What is Consignment Stock?
Consignment Stock is inventory held at a customer's or dealer's location that remains the supplier's property until sold or consumed — reducing the buyer's capital tied up in stock.
Consignment Stock Accounting
Consignment stock is not on the buyer's balance sheet. The supplier carries it as inventory until the buyer reports usage or sale. The buyer pays only for what is consumed. Risk of obsolescence and damage stays with the supplier. Regular consignment stock reports (count at period-end) trigger invoicing.
Managing Consignment in ERPNext
Use a virtual "Customer Warehouse" in ERPNext to track consignment stock sent to dealers. Transfer goods via Stock Entry (Material Transfer to Customer Warehouse). When the dealer reports consumption, create a Delivery Note from the Customer Warehouse, triggering the Sales Invoice and reducing the consignment balance.
Infonoxe Technologies specialises in ERPNext implementation and custom software for Indian businesses.
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