To discuss this article and its scenarios, there are two types of stock: CONSIGNMENT STOCK/INVENTORY, for which you are only invoiced when it is sold, and REGULAR STOCK/INVENTORY, for which you are invoiced at the time of purchase, regardless of whether it has been sold or not.
In a nutshell, consignment inventory works as follows: You, as the retailer, receive products from a supplier, but the supplier retains ownership of the inventory until a customer purchases it. Once the product is sold, you notify the supplier, and they will invoice you for the sold items. Since you don’t own the inventory until it's sold, any unsold items can be returned to the supplier.
For example, if a supplier sends you 10 batteries on consignment, you store them without owing anything yet. When you sell 2 batteries to a customer, you notify the supplier, and they invoice you for the 2 sold batteries.
The general process that can be followed for setting up, receiving, and selling consignment stock is seen below:
STEPS as seen in image above:
1. Ensure that the supplier is created in Supplier Catalog.
NOTE: If you are purchasing regular stock from the supplier, you might consider setting up a separate supplier account for consignment stock, though it’s not required. Please note, combining the two accounts will need to be done manually.NOTE: To learn how to create a supplier, click on the following link: How do I create a new supplier account?
2. Create a "Consignment Stock" lookup, in:
- Product Types OR
- Product Departments OR
- Product Groups OR
- Product Locations.
NOTE: To learn how to create a product filter lookup, click on the following link: How do I add a product filter option?
3. Create each of the Consignment products in the Product Catalog.
NOTE: • If you have or will receive both regular and consignment stock of the same product, you might consider setting up separate products for each, though it’s not required. • Remember to set the 'Consignment Stock' filter under Type, Group, Department, or Location, depending on where you've added the "Consignment Stock" lookup.
NOTE: To learn how to create a product, click on the following link: How do I create a new product?
4. Add a last and average cost to each consignment product in the Cost Adjustments screen, by applying the "Consignment Stock" filter to view only the Consignment Products, and then adding the Last, Average, and Standard (optional) costs for each product.
NOTE: To learn how to adjust the cost for multiple products simultaneously, click on the following link: How can I view multiple products at once, enter last, average, and standard costs for each, and save the changes to update all costs simultaneously?
5. Receipt the consignment stock in the Consignment Receipts screen.
NOTE: To learn how to receipt consignment stock, click on the following link: How do I bring consignment stock into the system?