Consignment Options
This Solution provides a procedure for tracking Consignments from Vendors.
By definition, consigned product is valued in the consignor's inventory. As the consignee you do not value consigned product in your inventory, nor do you record any liability to the Vendor until you have sold the product. This Solution assumes that you, not your Vendor, will be invoicing your customer. When you are ready to ship an order of consigned product, you will first "purchase" the product from the Vendor.
The following issues are addressed:
-Providing the Vendor a receipt for consigned product
-Tracking quantities and availability of consigned product
-Determining which "purchases" need to be made to fill orders for consigned products
-Keeping complete histories to facilitate reporting
Please read this Solution in its entirety before implementation. Direct any technical questions to support@bigbusiness.com. For accounting questions, consult your CPA. If you are creating a new data file, you should consider any modifications you might make to your import files (in a spreadsheet) to avoid having to modify Cards one at a time.
(3195)
1) It is recommended that you create an additional Inventory Account for consigned Items. This Account should clear to zero and can therefore be used to spot any discrepancies. After Setup, you can add the Account using the Account Card tool on the Bookkeeper toolbar. Name the Account appropriately (e.g. 1350-Consigned Inventory) and specify the Account Type as "Current Asset." NOTE: You must add your new account as an Inventory Account before you can select it from the Item Card. Go to the Item toolbar, open Item Prefs, click the Accounting tab, and in the Inventory Categories click the Add button. Select your new Account to make it available as an Inventory Account.
2) Create Item Cards for consigned product using the following criteria:
• Bought (as appropriate, you will be buying the consigned product you are selling)
• Inventoried (enables quantity tracking)
• Sold
•(Recommended) Specify an Item Type of "Consigned."
Use the Show List option in the Item Type field and Add an Item Type of "Consigned." This will help tremendously when reporting on consigned Items.
•(Recommended) Select your "Consigned Inventory" Account as the Asset Account.
• Specify a Cost (if you "overdraw" your Inventory, the Cost is used for the COGS posting; however, it is recommended that you avoid selling into a negative Quantity on Hand by keeping current on your "purchases.")
• Royalty Percentage Rate/Amount Per Item is not necessary for this Solution
• Specify a primary Vendor for the Item
3) Set ETA Days on the Vendor's Card to a number other than zero. This Solution relies on Big Business's ability to calculate an ETA date on a Sales Order. If Vendor ETA Days is zero, this calculation is useless. NOTE: You can use QuickChange in the Vendor QuickSearch tool to assign ETA Days to a found set (or all) Vendors.
4) If you need to provide your Vendor with a Consignment Receipt, you can create one using the Custom Form/Report tool. On the InfoCenter toolbar select the Custom Form/Report Tool. Click New and select the Purchase Order template. Double-click on the "Purchase Order" text box and enter "Consignment Receipt." Add your logo or company information. From the small File menu, open the Page Setup and confirm the settings. From the small File menu, select Save As and name your form (e.g. Consignment Receipt).
5) When you receive consigned product from your Vendor, create a Purchase Order for the Items received. Set the ETA for each Line Item to the date received. Print a receipt for the Vendor using the form created in Step 3. This Purchase Order will track your stock of the consigned Items. Before Invoicing a Sales Order for a consigned Item, you will "purchase" the necessary quantity from the Vendor by creating a partial Bill for this Purchase Order.
6) To determine stock levels for a particular consigned Item, refer to the Qty On Order field on the Item Card. This field is a running total of the sum of Open Purchase Orders for the Item. This field can be verified at any time (see Solution #3117).
7) Don't fall asleep yet. We're just getting to the important parts.
8) When creating new Sales Orders you can rely upon the ETA Date for a consigned Line Item to determine availability (without checking the Qty On Order on the Item Card). When you add a Line Item, Big Business fills in the ETA Date according to the following:
-If the Quantity Available is positive, today, otherwise...
-If covered by an Open Purchase Order, the ETA Date of the Line Item on the P.O.
-Otherwise, today plus Vendor ETA Days.
Since your consigned Items that are in stock are Inventoried, have Open P.O.'s, and have the received date as the Line Item ETA on the P.O. the Line Item ETA on a new Sales Order will be TODAY if you have available stock. Since you have set Vendor ETA Days to a number other than zero, the ETA Date will show a date later than today if you do not have available stock.
9) Before Invoicing a Sales Order for consigned Items, create the Bill to "purchase" the Item from the Vendor. Use the Reports and Q&A's listed below to facilitate creating "batch" purchases to cover multiple orders.
10) If you return consigned Items to the Vendor, modify the Purchase Order to reflect the change in quantities. If all Items are returned (or the entire balance on a Partial P.O.) click the Closed box on the Purchase Order. NOTE: Never delete a Purchase Order.
11) If you accept Returns from Customers, you can create Vendor Bills with negative quantities, or simply "purchase" net quantities on your next Bill. You can verify that you are in sync by checking the balance on the Consignment Inventory account.
Useful Reports:
[Items] Open Items on Orders, sorted by Item (Summary)
-Search: Item Type is Consigned
-Use: shows "batch" totals for consigned Items that need to be "purchased" to cover open Sales Orders.
[Vendors] Open Items on Purchase Orders, sorted by Vendor (Summary)
-Search: Item Type is Consigned
-Search: All (Vendors)
-Use: summarizes consigned Item stock levels by Vendor
Useful Q&A's: NOTE: Q&A results can be double-clicked to go to individual records.
[Customers] Which Orders can be fully shipped?
-Use: includes all Sales Orders with consigned Items that have been "purchased" and are therefore ready to ship.
[Customers] Which Orders are waiting for Items to arrive?
-Use: includes all Sales Orders with consigned Items that need to be "purchased" before they can be shipped.
[Vendors] Which PO's have open Items past their E.T.A. date?
-Use: includes all Purchase Orders with consigned Items if you entered the received date as the ETA Date for each Line Item (unless received on the same day).
[Vendors] Which PO's have open Items needed to fill Customer Orders?
-Use: includes all Purchase Orders with consigned Items that need to be "purchased" to fill Open Sales Orders.
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