Defective Inventory is your queue of units pulled out of sellable stock because something went wrong: failed at install, returned by a customer under warranty, or otherwise rejected as not resellable. It is where you stage units waiting to ship back to the vendor for credit or replacement.

Go to Point of Sale > Inventory > Defective Inventory.

The list shows every defective unit currently in your shop

  • Product (clickable to the product detail page), SKU, Vendor
  • Qty (number of defective units of that product)
  • Unit Cost and Total: what the warranty claim is worth at cost
  • Last Updated

If the list is empty, the page reads: "No defective items in inventory. Defective items are created when a warranty invoice with negative quantities is posted." That message is the literal mechanism: defective inventory is built up by posting warranty invoices that include negative-quantity lines for the defective product. There is no "Defective" reason picker on a customer invoice; the warranty invoice is the dedicated path.

To send defective items back to the vendor

Click Return to Vendor on the item's row. A return order opens already filled in with that product, its vendor, and the defective quantity at cost. Adjust anything that needs it, save, and email or print the return PO for the supplier. The + New Return Order button at the top opens a blank return order instead, for anything not on this list. Both buttons need the "Manage purchase & return orders" permission (owners and store managers by default); anyone without it sees the list but not the buttons.

Creating the return order is what takes the unit off your Defective count and out of Total Stock: it has left the building. What the vendor does about it afterwards (a replacement, a credit memo, or nothing, which you record as a write-off) settles the money and does not move inventory.

Once you have received credit or replacement product, settle the return order from Inventory > Vendor Receivables (the open balance closes out there).

For the warranty-invoice side of this workflow, see the article on processing a warranty claim.