Consignment Purchasing

How does consignment stock work when I don't own it until it sells? Consignment purchasing

“How does consignment stock work when I don’t own it until it sells?” You receive it into your branch balance as consignment stock rather than as a purchase, sell it through your ordinary tills, bill yourself for what sold, pay for that and only that, and send the unsold units back — six consignment documents, of which two move stock — and three figures that treat the borrowed units as bought unless somebody steps in.

You run purchasing or accounts for a retailer, and a brand wants to put its stock on your shelves without you buying it: they keep ownership, you sell it, and once a month they bill you for what sold. By the end of this guide you will have run one full cycle, you will know which document moves stock and which posts, and you will know the three places — the moving average, month-end cost of sales and the Creditor Report — where BigLedger cannot tell borrowed units from your own, and who corrects each. Set aside 40 minutes for the first cycle.

One cycle, at a glance

Before the first receipt, map the company’s default consignment stock and consignment liability GL codes, tick Consignment Item on each item and add both knock-off rows. A missing code does not stop FINAL: the document goes through and its journal is left empty (Before you start).
Record the agreement as a consignment purchase order (optional, and worth doing). Nothing posts and nothing moves (Step 1).
Receive the units on a Consignment GRN, never an ordinary purchase GRN or invoice, at the agreed reference price, never RM 0. The GRN puts the units into your stock and its amount into the item’s moving average. A consignment GRN that has been billed against cannot be voided until the billing is, so get quantity and price right before FINAL (Step 2).
Sell them on ordinary tills and invoices, then count what sold on the Stock Movement Report before the principal’s bill arrives (Step 3).
Key the principal’s bill as a Consignment Billing, a purchase invoice despite its sales folder, for the quantity that sold, not the full GRN quantity. Settle any difference with the principal first: nothing compares the two for you (Step 4).
Pay against the billing, never the GRN. The GRN stays open against the principal in the Creditor Report (Step 5).
Send unsold units back with the document your company chose once, with its accountant: the Consignment Return reverses the value and moves no stock; the Consignment GIN moves the stock and touches no consignment account (a known defect BigLedger is tracking). Key a GIN at the price the units came in at, never RM 0, and never use an ordinary Purchase Return (Step 6).
If your company closes months with Month End Processing, know that month end counts consigned units on hand as your own closing stock. A fix is planned; until it ships this guide gives no workaround (Common mistakes).

The cycle runs across three pages. Step 1 is on this one; Steps 2 and 3 (receive and sell) are on Consignment: Receive and Sell, and Steps 4 to 6 (bill, pay and return) are on Consignment: Settle and Return.

    flowchart LR
  CPO["Consignment Purchase Order<br/>nothing posts"] -.->|"knock off"| GRN["<b>Consignment GRN</b><br/><b>stock in</b><br/>Consignment Stock · Consignment Liability"]
  GRN --> SALE["Cash bills and sales invoices<br/>stock out"]
  GRN -->|"knock off"| CB["<b>Consignment Billing</b><br/>for what sold<br/>Purchase · Creditor<br/>clears the holding"]
  CB -->|"contra"| PV["Payment Voucher"]
  GRN -->|"unsold units"| CR["Consignment Return<br/>reverses the value<br/>moves no stock"]
  GRN -->|"unsold units"| GIN["Consignment GIN<br/>moves the stock"]

Meet GadgetSphere

A wireless-audio brand principal offers GadgetSphere Sdn Bhd a launch range on consignment: 120 units of a new earbud model at branch GS-KV-01, reference price RM 189 a unit, billed monthly for whatever sold, unsold units returnable after 90 days. GadgetSphere sells them at RM 249 through its normal tills. In March, 74 units sell.

The six documents, and what each one actually does

Consignment has its own chain, separate from the ordinary purchase chain, and its own two ledger accounts: Consignment Stock (the value of goods on your shelf that you do not own) and Consignment Liability (what you would owe if you bought it all). The GRN puts a value into both; the billing takes it out of both as you buy; the return takes it out when goods go back.

Document	Moves stock?	Posts?	What it is really for
Consignment Purchase Order	No	No	The agreement as a document: items, quantities, reference price. Optional, but it gives the receipt something to knock off
Consignment GRN	Yes, in — and its amount enters the item’s moving average	Yes — Dr Consignment Stock / Cr Consignment Liability	The consignor’s goods arriving. This is the document that puts them in your branch balance
Your cash bills and sales invoices	Yes, out	Yes, as any sale	Selling the units. Nothing consignment-specific happens here
Consignment Billing	No	Yes — Dr Purchase / Cr Creditor, and Dr Consignment Liability / Cr Consignment Stock	The consignor’s bill to you for what sold. It turns the holding into a real purchase and a real payable. Despite its name and its folder, this is a purchase invoice
Consignment Return	No	Yes — Dr Consignment Liability / Cr Consignment Stock	Reverses the value of goods going back. It does not move the units
Consignment GIN	Yes, out — and its amount leaves the moving average	Yes — but to the ordinary purchase and creditor accounts, a known defect BigLedger is tracking (by design it reverses the consignment pair)	Consigned units leaving without a sale. No screen voids it; to reverse one, post a compensating Consignment GRN
Consignor Purchase Billing	No	No	A period worksheet in its own tables: opening, net purchases, closing, quantity to bill. It has no FINAL and creates no balance

The two ledger accounts must exist before the first receipt. The GRN and the return find them as Purchasing core concepts §8 describes: the liability from the company default only, the stock account from the header, then the item’s own link, then the default, and never from a line. The billing reads both from the company defaults only, so an item linked to its own consignment stock account is filled by the GRN on that account, while its billings are credited to the default one, and neither account ever clears. Map both defaults, and link an item to its own account only with your accountant’s plan for clearing it.

