Consignment stock

Goods physically at a customer or distributor that you still own until they sell or consume them — your inventory on someone else’s floor.

Also searched as: consignment inventory, stock on consignment, vendor managed consignment, owned stock at customer

Ownership and location diverge. The consignee holds units for sale; the consignor keeps them on the balance sheet until a sale or agreed consumption trigger. Confusing consignment with a normal transfer is how both parties double-count or lose stock.

Operationally you need a location or consignment account that is still “owned by us,” issue rules that do not book COGS on transfer, and a sale event that finally posts revenue and COGS.

If you never leave owned stock at another party, skip consignment. It is worth the complexity when retail or distributor agreements demand it.

Transfer to consignment, then sell part

Send 100 units (cost $20 each = $2,000) to a distributor on consignment. Distributor sells 40 units at your $35 sell price; fee is separate.

1. On transfer: inventory relocates, still $2,000 on your books (no COGS yet).
2. Cost of 40 sold = 40 × $20 = $800.
3. Remaining consignment stock = 60 × $20 = $1,200.
4. Your revenue on the 40 (before fees) = 40 × $35 = $1,400; COGS $800; gross $600.

After the sale report, books show $1,200 still on consignment and $800 COGS for units actually sold — not for the original 100 moved.

Related modules

• Inventory & assets
• Sales & work
• Finance & ledger

Related terms

• Perpetual inventory
• SKU
• Cost of goods sold (COGS)
• Reorder point

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