Benefits and Tips for Running a Business Consignment System

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This practice of consignment (consignment) sales is still common in our society, and is one of the business schemes that has its own advantages compared to buying and selling. A consignment is an agreement in which one of the parties that owns the goods surrenders a number of items to a certain party to be sold at the price and conditions stipulated in the agreement. The party who surrenders the goods (the owner) is called a consignor / consignor. The party who receives consignment goods is called consignee / consigner / commissioner. For consignors the goods entrusted to the consignee for sale are called consignment goods (consignment out).

This form of cooperative sales cooperation is carried out between the owner of the goods or products with the shop owner who already has many regular customers. Making it easier for product owners to market and sell their products.

Gain on Consignment Sales

There are several advantages to doing business on a consignment. Here are some of the benefits:

a. Products can be marketed more broadly in stores that already have regular customers.

b. No need to take care of the transaction procession to consumers.

c. You can focus more on managing product quality.

d. Your product is easier to sell without spending a lot of money.

What Happens in Consignment Sales

If you sell your product on a consignment system or you are a shop owner (distributor) with regular customers, you will experience a number of things in the consignment business. The following explanation:

a. Sales return.

b. Guarantee, if the goods sold are not purchased by the buyer, the company must repurchase the goods (refund).

c. Contingency obligations, namely constructive obligations that occur for a loss that occurs to consumers so that the company must pay compensation for some money to consumers.

Tips for Running a Consignment Sales System

As a first step to introducing products to the market, a system like this is usually done so that the store is willing to sell our products to consumers directly, because a new product usually still does not have a clear market share that usually raises doubts if the shop owner should buy directly from the entrepreneurs.

However, if you are one of the product owners who intends to conduct consignment of sales, then you should be selective in making provisions so that the product can be sold. To support this, here are some tips that can be done are:

a. Choose stores that are strategic and crowded with buyers in the hope that our products are easily known and easily sold.

b. Always check regularly, especially for products that have an expiration date such as food and drinks. By regularly checking, then you will avoid the possibility of expired products purchased that can cause harm and a negative image of the product.

c. Establish a good relationship with the shop owner. Offer attractive profit margins and gifts to store owners if they can make sales with the maximum amount. In this way the store owner is expected to offer your product first to consumers and make it the main alternative in every sale.

Consignment Sales Financial Recording System
As a business that is run on a consignment basis, of course there is a slight difference in terms of financial records. Check out the things below:

a. Recording completed completely
If an agreement has been completed when the consignor will prepare financial statements at the end of the accounting period, then the recording procedure and journal posts must be made by the consignor on the delivery of goods, sale of goods, payment of goods, and financial settlement, by the consignee (entrusted) to the consignor is as follows:

– Sales by consignees.

– Commissions or profits that must be received by the consignee.

– Cash transfers and consignment sales estimates by

consignee party.
– Recording in the consignor’s book if the consignor’s transactions are held separately from ordinary sales transactions.
– Recording in consignee books if consignee transactions are held separately from ordinary travel transactions.
b. The recording was not completed completely
If the consignor needs to prepare financial statements at the end of the accounting period while the consignment agreement period is still in progress or not all of the items have been successfully sold, then adjustments to the items related to some products have not been completed completely until the end of the accounting period.


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