realistically you cannot return product to a Vendor if you already shipped the product to your Customer. Are you asking about a financial credit from the Vendor or reversing of a Payables Invoice?

Also, is this a drop shipment/special order situation where the Sales Order and Purchase Order are linked/related?

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Rajvi Shah 250 on at

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Hello,

Yes, you are correct, First You need to reverse the sales document because there are application entries associated with it.

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RockwithNav 9,097 Super User 2026 Season 1 on at

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That's a good Business scenario but we need to think of some clarification first -

Is this a Drop Shipment? In a Drop Shipment scenario, the PO and SO are directly linked, so you need to proceed accordingly.

Or is this a separate PO and a separate SO, where the item on the SO is fulfilled through the PO you created?

Normally, if the customer is willing to return the item, you should proceed with the Sales Return process, followed by the Purchase Return process. This will ensure everything is properly aligned.

if the customer is not willing to return the item and only the financials need to be handled, you can use a Purchase Credit Memo.

If you are receiving the item back from the vendor, you should perform a negative adjustment for that item to ensure the inventory remains accurately aligned.

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Valentin Castravet 32,657 Super User 2026 Season 1 on at

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Agreed with Ben. Can you confirm what you’re trying to achieve?

If the customer still has the items, how would you be returning them to the vendor?

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

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YUN ZHU 100,168 Super User 2026 Season 1 on at

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The vendor only needs a refund? No return of the items is required?

If so, try creating a Credit Memo directly in Purhcase journals, and then create a Refund to apply it.

If you need to return items, it involves costs, so you must return the sales items first.

Thanks.

ZHU

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Yi Yong 2,704 Super User 2026 Season 1 on at

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Hello,

Do you plan to return the item to the vendor?

If not, you can create a Purchase Credit Memo and select G/L Account Type instead of Item.

Otherwise if you are not too concern on the COGS, then you can turn off Exact Cost Reversing Mandatory in Purchase & Payables Setup.

Use "Create Corrective Credit Memo" instead of "Cancel".

Then system will automatically return similar existing item in your inventory.

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OussamaSabbouh 15,144 Super User 2026 Season 1 on at

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Hello,

No standard way: if the purchase receipt quantity has already been sold/applied outbound, you generally can’t just reverse the purchase document alone and leave the sale as-is; Undo Receipt is only for posted receipts that are not invoiced yet, and for proper correction Business Central usually requires you to reverse the sales side first for the sold quantity, while if the purchase is already invoiced you should use a Purchase Credit Memo or Purchase Return Order, which will only reverse the quantity that is still reversible and not the quantity already sold.

Regards,
Oussama Sabbouh

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Gerardo Rentería Ga... 26,108 Most Valuable Professional on at

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Hi, good day
I hope this can help you, and give you some hints.

Process returns or cancellations - Business Central | Microsoft Learn

Amend or cancel unpaid purchase invoices - Business Central | Microsoft Learn

Dynamics 365 Business Central: Reverse Postings (Undo, Correct, Cancel, Reverse Transaction…) | Dynamics 365 Lab

Best Regards
Gerardo

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Yash_Mistry 474 on at

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Hello,

Are you referring to a drop shipment scenario where the Purchase Order and Sales Order are linked? In Business Central version 28, you can now directly undo the shipment, and a Purchase Return Receipt will be posted automatically as part of this new feature.

If this is not your scenario, could you please provide a bit more detail on what exactly you are trying to achieve?

Hope this helps.

Regards,
Yash Mistry

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CU22041105-0 14 on at

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Short answer. No clean way to reverse just the purchase once the item is already sold, without touching the sales side.

In Business Central, once the item is sold, the item ledger entries are linked (purchase → inventory → sale). So if you reverse the purchase, you’re breaking that cost flow.

That’s why the system expects you to:

Either undo the sale first, then reverse the purchase

Or handle it via adjustments instead of full reversal

What usually works in real scenarios:

If it’s a pricing/cost mistake → use Item Revaluation Journal to fix cost

If it’s a quantity/entry issue → use Item Journal adjustments

If it’s a true correction → you may need to credit sales + reverse purchase properly

Trying to bypass this will mess up:

Costing

Inventory valuation

G/L entries

So your understanding is correct. BC enforces this for a reason.

Best approach. Don’t force reversal. Adjust smartly based on what actually went wrong

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