Consignment: Settle and Return

Consignment purchasing: bill what sold, pay the principal and send the rest back

Steps 4 to 6 of consignment purchasing: bill yourself for what sold, pay the principal against that billing, and send the unsold units back. It follows Steps 2 and 3, where the units were received on a Consignment GRN, sold on ordinary tills and counted. When units go back, key a Consignment GIN at the price the units came in at, never RM 0, and never use an ordinary Purchase Return.

The running example: of the 120 earbuds GadgetSphere received at branch GS-KV-01 at a reference price of RM 189, 74 sold in March; the principal bills those 74, and after 90 days 31 units are still unsold and go back.

Before you finalise a billing or a return, check Before you start and the GL code callout: the billing reads both consignment accounts from the company defaults only, and for either document a missing code does not stop FINAL — the journal is left empty. Two decisions come before the documents. Settle any difference between the principal’s bill and your own count with the principal first, because nothing compares the two for you. And decide once, with your accountant, which document your company uses to send units back (Step 6 sets out the choice).

Step 4: bill yourself for what sold.
Step 5: pay the principal.
Step 6: send the unsold units back.

Step 4: Bill yourself for what sold

Sales > Consignment Billing (Internal) > Consignment Billing > Create

The principal’s invoice arrives: 74 units at RM 189, RM 13,986, plus RM 839.16 tax. Compare its units with your Step 3 count before you key anything; a difference is settled with the principal first, because the billing is the purchase invoice and the amount it books is the amount you will pay. Nothing in BigLedger compares the two for you.

The document is Consignment Billing (Internal) — filed in the sales folder and named as if it billed a customer, but a purchase invoice in every respect: its entity picker is titled Select Supplier, and it posts the purchase direction. Create it for branch GS-KV-01 and pick the principal on Account. On KO For, the sub-tab Consignment Purchase GRN lists GRN lines still waiting to be billed. Tick the earbud line and press KNOCK OFF: the line comes across with the full 120. Change the quantity to 74 and add the principal’s tax.

FINAL. BigLedger posts, in one journal:

Dr  Purchase                     RM 13,986.00
Dr  Input Tax                    RM    839.16
    Cr  Creditor — the principal          RM 14,825.16

Dr  Consignment Liability        RM 14,825.16
    Cr  Consignment Stock                 RM 14,825.16

The first block is the purchase you have now made. The second clears the holding — and it clears it by the billing’s total, tax included, not by the GRN value of what sold. So after March the consignment accounts hold RM 22,680 − RM 14,825.16 = RM 7,854.84, not the RM 8,694 that 46 units at RM 189 are worth; the RM 839.16 gap is the tax. The two accounts still equal each other, which is why nobody notices. Your accountant either keeps the billing tax-free on the consignment side or clears the gap by journal each month; a billing at a different price from the GRN drifts the same way. No stock moves, and the billing never touches the moving average.

Watch out for:

The KO For grid empties the moment you use its advanced search (a known issue, reported to engineering). Clear the search and use the grid’s column filters.
The grid is empty before you search — the company has no Consignment GRN → Consignment Billing knock-off row, so the GRN wrote no queue rows. Add the row; support can repair the queue for GRNs finalised before it existed.
The selected document contains a different entity/branch — one billing per supplier and branch.
No e-invoice comes out of this document. The Consignment Billing is not among the purchase types BigLedger submits as a self-billed e-invoice or matches against a supplier’s e-invoice. The principal, as the seller, issues its own; whoever keys the billing keeps the principal’s e-invoice number in the billing’s reference and checks the two totals agree.

Step 5: Pay the principal

Finance > Payment Voucher (Internal) > Internal Payment Voucher > Create

Create a payment voucher for the principal: one payment line for RM 14,825.16 by bank transfer, and on the Contra tab tick the Consignment Billing from Step 4 for the full amount. FINAL. The voucher posts Dr Creditor / Cr Bank and writes one cashbook line for Bank Reconciliation. You have paid for 74 units and nothing else.

Pay against the billing, never the GRN. The GRN from Step 2 is itself an open document of the principal with RM 22,680 outstanding; if it is offered to you as something to contra, leave it. In the Creditor Report and the creditor aging the principal therefore still shows RM 22,680 after you have paid in full, and the GRN ages as if it were an unpaid bill. A knock-off moves quantities, not a document’s balance, so billing the GRN does not reduce it. Which document is meant to close that balance for the units that sold is not settled yet; until it is, whoever reconciles the principal’s statement reads the principal’s Consignment Billing rows as the debt and the GRN rows as the holding.

Step 6: Send the unsold units back

After 90 days, 31 units are still unsold and go back to the principal. The chain has two documents here with different effects. Decide — once, with your accountant — what your company uses, and use it every time.

Document	What it does	What it does not do
Consignment Return (Internal)	Reverses the value: Dr Consignment Liability / Cr Consignment Stock, 31 × RM 189 = RM 5,859; carries its own open balance, closed by contra	Moves no stock and leaves the average alone. The 31 units stay in the branch balance until something takes them out
Consignment GIN (Internal)	Takes the 31 units out of stock at `GS-KV-01`, and takes its own amount out of the moving-average pool	Touches no consignment account. If your company posts journals for it, it posts Dr the principal’s creditor / Cr Purchase at its amount — RM 5,859 off the month’s purchases and a debit on the principal in the ledger

Used alone, the Return leaves 31 units you no longer hold in Stock Balance, and month end counts them as yours (Common mistakes). Used alone, the GIN empties the shelf and leaves RM 5,859 in both consignment accounts. Most companies need the stock to move and the value to reverse, which means both — and an accountant who decides what to do about the GIN’s journal. Key the GIN at RM 189, the price the units came in at: at RM 0 the 31 units leave and their RM 5,859 stays in the pool, so the 15 left would carry an average of RM 579.60.

Purchasing > Consignment Return (Internal) > Consignment Return > Create — set branch and location, pick the principal, add the line: 31 units at RM 189. CREATE, then FINAL from the listing. Get the principal’s signed collection note and attach it to whichever document moves the stock.

What success looks like for this part

The Consignment Billing is FINAL for 74 units and its Trace Document → Journal Txn shows both blocks from Step 4; the payment voucher contras that billing, not the GRN, for RM 14,825.16, and the billing has left the principal’s outstanding documents in the Creditor Report while the GRN remains; and the 31 units have left Stock Balance only if a GIN (or an adjustment) took them out — the Return alone moves none. Then run the whole cycle’s success check.

Common mistakes in this part

Treating Consignment Billing as a sales document. It sits in the sales folder and its name suggests a customer. It is the consignor’s invoice to you. If you are the one placing stock with a partner, that is the other direction — see Customer Consignment.

Billing the full GRN quantity. Knock-off brings the whole 120 across. Change the line to what sold; the rest stays as consignment stock.

Using an ordinary Purchase Return for consigned units rather than the consignment documents. It moves the stock out but posts to Creditor and Purchase Return, so the consignment accounts keep the value of units that have gone.

Month end counting the consigned units still on hand as yours is on the front page: it applies at every close while consigned units are on hand in Stock Balance, and a Consignment Return alone leaves them there.