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Consignment / Custody — A Guide from Scratch

Leaving goods with a customer on a "pay if you sell it, bring it back if you don't" basis, or keeping a supplier's goods in your warehouse on a "invoice as you use it" basis, is usually tracked in a separate notebook or not at all: goods go missing, invoices are forgotten and at the end of the period everyone argues about who used what. The Consignment / Custody window keeps this in one place: it sets up the agreement, records shipments and receipts without changing ownership, turns the customer's consumption report straight into an invoice, records returns and count differences, shows the differences in the period reconciliation and tracks everything in memorandum accounts in accounting.

1. What it is for: given and received consignment

Consignment separates two things: who owns the goods (ownership) and where they are (location). The program sets up every agreement with a direction:

In a given consignment the shipment is not a sale: the goods stay the company's, only their location becomes the customer; the invoice is issued when the customer reports having sold or used them (consumption report). In a received consignment the supplier's goods sit in a custody warehouse; before you sell them or use them in production you link them to a purchase invoice as consumption, and at that moment they become the company's.

Window tabs: Summary · Agreements · Consignment stock · Transactions · Reconciliations · Differences. Document numbers come from the document number series: agreements as KS2026000001, transactions as KN2026000001.

The Summary tab shows at a glance the value of consignment at customers (company property), supplier consignment (excluded from value), the number of active agreements, agreements with overdue reconciliation, draft reconciliations with differences and consignment waiting at a customer for more than 90 days.

2. Setting up an agreement

Agreements › New agreement (permission: consignment management). Fields:

• Direction and Account — the customer for a given consignment, the supplier for a received one.
• Consignment warehouse — if you leave it empty the program opens a warehouse named KNS-… itself: company-owned for a given consignment, custody (owner = the supplier) for a received one. The warehouse is tied to the account and never mixes with another customer's goods.
• Dispatch warehouse (company) is where the goods leave from in a given consignment; for a received consignment you are asked for the company warehouse the goods enter on consumption.
• Price rule — Price list (price engine): the consumption invoice is priced from the price list as in a normal sale; Agreement price (fixed): each item's unit price and discount from the agreement are used.
• Items — allowed products, agreement price and cap. The cap is the largest quantity that may be at the customer at one time; a shipment that exceeds it is rejected. If the item list is empty, any stock-keeping product can go on consignment; with the fixed price rule every product needs a unit price.
• Reconciliation interval (weekly / monthly / quarterly), Term (days) — the due term of the consumption invoice, Latest return (days), validity dates, currency and note.

The agreement card has Deactivate / Activate / Close buttons. An agreement cannot be closed until its consignment balance is zero. An agreement with transactions cannot be deleted (close it instead); its account, direction and consignment warehouse cannot be changed either. When an agreement without transactions is deleted, its automatically created warehouse is removed too.

3. Shipment and receipt

• Consignment shipment (given): a two-sided warehouse slip is written from the dispatch warehouse to the consignment warehouse. Company stock and its value do not change, only the location does; lots move in FEFO order. No VAT arises and no invoice is issued.
• Consignment receipt (received): a one-sided receipt slip is written into the custody warehouse. There is no invoice and no account movement; the goods do not enter company stock or its value, do not appear in the sales document picker and cannot be used in production.
• One transaction can have at most 300 items. If the product is not on the agreement's item list, or the stock card is not suitable for consignment (a non-stock card), the record is rejected.

4. Consumption report → invoice

When the customer says "I sold/used this much", open Consumption report on the agreement card. Only products with a balance can be chosen.

• Enter the date, the name of the reporter (customer representative) and the products/quantities. With the price list rule you may also type the price by hand.
• Preview invoice: shows the invoice type (sales for given, purchase for received), warehouse, due date, the source of the price (agreement price / price list / consignment book value / entered by hand), lines, VAT and the total excluding VAT.
• Issue invoice: the invoice is written with the same rules as the invoice screen — document series, price rules, the credit limit gate, VAT and the account receivable/payable apply as usual. The consignment balance drops by the invoiced quantity and the transaction is linked to the invoice.
• In a given consignment the sales invoice uses the consignment warehouse, so the goods leave from there. In a received consignment the purchase invoice enters the company warehouse you choose (stock + cost + input VAT + supplier payable) and the same quantity leaves the custody warehouse; the physical total does not change.

