Consignment stock
Consignment is a business arrangement in which a business, also referred to as a consignee, agrees to pay a seller, or consignor, for merchandise after the item sells. In this article we will look at how consignor and consignee scenarios can be handled in Cin7 Core.
Track consignment stock and invoice at regular intervals
For consignment sales, ideally, I want to be able to track the stock I've sent to my consignment clients and perhaps invoice them fortnightly or monthly (to reduce my paper work and admin) for the stock they have consumed. Also, this enables me to keep track of the inventory I need to replenish at their site, when it is consumed.
Create a separate location for every consignment client.
Perform a stock transfer to move stock from its current location to the consignment location when the stock is sent to the consignment client.
Once a month, your consignment clients send you a sales report.
Create a sale order and pick the sold stock from the relevant consignment locations.
To keep track of the inventory used and when to replenish, you can check product availability and sort the report by locations. You can use the Low Stock Reorder or reorder suggestions functions to set reorder points whenever stock falls below a certain level in a consignment location.
Track COGS and total inventory for each consignee
I want to be sure that my accounting system (Xero) is able to track the Cost of Goods Sold and Total Inventory on hand, as it is consumedIdeally, I would want to track Inventory at each consignee at the Xero level.
Cost of Goods Sold will be copied to Xero every time a shipment is authorized in Cin7 Core. Total SOH will be changed in Xero every time a sale or purchase invoice is authorized. If you have created a separate location for each consignment client, you can use tracking categories in Xero to export Cin7 Core location to Xero with purchases/sales.
Track overall stock levels regardless of location
This is available now and won't be different with consignment locations. Use the product availability report, but hide the Location column. With regards of volume we don't impose any limitations. However, Xero recommends their software for businesses with 1000 invoices per month max.
Manage consignment stock received from suppliers
Can you please send me your recommended method of managing consignment stock that I receive from my suppliers? Typically I would reconcile consignment stock at the end of each month and send a purchase order to my supplier for any stock sold in that period. I would like to invoice my clients for sales of this stock during that period as well.
Create a separate location for every consignment supplier.
Create a stock adjustment in every consignment location to put the quantity of the items with notional cost 0.00001.
Sell items from the consignment locations using the usual sale process.
Once a month, run the Sale Order Details report and get list of products sold in each consignment location. Export this list with SKUs, locations and quantities, create CSV files for every supplier.
Create a purchase order for every supplier using the CSV file.
Once you get an invoice from the supplier, process the invoice as a normal purchase, in account column select COGS account instead of Inventory account to write off item’s cost.