I have submitted this to R&D, for another customer. See below for details for R&D’s response.

Is there a way to reopen a staged purchase order line to perform a return for rework or credit?

Test Plan:

1.) Enter a PO line set to ‘Staged’ Payment type.

2.) Release the PO

3.) Enter 2 Stage Payment lines for 50% each.

4.) Approve and enter a supplier invoice for stage 1.

5.) Receive the PO into an inventory location.

6.) Approve the 2nd stage and flag it as the Final Stage Payment.

7.) Enter a supplier invoice for stage2. 8.) Customer realizes they need
to return the parts back to the supplier. 

9.) Try to reopen the po line.  The following error appears,
“Reopen of closed Purchase Order Line XXX, X is not allowed when the last stage payment milestone is approved.”

Per R&D, "This is considered as the desired functionality.”

So to prevent that a receipt is cancelled when all stage payments have been approved there should be a check if all stage payments are approved when the system tries to re-open a closed purchase order line as a part of the cancel receipt process. (A purchase order line is automatically re-opened when a receipt is cancelled).

If all stage payments are approved there should be an error message that states something like: “This purchase order line can’t be reopened as all stage payments are approved. Revoke approval for last stage payment before reopening purchase order line”.

Also note that a stage payment approval of the last stage payment can’t be revoked if there are supplier invoices matched against that stage payment. Consequently any matched supplier invoice matched against the last stage payment must also be manually cancelled before a receipt is returned.