Sage 100

Consignment Inventory - how have you done the accounting? The client currently has inventory of their own, and has just been delivered consignment inventory that they are storing in a separate location. The client will be billed monthly based on product usage. We have set up a separate warehouse to post to a GL segment value to keep the dollars separate. The current proposed process is that as needed, transfer the parts from the consignment warehouse to the main warehouse, then it becomes the clients inventory. The ""usage"" is determined by the transfer quantities. The part I'm trying to figure out is the accounting. The consignment inventory is not really an asset on the client's books until it is transferred into the main warehouse. But to get the quantities into the Consignment warehouse, then need to receive it, which will debit inventory and credit purchases clearing. The only alternative I can think of is to do a negative inventory issue and make the offset GL account the product line inventory account so it is a net zero GL transaction to get the quantities into the consignment warehouse without impacting the financials. How have you done this? Clark

Have you searched the archives on the topic? I believe there are several discussions. There is no nice way of doing it. You could set up a contra consignment inventory account and a contra purchases clearing account. Each month end, do a JE (and reverse it the first of the next month) for the value of the inventory in the consignment warehouse. These accounts would reduce the value of the inventory and purchases clearing accounts on the balance sheet. Someone would also have to do transfer transaction entry to move the items out of the consignment warehouse.

Haven't done this so just thinking out loud. 1. Receive in the inventory to a consigned warehouse and assign a consigned PL with PO against an AP vendor who is the source of the consignment 2. Create a consigned product line, create separate GL for the inventory account 3. Create a negative invoice to take off the liability consignor and credit a contra inventory account ""Consigned Inventory"" that you stick on the balance sheet next to inventory 4. Sell normally 5. Create a report periodically to show sales from the consignment warehouse (product line) to find out how much you owe 6. Enter in an AP invoice for what's owed for the things you sold and use the ""Consigned Inventory"" contra account reducing that balance Or something similar.

If you are in the voting mood, this idea could use another push. https://www5.v1ideas.com/TheSageGroupplc/Sage100ERP/Idea/Detail/11231

I searched 90 minds, sage city, and google. Apparently nobody has a firm answer to the issue. The common response was a consignment warehouse code to keep it separate. But nobody ever addressed the accounting process. So here's my solution. 1) I don't want the consignment inventory to impact the Financials until it is moved to client inventory. Therefore I will do a negative inventory issue with the offset GL account being the same as the inventory account, resulting in a zero GL impact.

Wayne, the problem in this instance is that they carry the part in both consigned and owned inventory. So it is not practical to create a separate product line. That actually was my first solution too, it's so clean. But reality isn't... Does anyone find a problem with my proposed solution of doing a negative issue transaction? Then the transfer from the consignment warehouse to main warehouse become the transaction data basis for the payable to vendor.

Haven't thought this all the way through but could you use kits in some way?

I wonder if one of the Scanco or Scanforce people might have a solution? They've probably seen this situation before.

@PhilMcIntosh - good idea, but the client uses the same item number for both the consignment and owned inventory. They are not separate item numbers. So I don't think a kit will work. And in this instance, they are only charged for the quantity they pull from consignment and move into owned inventory, not what is used in production or sales. @WayneSchultz - they are using Scanforce already, so I'll check with them. Good suggestion.

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