1)Create an order, delivery, and Invoice
2)Create a Return order with respect to above-created order and give ORDER REASON in the Return order.
3)Do PGR and for this, no billing documents are going to be generated.
4)Create a Credit Memo Request w.r.t the Sales order and give order reason and saving it, Credit Memo Request gets generated.
5)Create a Credit Memo for created Credit Memo Request.
after that Create Credit memo with reference to Returns Order.
You can create a Credit memo with reference to a returns order directly and reduces a document and see them in the document flow.
SAP FICO ECC & S4 Hana Certified Consultant