Consignment Stock includes stock which is sold by your business and paid for after invoicing the customer – typically, the stock is on display or available to sell at all times.
As Jim2 deals in FIFO, the preference is to receive stock and then sell it, otherwise depleting stock would have to be sold in advance, which limits the integrity of stock management.
For this reason, it's better not to tick Override FIFO for Consignment in Tools > Options > Stock.
Normal purchase orders need to be put on Received status, then a reconciliation of the stock performed.
With Consign In and Consign Buy, you use Consign In to put the products into stock for selling.
Once you receive an invoice for the goods, you can use Consign Buy to purchase the stock that has been sold.
The Consign Buy would match the invoice from the supplier.
A water tank supplier drops off 6 models of water tanks, each available for sale, however, not to be invoiced by the supplier until sold. The following process occurs:
▪You enter a Consign In PO (Received or Finish status) for six tanks. The dollar amount at this stage is of no importance as there is no impact on your GL with a Consign In PO.
▪You sell two tanks to customers. Jim2 understands you had six, and now only have four.
▪Sell two more tanks to customers. Jim2 understands you only have two tanks remaining.
▪Supplier invoices you for four tanks, and you raise a Consign Buy PO for four tanks including the amount you paid, which then finalises COGS for the tanks and adds to the Creditor balance.
Prepaid phone charge cards, where you have numerous depleting stock codes, however you are invoiced only when you sell them. The following process occurs:
▪Consign In PO (Received or Finish status) for 200 cards.
▪Jim2 understands that you have 200 of each card in stock.
▪Receive an invoice from your supplier for the 25 sold.
▪Raise a Consign Buy PO for the invoiced number.
This system also works for dial-time type transactions for mobile phone businesses.
A Consign Buy can only ever buy as many units as are on the Consign In.