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Community Contributor *

Receiving & Managing Consignment Items & Payouts

After you have created your items like normal (IE: Inventory Asset Account -> Inventory - Consignment, Expense Account -> Cost of Goods Sold - Consignment Sales)

 

Next, create a new Chart of Accounts "Consignment Inventory Received" (Account Type: Other Current Assets, Detail Type: Inventory"

 

Now, instead of going in and creating a Purchase Order and Bill for the Vendor (because you likely will never want to pay a consignee based on these bills, they're pointless to create and will create massive headaches later because you have a bunch of unpaid bills just sitting there), GO TO "Inventory Qty Adjustment", switch the Inventory adjustment account to "Consignment Inventory Received", then add the items you are receiving to the "Change in QTY" column.

 

Then, when paying out the consignee, you pay out via another COA, like COGS/Consignment Sales Payouts instead of paying out by the specific items that were sold (because if you payout specific items, those items will then be added back into your inventory which will create even more headaches and you'll be wondering how you lost so much inventory!).

This is the best way in QuickBooks Online that both our bookkeeper and I have found, so far, to manage this without having to do a bunch of other paper trails.

 

We hope this helps a LOT of people... and save you from the 10+ hours we spent trying to figure out the best way to do this.

4 Comments
Established Community Backer ***

Re: Receiving & Managing Consignment Items & Payouts

What you are doing by making those "inventory quantity adjustments' is creating items that have zero cost. So when those items are sold they generate no COGS - which is fine.
You can achieve exactly the same outcome by creating a 'vendor bill' when you receive the items and simply enter qnty with zero unit price. I prefer to use have bills rather than inventory adjustments because bills are easier to find and edit - and there is much more space on the document to enter relevant details and comments.
Community Contributor *

Re: Receiving & Managing Consignment Items & Payouts

MikeinBC...

 

It's still hitting the COGS account we have set-up for it.

The issue with zeroing out the billed price on the expense/vendor bill, doesn't that then zero the product cost? I was thinking that I read somewhere that QBO would auto adjust cost of the products? Also, when we did it this way, it was putting in that we received 2 for every 1 item - 1 for the "zeroed" vendor bill, and 1 for the actual payment to the consignee.

Community Contributor *

Re: Receiving & Managing Consignment Items & Payouts

Oh, and forgot to mention,

 

in the previous accounting system we used (for almost 10-years), we were able to:

  1. Create the Purchase Order
  2. Receive the items on the Purchase Order
  3. Later, create a Vendor Bill based on what sold in the month, and this bill would not add to the inventory. The only way anything was added to the inventory was by receiving the items on the PO, and you didn't have to create a bill to do that.

That system was very nice because from the PO you could Receive the Items then later create a bill, (OR), create the PO, Create the Bill (and also pay the bill), then later receive the items.... b/c some vendors you have to pay as soon as it's ordered, others you pay after you have received the items. It's honestly quite shocking that QBO doesn't accommodate for this.

Moderator

Re: Receiving & Managing Consignment Items & Payouts

Good day, info23.

 

Allow me to jump into this conversation and provide further details about the item receipt. 

 

I appreciate your thoughts on this. The item receipt is currently unavailable in QuickBooks Online (QBO). You may consider our Desktop version as this offers item receipt after creating a purchase order. 

 

You can check out this article for detailed comparison of each version: Choose your QuickBooks Desktop product.

 

Please know that we are constantly improving our product's feature to meet your needs. For any updates and feature enhancements, you can visit our website through this link: QuickBooks Blog.

 

We hear you, info23. I'll be sure to update this thread if I hear any changes about the option that you're looking for. 

 

I'm just a comment away of you have further questions. I'll be around. 

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