A missing code does not stop FINAL: the document goes FINAL, the posting job that runs a moment later fails with MISSING_DEFAULT_GL_CODE: <code>, and you see it only on the document’s Trace Document tab (Journal Txn empty). Once the code is mapped, post the journal from Financial Report > Error Checking > Stock Flow Report: click the Difference on the Purchase Consignment row, tick the document in the Difference Listing and press CREATE. That covers GRNs, returns and billings, not the GIN; Trace Document’s own checks read Unsupported document type for these documents.

Before you start

The consignor must exist as a supplier, with an AR/AP type. The billing credits the creditor account that type resolves to; a GRN whose principal has no AR/AP type gets no liability line, and its journal fails with TOTAL_DEBITS_AND_TOTAL_CREDITS_NOT_BALANCES.
Every consigned item has Consignment Item ticked in Doc Item Maintenance. Unticked items do not appear in the consignment GRN’s item search at all.
Company default GL codes: CONSIGNMENT_STOCK, CONSIGNMENT_LIABILITY, plus PURCHASE, INPUT_TAX and the creditor code for the billing.
Two Knock Off Configuration rows on the company in the Organization applet: Consignment Purchase Order → Consignment GRN, and Consignment GRN → Consignment Billing (INTERNAL_PURCHASE_CONSIGNMENT_GRN → INTERNAL_PURCHASE_CONSIGNMENT_INVOICE). Without the second, the billing’s KO For grid is empty however many GRNs you have finalised.
The reference price is agreed. You key it on the GRN, and the GRN’s amount enters the item’s moving-average cost pool (see Common mistakes for what RM 0 does).
Serial tracking decided for the item when it is created — the Sub Item Type locks at the item’s first save.

Step 1: Record the agreement as a consignment purchase order

Purchasing > Consignment Purchase Order (Internal) > Consignment Purchase Order > Create

Optional, and worth doing: it gives the warehouse a document to receive against and keeps the agreed price out of anyone’s memory. Set branch GS-KV-01 and the location on Main Details, pick the brand principal on Account, and on Lines add the earbud model, 120 units at RM 189. Put the agreement’s reference in the reference field and unsold returnable after 90 days in the remarks.

CREATE, then open it and FINAL. The order locks and, because the company has the Consignment Purchase Order → Consignment GRN row, its lines enter the open queue. Nothing posts and nothing moves: this is an agreement, not a transaction.

Next: Step 2: Receive the consigned stock.

What success looks like

Thirty seconds, four checks, after the March billing and payment:

Stock Balance for the earbud at GS-KV-01 reads 46 — 120 received less 74 sold. The figure is stored, rewritten by the stock job each time a document moves the item, so a sale finalised a moment ago may take a minute to show. After Step 6 it reads 15 only if a GIN (or an adjustment) took the 31 out; the Return alone leaves it at 46.
The billing’s Trace Document → Journal Txn shows both blocks from Step 4, and the Consignment Billing has left the principal’s outstanding documents in the Creditor Report (only the GRN remains).
Ledger And Journal shows Consignment Stock and Consignment Liability equal and opposite at RM 7,854.84. If they are equal but differ from 46 × RM 189 by the tax or a price difference, that is Step 4’s drift, not an error. If they are not equal to each other, an item is linked to its own consignment stock account (the callout) and the GRN filled one account while the billing emptied another.
The Purchase account for March carries the billing’s RM 13,986 and nothing from the GRN — you bought 74 units, not 120.

Common mistakes

Two mistakes belong to the whole cycle and stay here. The ones that belong to one part are on that part’s page: receiving consignment on an ordinary Purchase GRN or Purchase Invoice, and keying the consignment GRN at RM 0, are on Consignment: Receive and Sell; treating Consignment Billing as a sales document, billing the full GRN quantity, and using an ordinary Purchase Return for consigned units are on Consignment: Settle and Return.

Not knowing that month end counts the consigned units as yours. If your company closes months with Month End Processing, cost of sales is worked out the periodic way — opening stock plus the month’s purchases, less closing stock — and closing stock is read from every stock movement of the company, at the moment you process, with nothing asking who owns the units. On 31 March the 46 earbuds on the shelf go into closing stock at RM 8,694, the stock account takes them as your inventory while Consignment Stock holds them too, and the month’s cost of sales for this item comes out at RM 5,292 instead of the RM 13,986 you were billed. BigLedger’s design for the close takes unbilled consigned goods back out, and that part is planned and not yet built. Until it ships, this guide names the effect and gives no workaround: the accountant who closes the month should know it is there, and how large it is.

Expecting a line GL code to route consignment stock. It is ignored on the GRN and the return; the stock side takes the header code, then the item’s link, then the company default, and the billing reads the company default only. FINAL still goes through when nothing resolves; a FINAL document with an empty Journal Txn tab is the symptom.