A consignment warehouse is a supplier's warehouse on the premises or in the vicinity of a customer. In this warehouse, goods and/or parts are kept for the customer, which are to be delivered to the customer in the future. SAP Business One is prepared accordingly for this type of goods delivery.
The supplier (consignor) remains the owner of the goods even if they are on the customer's (consignor's) premises. The transfer of ownership from the supplier to the customer takes place after the expiry of a period or the customer takes goods from the consignment warehouse. By means of a contractual retention of title, the supplier can also remain the owner of the goods until they have been paid for in full.
Consignment stock in financial accounting
In accounting terms, this means that moving stock to the consignment warehouse is the same as moving stock from one warehouse to another.
In SAP Business One, a Stock transfer is required. In the object "Warehouse Definition" you can define a specific business partner as consignor by making an entry in the corresponding field.
Sales documents in SAP Business One
Based on the consignor's report, one can then issue the sales documents from within SAP Business One: Deliveries and outgoing invoices to the customer or to the customers referred by the consignee, depending on the consignment model. So when items are taken from the customer's consignment stock, as a supplier you create an A/R invoice in SAP Business One for the items and quantities used. Each row refers to the consignment warehouse so that the stock is shown as withdrawn from the warehouse when the invoice is saved.
The difference between commission and consignment stock?
The consignment warehouse is also a type of warehousing for customers. In contrast to the consignment warehouse, the goods remain the property of the supplier until they are sold to the end customer.