How to Record Consignment to Stores in Xero

Note: You have to require your store report which items sold; they don’t all willingly do this. If you have a store that doesn’t report what items have sold, then you can keep it as an invoice and simply receive payments to the invoice until it is paid off.

For Consignment items, create a New Invoice, but you’re going to save it as a Draft. Here’s the process I recommend:

1. Create New Invoice
2. List all the Items you sent on consignment
3. Bottom Left of the Invoice click SAVE as Draft. The Draft will be a running list of what the Store has on hand. By keeping the Consignment as a Draft and only invoicing out the items that sold, it keeps your books from looking like you have a huge outstanding Accounts Receivable (Invoice) that is awaiting payment, which isn’t accurate because Consignments can always be returned or exchanged.

As The Store Pays For Items Sold

1. Copy the Draft: Go to Options in the top Right of the Invoice and “Copy”
2. On the Copy, Click the “X” to the right of each line to Delete all the items still on hand at the Store. You want this copy to only show the items the store is sending payment for.
3. Approve this as an invoice and record the payment.
4. The original Draft Invoice remains, go back to the Draft, and delete off (use the “X” to the right) the line items that you just recorded payment for on the Approved Invoice.
   1. The invoice has items that have sold.
   2. The draft only has the items the Store still has on hand.
5. As more items sell, you repeat the process 1-4 with those items. If you send the store more items, just add them to the existing Draft Invoice.

You should ask for regular statements from your accounts and if they haven’t paid you for inventory sold, do not send new work until they have and do not let them off the hook even though you hate to make those awkward and unpleasant phone calls asking for payment. Finally, be sure you have a contract (doesn’t have to be complex) with each account and a fully descriptive inventory sheet (with an authorized signature acknowledging receipt) for each account. Keep meticulous records.

If you also need to track your inventory from materials to finished goods, may we suggest BenchWorks. There you can easily track consignments!