Credit limit approval and "Link invoice"

If the customer's credit limit requires approval, the invoice is not written right away: the message "The invoice is awaiting approval (credit limit)" appears and the request goes to the approval queue. Once it is approved and the invoice is written, enter the invoice's sequence number under Link an issued invoice to the consumption at the bottom of the consumption form and press Link invoice. If the invoice's account, warehouse or lines do not match this consumption, the link is rejected. If the limit is in "block" mode, no invoice is written and the consignment balance does not change.

5. Return

In a given consignment the customer brings back what they could not sell: a warehouse slip is written from the consignment warehouse to the warehouse the return goes into. In a received consignment unsold goods go back to the supplier: a one-sided issue from the custody warehouse. The agreement's Latest return (days) period is a reminder in the aging view; a return cannot exceed the balance.

6. Count

When a count is done at the customer, the Count form fills the products in the balance with their book quantity; type the counted quantity. What is saved is the difference = counted − book, posted as a one-sided adjustment slip. If the count equals the book, nothing is written. A shortage is usually unreported consumption: try a consumption report (and invoice) first, then record only the unexplained remainder as a count.

7. Reversal

A wrong transaction is not deleted. Press Undo on the transaction row of the agreement card and write a justification of at least 3 characters (permission: consignment management). The program writes the reverse stock slip and the reverse book entry, marks the transaction "Reversed" and numbers the reverse document; a number is never reused.

When a consumption is reversed, the linked invoice is deleted first — with your session, so the invoice deletion rules and permissions apply as usual; if the invoice cannot be deleted, the reversal is not done either. In a given consignment, deleting the invoice returns the goods to the consignment warehouse automatically; in a received consignment a receipt slip is written back into the custody warehouse.

8. Period reconciliation

On the agreement card, the Reconciliation section suggests the period start and end from the interval. Preview gives this row for each product:

Three kinds of difference are flagged, each with a suggestion: a book difference (remaining ≠ in warehouse — a non-consignment document may have touched the warehouse or a consumption invoice may have been deleted), an invoice difference (consumed ≠ invoiced — the invoice may have been edited later; check the invoice) and a count difference (counted ≠ remaining — invoice a shortage as consumption, correct an excess with a count). Save Reconciliation saves a draft; a user with consignment management permission Confirms it. A confirmed reconciliation cannot be changed; a draft can be deleted.

Agreements whose interval has passed without a reconciliation are listed on the Summary tab as Agreements with overdue reconciliation; saved reconciliations are on the Reconciliations tab.

9. Consignment stock and aging

The Consignment stock tab shows the balance, value, first entry and last activity per account × product × lot. Aging is counted from the first entry to today in four buckets: 0-30, 31-60, 61-90 days and older than 90 days (red). With the direction filter you can see only our goods at customers or only supplier goods with us. Items whose unit cost is unknown are tracked without value and listed by code in a warning.

10. Differences report

The Differences tab compares today's consignment book (agreement balance) with the real stock of the consignment warehouse. A row means a document outside the consignment window (a manual warehouse slip, another invoice) has touched that warehouse. Invoices that were linked to a consumption and later deleted are also listed as "invoice deleted" — reverse that consumption transaction. With no difference at all it says "No differences: all consignment warehouses match the book".

11. The Consignment tab on the account card

The Consignment tab of the account card shows that account's agreements, consignment warehouse, consignment balance and recent transactions, read-only. To work on them, press Open in Consignment window; the window opens filtered to that account.

