Did you know RMPro allows you to keep track of inventory in consignment from your vendors? This is not found in most inventory tracking software, because it’s only done in a few industries. In the oriental rug and home furnishing industry, however, consignments are extremely common.
What is a Consignment Anyway?
Consignments are when someone hands over their inventory to someone else in order to sell it for them. They’re typically for wholesale transactions only, which does not include any tax. Although possession of the inventory is passed to the consignee, the ownership still remains with the consigner. If any of the inventory has been sold, then the consignee becomes obligated to pay their vendor for that inventory. Otherwise, the consigner may request any unsold inventory back at any time in the future – usually by means of a contract with a time limit.
Why is This Important?
Here’s a scenario…Imagine you have some inventory consigned to you from your vendor. Now suppose you sold one of these consignment items to a customer. Just like most sales, you consider it one less item in your inventory, and you’ve collected money for it. The sale is final.
A year goes by, and you get a phone call from this vendor demanding his consigned inventory back, or payment for any of those items which don’t get returned. Now you realize, that money was already spent. You don’t have it anymore. You sold $230,000 worth of inventory from this vendor, and have already spent it all on rent, utilities, labor, advertising, and filling your store with more inventory. This is why you need to keep a close eye on your consigned inventory.
What Does RMPro Offer?
In the RMPro software, you can keep track of inventory that is consigned from your vendors to you. RMPro knows that these items are consigned, and will expect further action in the future – whether that action is to convert from Consigned to Purchased, or to return the unsold items. Not only that, but RMPro will make sure you know when you owe one of your vendors in this case. On RMPro’s main screen, for example, the “Alerts” section will say “4 Vendors having over $5k Sold Consigned Items”. Double-click on that, and you will be presented with the complete Purchase Consigned Items module, where you can further take action.
Creating a Consigned Purchase Order
The first step is to create a Purchase Order which is marked as Consigned. When you first start a new PO, make sure the “Consigned PO” checkbox is checked on the top-left. Make sure you do this right away, because you won’t be able to come back and change it later.
If you need, you can also mark just certain items as Consigned on the PO. This is done on the next screen, where you enter the item information. This way, a single PO could contain items which are both Consigned and Purchased.
KeepTrack of Consigned Inventory
There are many places across RMPro where you can see how much inventory you have consigned to you, as opposed to what is purchased. For example, on the main screen of RMPro, on the bottom-right of the dashboard, there’s a section for “Current Inventory”, where you can see “In Stock – Vendor Consigned”.
Find out When They’re Sold
Also on the main screen, there’s a section on the top-left of the dashboard for “Alerts”, which will inform you if you’ve sold any inventory which was consigned from your Vendors. This can be customized to only report to you if any vendor has sold at least a certain value. In this case, there are 4 vendors who have at least $5,000 sold consigned items.
Finally, you need to be able to convert Consigned inventory into Purchased inventory. This is done using the Purchase Consigned Items screen, which can be accessed by simply double-clicking on the alert, as shown above, or by going to the Purchase Orders main menu and selecting “Purchase Consigned Items”.
From here, by default you will see all of your inventory which is still consigned from your Vendors and has been sold to your Customers. However, you can also include those items which you haven’t sold yet, but want to keep as your own inventory anyway. For example, maybe you’ve only sold 4 items from this vendor, valued at $10 per square foot. You can negotiate with this vendor and talk them into selling you 10 items instead, valued at $8 per square foot – rewarding you with a better deal.
I Don’t Take Consignments, But I Send Them.
RMPro helps you manage consigning your inventory out to your clients too! This is all handled by a special “Consignment” invoice type in the Point-of-Sale module. Please check back later if you’d like to learn how RMPro handles sending out consignments to your customers.