diff --git a/backend/modules/data_entry/db/crud/receipt.py b/backend/modules/data_entry/db/crud/receipt.py
index 2855ddc..6a0fa06 100644
--- a/backend/modules/data_entry/db/crud/receipt.py
+++ b/backend/modules/data_entry/db/crud/receipt.py
@@ -265,7 +265,12 @@ class ReceiptCRUD:
         receipt: Receipt,
         data: ReceiptUpdate,
     ) -> Receipt:
-        """Update receipt fields."""
+        """Update receipt fields.
+
+        US-407: When a receipt is manually updated, reset processing_status and
+        processing_error to NULL. This allows failed OCR receipts to be corrected
+        manually and then submitted for approval without showing as "error" status.
+        """
         update_data = data.model_dump(exclude_unset=True)
 
         # Recalculate tva_total from tva_breakdown if breakdown is being updated
@@ -285,6 +290,12 @@ class ReceiptCRUD:
         for field, value in update_data.items():
             setattr(receipt, field, value)
 
+        # US-407: Reset processing status when receipt is manually edited
+        # This clears the "failed" status so edited receipts can be submitted for approval
+        if receipt.processing_status == 'failed':
+            receipt.processing_status = None
+            receipt.processing_error = None
+
         receipt.updated_at = datetime.utcnow()
 
         session.add(receipt)
diff --git a/scripts/ralph/prd.json b/scripts/ralph/prd.json
index b422e9f..f73662a 100644
--- a/scripts/ralph/prd.json
+++ b/scripts/ralph/prd.json
@@ -136,8 +136,8 @@
         "npm run build passes",
         "Verify in browser: Editează bon cu eroare → Salvează → Statusul nu mai arată eroare"
       ],
-      "passes": false,
-      "notes": ""
+      "passes": true,
+      "notes": "Completed in iteration 7"
     },
     {
       "id": "US-408",
diff --git a/scripts/ralph/progress.txt b/scripts/ralph/progress.txt
index 0694b05..fabe7b3 100644
--- a/scripts/ralph/progress.txt
+++ b/scripts/ralph/progress.txt
@@ -33,3 +33,14 @@ Stories: 8 (US-401 to US-408)
 [2026-01-12 19:31:11] Working on story: US-406
 [2026-01-12 19:31:11] Running Claude... (log: /workspace/roa2web/scripts/ralph/logs/iteration_5_US-406.log)
 [2026-01-12 19:36:45] SUCCESS: Story US-406 passed!
+[2026-01-12 19:36:45] Changes committed
+[2026-01-12 19:36:45] Progress: 6/8 stories completed
+[2026-01-12 19:36:47] === Iteration 6/50 ===
+[2026-01-12 19:36:47] Working on story: US-407
+[2026-01-12 19:36:47] Running Claude... (log: /workspace/roa2web/scripts/ralph/logs/iteration_6_US-407.log)
+[2026-01-12 19:47:56] Story US-407 not yet complete, continuing...
+[2026-01-12 19:47:56] Progress: 6/8 stories completed
+[2026-01-12 19:47:58] === Iteration 7/50 ===
+[2026-01-12 19:47:58] Working on story: US-407
+[2026-01-12 19:47:58] Running Claude... (log: /workspace/roa2web/scripts/ralph/logs/iteration_7_US-407.log)
+[2026-01-12 19:52:43] SUCCESS: Story US-407 passed!