12. On the phone (Garden + Steps)

On the phone the window opens in three steps for the sales rep at the customer:

1. 1. Agreement — search for a customer or agreement; active agreements are listed as cards (+ New agreement if you have permission).
2. 2. Stock at customers — product, quantity, value and oldest-day cards; large buttons: Report consumption, Consignment shipment (or receipt), Return, Count, Period reconciliation; recent transactions below.
3. 3. Action — the consumption report has three steps of its own: 1 Product and quantity → 2 Preview → 3 Invoice. Transactions entered on the phone are tracked with the source "Mobile".

Linking an already issued invoice to a consumption after credit limit approval is done on the desktop. Details: Mobile.

13. Stock valuation and the Owner Dashboard

• In the company stock valuation report, consignment at customers is company property and included in stock value; its location is shown on a separate line as "Consignment at customers (company property)".
• Goods received on consignment from a supplier are not company property: they appear on the information line "Supplier consignment (excluded from value)" and are deducted from quantity in the general view. This split is only possible with today's balance; a report for a past date shows a warning.
• In the stock health box of the Owner Dashboard, a "… on consignment at customers" slice is shown under tied-up money.

14. Accounting: memorandum accounts

Consignment transactions are tracked in memorandum (off-balance) accounts by the Accounting automation; the amount is the transaction's consignment book value:

Memorandum accounts appear in the trial balance but do not enter the balance sheet, income statement or cash flow. Because the shipment is a warehouse slip, account 153 Merchandise does not move (the goods are still ours). The consumption invoice goes through the normal sales (120 / 600 / 391 + cost of goods sold) or purchase (153 / 191 / 320) rules — no separate consignment rule is needed. Indonesia's SAK EP layout has no memorandum class, so off-balance tracking accounts prefixed N- are used.

15. VAT / PPN

Türkiye: a consignment shipment is not a supply; VAT arises when the goods are sold/used by the customer (VAT Law art. 10/a) — so the shipment has no VAT and the consumption invoice carries VAT. In the monthly VAT breakdown the consignment information section shows the number, base and VAT of the period's consumption invoices; this amount is already included in output VAT and is not added again.

Indonesia: VAT Law (UU PPN) 42/2009 removed consignment deliveries ("penyerahan secara konsinyasi") from taxable supplies; PPN is due when the consignee sells the goods. The PPN breakdown has the same information section. This is a summary of the legislation; confirm it for your own situation with your accountant / tax adviser.

16. Permissions

Settings › Users › permissions, Consignment / custody group:

• Consignment transactions (shipment, receipt, consumption, return, count) — enters transactions and saves reconciliation drafts.
• Consignment agreements, reconciliation approval and reversal — opens/edits/closes agreements, confirms reconciliations, reverses transactions.
• Either one is enough to read the window; administrators see everything. A read-only user cannot change consignment records.
• The consumption invoice is written with your session: sales/purchase invoice permissions and the credit limit gate apply as on the invoice screen.

17. Frequently asked questions

• I shipped but stock did not go down? Correct: a consignment shipment is not a sale, the goods stay the company's. Stock goes down when consumption is reported and invoiced.
• Why can't I sell the supplier's goods? Goods in the custody warehouse are not company property. First link them to a purchase invoice with Consumption; they move to a company warehouse.
• I deleted the consumption invoice from the invoice screen, what now? The goods return to the consignment warehouse but the transaction stays linked; it shows as "invoice deleted" on the Differences tab — reverse the transaction.
• "The consignment cap in the agreement is exceeded" — after the shipment the quantity at the customer would pass the cap. Record consumption or a return first, or raise the cap in the agreement.
• "Consignment tables (EM_*) have not been created in this company yet" — the tables are created when the Java server opens the company; ask your system administrator to restart the Java service.
• Can the customer report their own consumption? The hook for a customer portal is ready (source "Customer portal"); the portal itself is separate work. Today consumption is entered on the desktop or the phone.

Related guides: Warehouses › Custody · Document entry · Credit limit · Accounting · All modules.