COSTAR Consignment Stock Overview

COSTAR Consignment Stock Overview

Purpose

Consignment stock within COSTAR is handled with relative ease with the COSTAR system. 
This document outlines the process of receipting in consignment stock and entering any invoices for sold consignment stock.

Below is the steps to receipt consignment stock, followed by the three common outcomes when related to handling the consignment stock after you have receipted it in.

Receipting in Consignment Stock

To receipt the initial consignment stock order into your COSTAR system;
  1. Select Purchasing, Purchase Order, then click Add New.
  2. Enter the Supplier's Account number in Supplier Account
  3. Enter the items that need to be receipted in.
  4. Ensure that the Order Qty, Unfilled Qty and Receipt Qty are filled out correctly.
  5. Ensure the Supplier Cost and Totals are also correct according to the Delivery Docket. 
    NotesNote: These prices must be excluding GST.
  6. In the lower left hand corner of the window, Uncheck the Invoice number box. This will remove the Invoice information including Invoice number, Date, Terms, and Amount. 
  7. Click Receipt at the top of the purchase order.
  8. Enter the Delivery Docket number,
  9. Click OK  and print off the Stock Receipt.




Once Consignment stock is receipted in, a review of the of the Stock Receipt GL transaction reveal that the Inventory is Debited, and the Supplier's Accrued Payables have been Credited.

Handling Consignment stock. 

With regard to handling consignment stock for customers, COSTAR does not differentiate between inventory stock or consignment stock. 

Replacement Consignment Stock

Once consignment stock is sold and the supplier replaces the stock, they will also issue an invoice for the replacement stock. 
As it is just a replacement of like for like stock, you can enter this replacement stock and invoice using the same Purchase Order procedure used for normal inventory stock. This will Debit Inventory and GST Claimable, while Crediting the supplier's Accounts Payables. 

Purchase of Consignment Stock

If you want to purchase the consignment stock, the supplier will provide an invoice for the consignment stock. This can be entered in as an AP Invoice Entry. 
  1. Select Supplier then A/P Invoice Entry
  2. Click New, then Entries
  3. Enter the Invoice Number, Description, Date, Amount (Inc. GST) and Supplier.
  4. In the Distribution table, enter the GL 90200 (Accrued Payables), select the same Supplier, and click Apply to document. 
  5. Select the consignment purchase order.
    Notes
    Note: A message will appear say that there in an unallocated amount. This will be the GST component of the invoice.
  6. On the second line of the Distribution table, Select 90100 (GST Claimable). 
  7. Click Back to close the window. Enter the Supplier Total to equal the Actual Total.
  8. Click Post and Post the invoice to the appropriate month.

Return of Consignment Stock

If you need to return consignment stock, the procedure is the opposite to receipting in the stock via a Purchase Order.
  1. Select Order Entry, Supplier Return
  2. Click Add New
  3. Enter the Supplier's Account number in Supplier Account
  4. Enter the items that need to be returned. Ensure that the Order Qty, Unfilled Qty and Receipt Qty are filled out correctly. Ensure the Supplier Cost and Totals are also correct. 
    Notes
    Note these prices are GST Free.
  5. In the low left hand corner of the window, UNCHECK the Credit Note number box. This will remove the Credit Note information including Credit Note number, Date, Terms, and Amount. 
  6. Click Sell at the top of the windows.
  7. Print off the Supplier Return document.


Once Consignment stock is returned, a review of the of the Supplier Return GL transaction reveal that the Inventory is Credited, and the Supplier's Accrued Payables have been Debited. This is the opposite of the original Purchase Order.

Accounting Implications

When Consignment stock is receipted in on a purchase order the "Receipt on Invoice" is unchecked. This will have the following effect:
  • Quantity on Hand for the items will be added according to the quantities on the Purchase Order.
  • Inventory (GL#72401 by default) is debited the total value of the consignment stock (excluding GST).
  • Accrued Payables for the Supplier listed on the Purchase Order is credited the total value of the consignment stock (excluding GST).
At this point there is no difference in COSTAR between inventory stock purchased and consignment stock. 
COSTAR is only interested in the debt that is recorded in Accrued Payables for that Supplier. 

After the stock is receipted and/or sold, there is three scenarios that can occur. 

1. Replenishing consignment stock when stock is sold.
When the stock item is sold to a customer, the supplier will issue the store with stock to replenish the consignment stock sold.
The supplier will also provide an invoice for the consignment stock sold. As this stock is simply replacement stock, when receipting in the stock on a Purchase Order the Invoice details can be added in as well.  This will have the following effect. 
  • Quantity on Hand for the items will be added according to the quantities on the Purchase Order. This effectively replaces the consignment stock even though you are being invoiced for the stock.
  • Inventory asset (GL#72401 by default) is debited the total value of the stock (excluding GST).
  • Accounts Payables for the Supplier listed on the Purchase Order is credited the total value of the Purchase Order including GST.
  • GST is calculated accordingly as a GST credit to be claimed.  
2. Return of Consignment Stock to Supplier.
When the consignment stock is returned, a Supplier return is processed with the "Return using Credit Note" unchecked. This will have the following effect:
  • Quantity on Hand for the items will be removed according to the quantities on the Purchase Order
  • Inventory asset (GL#72401 by default) is credited the total value of the stock (excluding GST).
  • Accrued Payables for the Supplier listed on the Purchase Order is debited the total value of the stock (excluding GST).
The debt that represents the value of the consignment stock is reversed in Accrued Payables for the Supplier. A journal is usually performed after this to clear the debits and credits on the Suppliers Accrued Payables window and move these records to Accrued History. In theory the debit and credit recorded in Accrued Payables should equal zero. However, in practice, due the continually changing price of stock, this is rarely the case and a difference in these value will also need to written off. 

3. Purchase of Consignment Stock.
When the decision is made to purchase the consignment stock, the Inventory GL and the stock's quantity on hand has already been accounted for. In this instance all that needs to be done is the entry of the Supplier Invoice (for the original consignment stock). This is completed under AP Invoice Entry, and when processed, had the following effect. 
  • Inventory and Stock on hand are NOT affected.
  • Accounts Payable is credited the full amount due including GST.
  • Accrued Payables is debited. This moves the consignment stock debt to Accounts Payable.
  • GST is calculated accordingly as a GST credit to be claimed.


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