Hi, I have my first Consignment and I am the Consignor. Do I set the Consignee up as a Customer? We ship them xxx amount of products for their inventory and then they send us a report of their sales monthly, minus their fees, etc... then payment to follow shortly thereafter.
Right now I have them set up as a Customer, then when I sent the products to them, I created an invoice. As they sell of some of our products and send us payment, I apply that towards the invoice which of course would still leave a balance until everything is sold.
I have separate item #s assigned for this Consignee and the income account pointed to Consignment Sales. I currently have amounts listed in there for an invoice I recently created.
But then I see in the Chart of Accounts, there is a Consignment Payouts... however, nothing is in there even though I did apply a partial payment to one of the invoices.
I am worried I set this up all wrong and wanted to fix it before I get in too deep.
Thank you for your help!
Hi there, alicewndr17.
Thanks for dropping by the Community, I'm happy to help, what you're going to want to do is set them up and record them as vendors and classes, follow along below for the steps:
If you sell items on consignment, you can track and generate a report that shows consignment sales you have made and how much you have paid out to consignors.
There are four basic steps to this procedure:
The following sections will guide you through the steps needed to complete this process.
Tip:Don't like tracking consignments manually? If you use QuickBooks Online Plus, you can use the built-in inventory feature to make it easier to track consignment sales.
1. Set up consignors as vendors and classes:
Before you can set up consignors as vendors and classes, you should make sure you have turned on the Class tracking feature. Follow the steps in the following section to turn the feature on, then enter the consignors as vendors, and assign a class to each consignor for reporting purposes.
Turn on Class tracking
To turn the Class tracking feature on:
Class tracking is enabled. The next step is to set up your consignors as vendors.
Enter consignors as vendors
To enter your consignors as vendors, perform the following steps for each of your consignment vendors:
Repeat these steps until all consignment vendors are set up.
The next step is to set up your consignors by Class.
Set up consignors by Class
You can assign each of your consignors to a Class for reporting purposes.
Repeat these steps for each of your consignors to set up reporting for your consignors. The next step is to set up the accounts and items that will let you track consignment sales.
2. Set up consignment income accounts:
Once the consignors are set up, you can create two accounts to help track consignment sales and payouts:
The accounts are set up. The next step is to create a Sales item for consignment sales.
Set up Consignment Sales item
Now that you have your accounts set up you are ready to set up the Consignment Sales item.
The Consignment Sales item is set up, and you are ready to record consignment sales and payouts.
3. Record consignment sales and payouts:
You are now set up to sell consignment items and pay consignors.
As you create invoices or sales receipts and record payouts, remember the following:
4. Create a consignment report:
After you have set up consignors and properly recorded sales and payouts, you can create and save a customized report showing a breakdown of your consignment sales and payouts.
To create a custom Consignment Sales/Payout report:
This report is now available at any time from the Custom reports tab, available from the Reports page.
The report groups sales, payouts, and ending income by each of the consignors, as well as the total income by all. Non-consignment sales are grouped under the Not Specified class
Before doing this, I would recommend reaching out to an accountant as they would be able to make sure everything set up correctly. Thank you for your time and have a nice afternoon.
But I am the Consignor... so I would set myself up as a Vendor? Would the Consignee be set up as a Customer then? How to track sales if I am the Consignor? Is it the same as you listed?
To consign means to place goods or stock in the inventory of another party, but retaining ownership until the products are sold and the consignee is not required to pay for the goods until after they have been sold. The consignee can even decide to return any leftover stock without worrying about monetary repercussions. QBO has limited features for consigner to manage this operation and you should consider an inventory management app.
You should monitor consignment sell-through rates (the percentage of stock that a consignment channel sells) and make decisions based on accurate data only when you use a good consignment inventory management system. The app is designed to assist wholesalers and retailers keep track of consignment stock. You can track exact consignment inventory at a particular location, keep an eye on movements and fluctuations of consignment inventory, and receive up-to-date reorder notification for each consignment channel, giving ultimate visibility for all involved in the consignment supply chain. You will treat consignment inventory as a location. Then you can create a stock transfer to bring products in and create sales orders from that location as they are sold.
We are not tracking inventory at the moment. Not sure if this is acceptable but I'll probably just set up the Consignee as a Customer and since I am not tracking inventory, I'll just create an invoice as payment is received for goods sold. That way I have something to apply the payment towards and also able to see what products were sold.
This is not correct accounting. When you create an invoice, you are recording a sale. Consignment is not recognized as income until the consignee sells it. Until then it should be a consignment asset. You are overstating your income, COGS and A/R and understating your inventory.
Good afternoon, @KK46.
Thanks for joining in on the thread. I want to make sure that you're able to get through all of these steps so that you're able to get back on track.
I can provide a visual to help you locate the "Vendors" tab in the expenses page of your QuickBooks Online (QBO) account. Here's how:
4. Type in all the information need and tap Save and Close when done.
That's all there is to it! Also, before doing these steps that my colleague provided, I recommend consulting with your accountant just to be sure this would be best for your business.
Let me know if this helps. I want to ensure that you're taken care of. Should you need any further assistance, don't hesitate to ask. The Community and I are always here to lend a helping hand. Bye for now!
Thanks for joining this conversation, @alihassandxb7.
You can set up X as the vendor when creating expenses since they are the consignor. The Consignor or seller sends the goods to a buyer or consignee. They also keep the ownership of the product until it is sold. To do so, please follow these steps:
Once done, you're now ready to create an expense transaction.
For additional details about tracking consignment sales, check out this article: How to record consignment sales.
Also, in QuickBooks Online (QBO), monitoring your business expenses and accounts payable is a breeze. The program has ready-made vendor reports you can open at any time and customize depending on your business needs.
I'm always here if you need further assistance setting up vendors in QBO. Feel free to post a comment below to notify me of your response. Take care always.
It means, me being a consigner, I am sending goods on consignment. Should I still add myself as a vendor on my same company? Please clarify if is it good to go?
And also If you can show an illustration on how to record a consignment transaction in consigner's Book?