For consignment sales, ideally, I want to be able to track the stock I've sent to my consignment clients and perhaps invoice them fortnightly or monthly (to reduce my paper work and admin) for the stock they have consumed. Also, this enables me to keep track of the inventory I need to replenish at their site, when it is consumed.
A. For every consignment client you create separate location
B. You send stock to consignment client.
Inventory->Transfers. Move from main warehouse to consignment location
C. Once a month you get a sale report from consignment clients. Create Sale order and use consignment locations to pick the stock
D. To replenish on their site you will use Inventory-> Product availability report sorted by locations
On a summary level, I also need to be able to keep track of my overall stock levels in order to put in purchases for more stock when it runs low. There is a barcode and batch number attached to each item, so the purchase/sale process needs to be able to be robust enough to take volume. This is a government legislation.
This is generally available now and won't be different with consignment locations. Use Inventory-> Product availability report, just hide Location column. With regards of volume we don't impose any limitations. Though Xero recommends their software for businesses with 1000 invoices per month max.
Taking into account the above, I want to be sure that my accounting system (Xero) is able to track the Cost of Goods Sold and Total Inventory on hand, as it is consumed. This is very important, as it affects my operations and GST.
Ideally, I would want to track Inventory at each consignee at the Xero level but since DEAR only syncs one inventory account so I know that is not possible.
Cost of Goods Sold will be copied to Xero every time when shipment is authorized in DEAR. Total SOH will changed in Xero every time when you authorize sale/purchase invoice. See item 1 on reporting by consignment clients
Can you please send me your recommended method of managing consignment stock that I receive from my suppliers?
Typically I would reconcile consignment stock at the end of each month and send a purchase order to my supplier for any stock sold in that period. I would like to invoice my clients for sales of this stock during that period as well.
A. For every consignment supplier you create separate location Settings->Reference Books->Locations
B. You create stock adjustment in every location to put quantity of the items with notional cost 0.00001. Inventory->Stock adjustment.
C. You will sell items from these locations using normal sale process.
D. Once a month you run Sale Order Details report and get list of products sold in each consignment location. Export this list with SKUs , locations and quantities, create CSV files for every supplier. Create Purchase order for every supplier using CSV file.
E. Once you get invoice from supplier process invoice as normal purchase, in account column select COGS account instead of Inventory account to write off item’s cost.